I’m thinking about doing some consulting work. It’s likely to be very little work, at least at first, but I’d like to have everything legal and not work under the table. If it’s not breaking any laws, I’d like to do it as self-employment work (I have an open work permit), but it would go better to have a registered business. Two questions, one long.
Basically free option: Is it legal for me to do consultancy work and market it as My Name Widget Consulting, without registering a business and pay taxes as self-employment income? A possible complication is that I will have business expenses and will outsource at least some of the work to freelancers.
Registered business option: What are the absolute minimum costs to comply with all laws to run a business? Leaving out anything optional for now.
So far, I know I need:
Virtual office-$1,000-$3,000. I have also seen business centers say that to register a business, the cost is $3000. I’m not clear if that is the minimum rent to have a business registered there or if it is in addition to their services. I don’t need an actual office, except I may use a business center to meet clients.
Cost of registration-not sure about the cost.
Initial investment: I’ve heard different numbers for how much you need in the bank to start, from $1 to $500,000. I think there’s a minimum that’s very low, but a license can get rejected if you don’t have enough. What’s a reasonable amount?
Accountant: Is that required, or just recommended? I think I’ve seen the business centers offering this service for $3000, which I assume is per month.
Am I missing anything? So, broadly speaking, what could be the minimum I could get away with paying just to have a registered business to do consulting through?
10k setup, easy. But no one else will likely agree.
Consider you need to have everything setup. But consulting is pretty easy for those that want to do it. A10k setup with a 5k monthly is not difficult. Thats my minds bare minimum (using a digital address and an accountant). But more is better usually. It really comes down to YOU and your clients. The flip side is we might spend 30k on a single meal to impress a single client to jump on board. So i am only talking minimum. maximum can be compared with infinity.
You only need 1 dollar in capitol to start a business. Its easy now. But i think Andrew is right in that if you are a foreigner opening a business and hiring yourself for a work permit you are still stuck with that 3mill over 3 years type situation (not sure the exact numbers in recent years) and the min. Amount in the bank (500k?). At least for a ltd. If that rule still exists, bear in mind they are pretty picky now about where that initial chunk comes from. We had everything in order, paid taxes and bank of taiwan and the tax place gave us nothing but hassles and insults doing this 4 years back with our new company (pingdong). My wife is taiwanese and they were nothing but horrendous towards her in regards to where she got the money. I had to get involved at the end which wasnt what i wanted. they are quite the judgemental sexist bunch…
Used to be you just borrow money and deposit it, take it out later. Those days are gone, or at least more complicated.
What happens is people want to close loopholes to make sure only the insanely rich can qualify for business visas. Used to be you could get business visas to most Western countries just by borrowing the required money and letting people see you have it in your account. Now they want to know where the money came from and all that…
Accountant in most cases is not required if you can do the legal and tax reports yourself but if you need a Visa I think you need an accountant. We do a lot of accounting in house as one of staff wanted to do it as she thought she could do a better job as far tax, for corporate stuff (Balance Sheet, capital reports) we let the CPA do it.
Ya, its true you do actually need a license accountant for 1 step of starting up. If you can find one to do only that, the rest you can do yourself of you choose to.
I don’t use accountants, but then I’m more of self employed who isn’t making that much. I think accounting costs like 3000 per month or so. It would be required if you need to use the business as a means for getting a visa however.
That’s a number I can live with, though I’m sure I’ll need 3x that as I don’t speak Chinese well enough to fill out the forms or understand all the accounting laws as @Marco says. I don’t even know if tax reports have to be sent in monthly or yearly. Or quarterly.
Are accounts by the hour only or do you need to keep one on retainer like a lawyer?
Thanks to everyone who chimed in about visas, but I have an APRC and an open work permit.
That’s the situation I expect to be in for awhile, so how much money do I need to be making before I need a business license?
Back to my first question, is it legal for me to market my services under a business name (something like a dba as they do in the US) but count it as self-employment income? I’m sure that’s ok if I do one consultation for a price, but if I’m out there marketing myself as though I were a business?
I really want to start with as little money down as possible because, while I think I can make a go of it, I don’t want to have a lot of startup and ongoing costs for a business that I don’t have a lot of time and money to invest in and won’t be very profitable in the short term.
Because you have APRC and open work rights, its easier.
