Don’t Panic. Learn China bookkeeping and accounting with one article

All the time, many middle and small-sized enterprises newly established have been fined by relevant department due to the lack of financial knowledge, and they have been rushing about and deeply troubled by transactions related to business and taxation.

Some enterprises were punished failing to make tax declaration within the prescribed period; others failed to carry out tax registration in accordance with the tax law requirements, or failed to carry out filing by the prescribed process, due to which they could not enjoy preferential policies and treatments such as tax reliefs, and suffered losses. All of such problems could be solved and avoided through agent accounting.

What is agent accounting and outsourcing bookkeeping in mainland China?

Agent accounting refers to a kind of social accounting service activity that the accounting consultation or service agencies, or other intermediary organs, which have been approved to be established and involved in agent accounting businesses, accept the entrustments from independent accounting units, and transact accounting, balance accounts and reimbursement for them.

The subjects of agent accounting are the intermediary organs, which have been approved to be established and involved in agent accounting businesses, including accounting firm, agent accounting company as well as other intermediary organs that have the qualification for agent accounting.

The objects of agent accounting are the independent accounting units that do set up accounting organ, or do not have full-time accountants in relevant organs, e.g., small economic organization, individual businesses, etc. that shall set up accounts.

The contents of agent accounting are mainly transacting accounting, balance accounts, reimbursement and other businesses on behalf of the independent accounting units.

The nature of agent accounting is a kind of social accounting service activity, a manifestation of socialization and specialization of accounting jobs.

Agent accounting, when shown on the aspect of law, clarify and specify the rights-obligations relationship between the entrusting and the entrusted parties through signing the commission contracts.

Regular agent accounting could not only save the company costs, but also keep secrets for the enterprise operation so as to protect the business secrets of the company.

Why you need agent and outsourcing accounting?

  • 1. Professional financial companies have handled a lot of company registration and accounting businesses, and are more experienced. Newly established companies need to run some processes for registration, account establishment, social insurance, initiation of accumulation fund, for which some financial companies could handle, which would save time and material preparation.
  • 2. Quality and credit guarantee. In case of faults or wrongful conducts of the accountant employed by the company ( including part-time accountant ) that generate fine due to tax payment omission, deferred tax declaration, which bring losses to the entrusting company, the accountant shall generally not burden the losses.
    However, the agent accounting company could make corresponding stipulations in the agent contract, regulating that, if the accountants of the agent accounting company are not familiar with the tax declaration term for the newly established enterprise, the agent accounting company shall burden the responsibilities for fine from deferred tax declaration.
  • 3. Low service charge. If a small or medium-sized enterprise establishes the accountant posts, generally, one accountant would have a monthly salary of about 2000, not including insurance fees such as “five social insurance and one housing fund”, or welfare expenses. The finance chief could have a monthly salary of up to 4000 or 5000.
    While for agent accounting implemented by accounting firm, an enterprise could pay the salary amount equals to one or less than one accountant, but to enjoy professional services from several accountants.

How to choose a regular agent accounting company?

  • 1. Business license. Regularly registered accounting companies shall have the business license issued by the industrial and commercial bureau. An agent accounting company is unreliable if not having a legal business license.
  • 2. Agent accounting qualification. General companies involved in pure agent accounting businesses shall have the “agent accounting qualification certificate” issued by the Finance Bureau.
  • 3. Check the office environment. Regular agent accounting companies shall have fixed office place and office equipment independently bought or rented. A company without a office place is untrustworthy.
  • 4. Check the company staff. Companies involved in pure agent accounting businesses generally have a small scale and not many employees. However, they shall have basic employees, such as manager, outworker, book keeping accountant, audit accountant, etc.
  • 5. Check the hardware equipment. With further development of accounting computerization, computer accounting had basically replaced the manual accounting. Thus, general agent accounting company would use computer for accounting, install financial software, and allocate relevant equipment such as voucher printer, card reader, financial binding machine, etc. The computers shall have access to the Internet, in order to carry out online tax declaration and other businesses.

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