China is the global economic hub and paradise for investors. Over the years, China has been experiencing exponential growth. Therefor it is now a perfect launching pad for businesses that want to expand and invest globally. There are many who want to take advantage of this proven offshore investment destination. However, you need to follow the right steps for China company registration.
The typical business type for foreigners to start businesses in China is a wholly foreign-owned Enterprise(aka WFOE). WFOE is a limited liability company that is 100% owned by a foreigner or run by a foreign company. And since you fully own the business, you have greater control over its operations, profit targets and revenue.
As a limited liability company, it also means that it is a separate legal entity. In addition, it limits your liability to the contributed share capital. As a result, this is the most favorable option for an overseas business that targets entering the China market.
Here is the complete procedure for company registration in China.
1. Find an agency to help you with the registration
The Chinese administration has put a lot of effort into supporting businesses. Nevetheless, registering a company is still not a simple task. The process could be overwhelming. For instance, interpretation of the company laws and preparing the required documents. Therefore, the best option is using an agency.
An professional agency will be able to assist you with the following:
- Payroll
- Bookkeeping
- Tax minimization methods
- Audits
- Tax advise
- Support for the annual financial statements
2. Select the preferred company scope
The China government provides strong support on businesses with the potential to grow the economy faster. So you should check the Catalog for the Guidance of Foreign Investment Industries.
3. Prepare the required documents
Here are the documents that you need to submit:
- Firstly, the company name. To get the company name, you should seek approval from the Administration of Industry and Commerce. This is very important to ensure that your name does not conflict with others already in operation. Note that this approval can take between two and fifteen days depending on where you want to open the business.
- Secondly, the list of controlling partners. These are the shareholders who hold the majority of shares in the company that you are incorporating. To avoid getting into trouble later, it is advisable to confirm that the business partners are allowed to hold shares in China.
- Thirdly, the managerial structure. This is the complete business operational profile that includes the board of directors, supervisors, general manager, and the legal representative. This structure should be accompanied by copies of the directors’ passports.
- Fourthly, the legal address. This is the official headquarters of the company where the authorities can seek answers to any issue about the company. The address should include details such as phone number and email of the house or landowner.
- Moreover, articles of Association. This is another crucial document during China company registration process. It contains important information on business description, including the scope that you intend to operate in.
- In addition, registered capital and total investment. The registered capital denotes the resources dedicated to meeting the expenses of running the company. On the other hand, the total investment is the sum of registered capital and future loans from investors. It can also be from third parties like banks.
- Lastly, a feasibility study. To prove to the authorities beyond any reasonable doubt that the company is feasible, you need to provide a comprehensive business plan and a budget.
4. Apply for approval certificate
In order to get issued with an approval certificate and operating license, you need to deal with two organizations. Firstly, the Ministry of Commerce (MOFCOM).Secondly, State Administration of Industry and Commerce (SAIC). These people will review your application and give you a yes or no.
5. Apply for business license
In China, businesses in some industries require additional license. For instance manufacturing, food, beverages, construction and telecoms.
6. Register with the Public Security Bureau (PSB)
This registration helps you to get the company chops. In China, company chops are equivalent to the value of signature in western countries. If you do not have a chop, it is impossible to validate any contract.
7. Create a bank account
The bank account will also come in handy when filing returns.
8. Register at the Tax Bureau
In China, all companies, including the wholly foreign-owned enterprises, are required to comply with the Tax regulations. Therefore, you should first register the business basic financial. And then put in operating information such as CFO verification and category.
Deep digital China can also help you with setting up a company in China. If you would like to learn more about our services, contact us now.