Open your business. The only thing you MUST obtain someone elses services is the accountant to do that 1 thing while setting up. everything else you can do yourself if you so wish. knowing chinese would certainly be better!
You will need an address. Digital addresses are possible, and range in price 2 to 5000. Any residential house that has been license and address (aka a legal house) you can register your business at it as well. Thats up to you, and if you have a landlord you will need their written consent as their taxes go up. this may not work for manufacturing related companies.
After that your taxed on ALL income at about 1.7 to 2.2 percent. you cannot write off expenses, but your sales tax on purchases will be refunded on expenses.
The only real change to you personally is health insurance will go up. i forgot how much but i think my wife pays just under 2k now.
Things get more complicated when you hire someone.
Great ino. a note to add. aside from the bimonthly receipts, digital invoices are now pretty common and well recieved. I am pretty sure you need to do those in chinese though
If you are a sole proprietorship and make less than 100k a month you don’t need receipts. You will get a yellow sticker stating this when you register your business.
Are you saying I don’t need to pay the costs of starting a company but can report the profit as self-employment income? There’s surely a limit to how much you can earn before you have to have a business license.
I wouldn’t need a virtual office if I’m working as self-employed, would I? I’m still not clear if I can call myself self-employed if I am branding my services under a business name.
About taxes, do you mean if I charge a customer $10,000 but I have to outsource some of the work and spend $8000, I have to pay taxes on the $10,000? Is that a sales tax? Is that all a company pays in taxes? There’s no tax on profits?
And why would my health insurance go up? I’m already paying through my employer for myself and my wife, about $2000 together, they pay half of mine and I pay all of hers. Is it because my income goes up, or does working for yourself change things? I’m not planning to quit my current employer unless any business I start goes very well.
The only costs to starting a business are the administrative fees and work done by the CPA. You can’t open one by yourself, you NEED a CPA.
Customers are not gonna view you as legitimate if they can’t write off the GST by receiving a Fapiao with their ID attached to it.
Of course there’s tax on profits. That is calculated at Income Tax Time in May. You would need to set up payroll etc… But you will need to levy GST on your customer.
So either you’re charging the customer $9524 plus GST:
($9523.80*1.05 = $10000)
Or
You’re charging them $10000 plus GST.
($10000*1.05=10500)
Companies subsidise half of your NHI. When you open your own company, your company should be subsidising your NHI too. But you own the company soo…
Gonna have to take that up with the NHI to ensure you aren’t paying more.
I feel like I’m going in circles here. So if I do any sort of freelance work, consulting or tutoring, for a business, in theory I should be charging them VAT/GST? And for them to write it off I need to give them a Fapiao with their company ID on it.
So even if I do something as a one-off or occasionally, like edit a document or design a website, I should charge VAT and then pay that to the tax office?
Either they’re gonna pay you as an employee (subject to income taxes) or they’re gonna want the fapiao. (subject to GST)
Same as above. It depends if they want to pay you as an employee or want a fapiao. If it’s the latter you’re gonna be paying the tax when (from now) November rolls around.
Of course there is under the table, but I’m not gonna discuss illegal concepts.
To pay the tax, the GST time is 1-15th every odd month. 15th is the deadline.
If you just want to work as self employed then just go register a business. If your income is less than 100k then you do not need fapiao. You can write an informal receipt if the client needs it for tax or reimbursement. There are lots of small businesses that do not need faipao because they have not exceeded the income limit. Fapiao is only needed if you are opening a LLC or the like. If you need it, the government will tell you. When you register a business and you have not exceeded the income limit they will give you a big yellow sticker informing customers that your business do not issue fapiao and you can simply issue a receipt that can be used for declaration by the client, but can’t be used to win lotteries (if the client is declaring them then winning 200nt is the last thing on their mind).
If you are starting this kind of business, you do not need a CPA. Most foreigners starting a business are going to use a CPA because they will be starting a LLC as they will need a business based visa for this, and this kind of business is no good for that purpose.
Where I’m from, those are contradictory statements. Self-employed would usually mean an unregistered business. If you have a business, you’re a business owner with one employee.
Do you still charge VAT, pay it bimonthly, etc?
When you register a business, you don’t have any income in the beginning, right? Or do they evaluate you year by year or what then?
What is the sticker stuck on, your license?
Most foreigners starting a business have the money to throw around, but I’m just hoping to get out of a dead-end job or at least have a little extra income. I’m not sure enough of being successful at either.
