Formal registration of companies has many immediate benefits for the companies and for business owners and employees. Legal entities can outlive their founders. Resources are pooled as several shareholders join forces to start a company. Formally registered companies have access to services and institutions from courts to banks as well as to new markets. And their employees can benefit from protections provided by the law. An additional benefit comes with limited liability companies. These limit the financial liability of company owners to their investments, so personal assets of the owners are not put at risk. Where governments make registration easy, more entrepreneurs start businesses in the formal sector, creating more good jobs and generating more revenue for the government.
Below is a summary of the bureaucratic and legal hurdles faced by entrepreneurs wishing to incorporate and register a new firm in China. It examines the procedures, time and cost involved in launching a commercial or industrial firm with up to 50 employees and start-up capital of 10 times the economy's per-capita gross national income.
This information was collected from World Bank: Doing Business
* Takes place simultaneously with another procedure.
This information was collected from World Bank: Doing Business
| No. | Procedure | Time to Complete | Associated Costs |
|---|---|---|---|
| 1 | Obtain a notice of pre-approval of the company name | 1 day | no charge |
| 2 | Open a preliminary bank account; deposit fund in the account and obtain the certificate of deposit | 1 day | no charge |
| 3 | Obtain capital verification report from an auditing firm | 2 days | CNY 350 |
| 4 | Apply for registration certification "business license of enterprise legal person" with SAIC, the organization code certificate issued by the Quality and Technology Supervision Bureau and registrationfor both state and local tax with the tax bureau | 11 calendar days | no charge (Fee exempted for micro and small size companies from 2012 to 2014 - otherwise 0.08% of registered capital) |
| 5 | Obtain the approval to make a company seal from the police department | 1 day | no charge |
| 6 | Make a company seal | 1 day | CNY 300 |
| 7 | Pay the fee for the organization code certificate issued by the Quality and Technology Supervision Bureau at the time of pick-up | 1 day | CNY 102 (Production cost of CNY 18 for Organization Code Certificate is exempted for micro and small size companies from 2012 to 2014) |
| 8 | Register with the local statistics bureau | 1 day | no charge |
| * 9 | Open a formal bank account of the company and transfer the registered capital to the account | 1 day, simultaneous with previous procedure | no charge |
| 10 | Apply for the authorization to print or purchase financial invoices/receipts | 10 days | no charge (Fee exempted for micro and small size companies from 2012 to 2014) |
| 11 | Purchase uniform invoices | 1 day | no charge (Fee exempted for micro and small size companies from 2012 to 2014 - otherwise CNY 1.05-1.67 per book of invoices) |
| 12 | File for recruitment registration with local career service center | 1 day | no charge |
| * 13 | Register with Social Welfare Insurance Center | 1 day, simultaneous with previous procedure | no charge |