A virtual office in China is the best solution for businesses that are seeking to expand their scope of business activities in the country. An office is required if you want to register a company in China, but many times this is a very high cost for companies, especially small businesses or startups that are just starting operating in the country.
A virtual office in China allows your company to save costs and avoid potential trouble with the Chinese law in case of mistakes in the registration procedure of the company.
In this article, we show you what are the benefits of using a virtual office in China if you are a SMEs or a startup.
- What Is A Virtual Office In China?
- Reasons Why Startup And SMEs Should Consider A Virtual Office In China
- How To Set Up A Virtual Office In China
What Is A Virtual Office In China?
A “virtual office” is the informal name for a centralized company registration area. The address is never a virtual one as suggested by the name — what is virtual is the fact that the company is located there.
Centralized office registration areas are introduced by local governments to support small and medium-sized enterprises (SMEs) or startup businesses so that the startup and SMEs will be able to have an affordable “company residence” on their Business License.
The virtual office addresses approved by the governments have gone through proper archival filing and registration at relevant government departments (for instance, at the Administration of Market Regulation or the Taxation Administration), so business owners would not need to worry about relevant compliance issues regarding corporate establishment at the annual government inspection.
A “Virtual Office” can have many names in real life. Startup coffee, Innovation Workshop, Innovation Technology Park, Entrepreneur Incubator… But not all “Virtual Offices” are licensed and filed.
Registering your corporation at non-compliant virtual office providers may bring risks, including administrative penalties and significant inconvenience in your business operation. That is why you should learn more about this approach before you act.
Reasons Why Startup And SMEs Should Consider A Virtual Office In China
1) Reduce Costs
This is definitely a big appeal for startups and SMEs. As commercial virtual office companies seldom provide actual office space, the costs can be very low. For instance, renting a 25m2 office in Shanghai city center can easily go over 2000 USD per month, but with virtual office services, the same expense can normally guarantee you one year access to a city center address with even less money.
2) Save Trouble
As the virtual offices are endorsed by local governments and registered at government departments, companies going with virtual office services rarely encounter legal issues regarding corporate registration. Further, as lots of licensed virtual office providers are well-known corporations (even state-funded ones) and law firms, entrepreneurs can easily negotiate for add-on services, such as secretary services, bookkeeping, tax reporting, and even legal consultation.
In case the enterprise owner feels they have a more preferrable place of business, they may easily switch from/to a virtual address. As virtual offices do not involve real estate lease/purchase procedures, enterprise owners will be free from the troublesome formalities.
4) Possible Government Policy Support
Many district governments will introduce rent subsidy, tax reduction, or tax refund policies to attract foreign investment. Big companies that will pay a relatively high amount of taxes may consider registering at government-supported Innovation Park addresses to reduce their tax costs.
How To Set Up A Virtual Office In China
1) Choose Your Provider
Choose a virtual office provider that best fits your business. The price, the location, policy support, and the add-on services can all be taken into consideration. Also, entrepreneurs should make that their company’s main business does not require specific business conditions or premises as stipulated by local laws.
Prepare the documents required for the registration of business establishment, including but not limited to:
- Application for Company Registration
- Your Articles of Incorporation
- A copy of the main qualification certificate (if the registerer is a company), or a copy of the proof of identity (if the registerer is a natural person)
- Proof of the company’s residence (a contract with your virtual office provider will do)
- Copies of relevant approval documents or licenses, if local laws or administrative regulations stipulate that the establishment of the company must be submitted for approval.
The requirements may vary in different cities.
3) Market Administration Authority Registration
Register the enterprise establishment with the district market administration authority and obtain a business license.
4) Enterprise Seal
Apply for approval to engrave the enterprise seal at a District Public Security designated Seal-Engraving Agency. Normally, a new company will at least need an official seal, a finance seal, and a personal seal of the legal representative.
5) Open a Bank Account
Your bank will usually request a visit to your office/place of business to verify that your company is compliant with their internal policies and the local law. Also, some banks may request the foreign company director to make a declaration regarding the place of incorporation, the business address, the authorized capital, the current director(s), etc.
6) Tax Authority Registration
Apply for tax registration and tax-control equipment at the Tax Authority of the District.
7) Open Company Social Insurance And Housing Fund Account
As paying social insurance and housing funds for employees are compulsory for employers, you will need to register your company at the district’s Social Security Bureau and the Provident Fund Management Center.
A virtual office in China can help your businesses to save costs and avoid trouble with the law. But you must be careful when you choose a provider of this service because many cannot guarantee that the office where you register the company is actually an office registered with the Chinese authorities.
We at FDI China have relationships with the major providers and we can make sure that everything is compliant with law and regulations. If you are interested in opening a company in China and use this service, feel free to contact us to discuss your needs.