Setting up a WFOE in China takes months, but the immediate 60 days before the launch — the period when the business license is issued, the company infrastructure is activated, and the first employees start work — is the most critical. A company that’s not prepared for what happens in those 60 days loses time, wastes money, and starts operations on a shaky foundation.
Here’s a day-by-day checklist of what needs to happen and when you need to start each item to be ready.
Day 0: Business License Issued
The business license is issued by the Administration for Market Regulation. The license contains the company’s unified social credit code — the tax registration number, the organization code, and the business registration number, now combined into a single 18-digit code — the company name, the legal representative, the registered capital, the establishment date, and the business scope. The license is the foundational document — everything that follows depends on it.
On the day the license is issued, order the company chops. The chops are the official company seal, the financial seal, and the legal representative’s seal. Go to a government-authorized chop engraver — not a street-side key shop — with the business license and the legal representative’s identification. The engraving takes two to three working days. Start the chop engraving on day 0 so the chops are ready by day 3.
Also on day 0, identify the bank for the corporate account. Contact the bank’s corporate account department, get the account opening checklist, and schedule the site visit. The bank selection should have been decided before day 0 — the company should have met with several banks, compared the fees and the services, and selected the bank — so that the account opening process can start immediately.
Day 1-3: Tax Registration
The tax registration is done at the tax bureau responsible for the company’s registered address. The registration requires the business license, the company chops — or the legal representative’s identification if the chops are not yet ready — the legal representative’s identification, the financial officer’s identification, the office lease contract, and the tax registration forms.
The tax bureau issues the tax registration certificate — or, increasingly, the tax registration is electronic and the certificate is a digital document — and assigns the tax categories: the VAT classification — small-scale taxpayer or general taxpayer — the corporate income tax registration, and the other tax registrations.
The tax bureau also registers the company for the fapiao system — the system for issuing VAT invoices. The fapiao registration requires a separate application, and the tax bureau may require a site visit to the company’s office before approving the fapiao registration. The fapiao registration is critical — the company can’t issue invoices to customers until the fapiao system is set up, and customers expect invoices.
Day 3-5: Bank Account Opening
With the chops ready by day 3 and the tax registration complete, the bank account opening can proceed. The legal representative — or the authorized representative — visits the bank with the business license, the chops, the tax registration certificate, and the legal representative’s identification. The bank verifies the documents, records the chop specimens, and schedules the site visit.
The bank’s site visit to the company’s office is typically scheduled within a few days of the account opening appointment. The visit is brief — the bank’s staff confirms that the office exists, that the company sign is displayed, and that the office is a genuine business premises — and prepares the site visit report. After the site visit, the bank processes the internal approvals and activates the account.
The account is typically active within one to two weeks of the account opening appointment — by day 10 to day 14. The company receives the account number, the online banking USB keys, and the password for the online banking system. The online banking is tested with a small transfer — the company transfers a small amount from the parent company’s account or from the legal representative’s personal account — to confirm that the account is receiving funds.
Day 5-10: Social Insurance and Housing Fund Registration
The social insurance registration is done at the local social insurance bureau. The registration requires the business license, the company chops, the legal representative’s identification, and the employee register — even if the company has no employees yet, the company must register as an employer. The social insurance registration generates the employer’s social insurance number, which is used for the monthly contribution reporting.
The housing fund registration is done at the local housing fund management center. The registration requires the same documents as the social insurance registration and generates the employer’s housing fund account number.
The social insurance and housing fund registrations are done in parallel with the bank account opening — the registrations don’t depend on the bank account — and should be completed as soon as possible after the business license is issued. A company that delays the social insurance registration until after the first employees are hired discovers that the employees can’t be enrolled in the social insurance system until the employer is registered, and the delay takes time that the company may not have if the first employees are starting work immediately.
Day 10-20: First Employee Onboarding
The first employees — the country manager, the accountant, the administrative assistant — are onboarded during the second and third weeks. The employment contracts are signed using the company’s chops — which are now ready — and the employment documentation is filed. The employees are registered with the social insurance bureau and the housing fund center, and the first contribution payments are scheduled.
The onboarding period is when the employment handbook, the company policies, and the HR procedures are established. The company that wrote the employment contracts but didn’t prepare the handbook and the policies before the launch discovers that the new employees have questions that the company can’t answer — what’s the leave policy, what’s the expense reimbursement policy, what’s the travel policy — and the answers are being made up as the questions are asked.
Day 15-25: Accounting System Setup
The accounting system — the software that records the company’s transactions, generates the financial statements, and produces the tax returns — is set up during the third and fourth weeks. The accounting system must be compliant with Chinese accounting standards — the China Accounting Standards for Business Enterprises, the CASBE — and must produce the chart of accounts, the general ledger, and the financial statements in the format required by the tax authorities and the company law.
The accounting system is set up by the company’s internal accountant or by an external accounting firm. The external accounting firm is the more common choice for a new WFOE — the cost of a part-time external accountant is lower than the cost of a full-time internal accountant, and the external firm’s expertise reduces the risk of accounting errors in the first months.
The accounting system setup includes the opening balance — the initial capital contribution from the foreign parent company, deposited into the company’s capital account and transferred to the basic account — and the chart of accounts. The opening balance is the starting point for the company’s financial records, and the accuracy of the opening balance is the foundation for all subsequent accounting.
Day 20-30: Capital Contribution and Capital Verification
The foreign parent company contributes the registered capital to the WFOE. The contribution is deposited into the WFOE’s capital account — a special account for capital contributions — at the bank. The deposit is supported by the capital remittance documentation — the bank transfer record showing the amount, the currency, the remitter, and the purpose of the remittance as “capital contribution.”
The capital verification report is prepared by a Chinese accounting firm. The accounting firm examines the capital remittance documentation, the bank statement showing the deposit, and the company’s articles of association to confirm that the capital was contributed by the shareholder and that the contribution matches the registered capital amount and the contribution schedule. The capital verification report is the evidence that the registered capital has been contributed, and it’s required for the company’s annual filing and for certain government approvals.
Day 30-45: Operational Launch
By day 30, the company should have the bank account active, the social insurance and housing fund registrations complete, the first employees onboarded and enrolled in the social insurance and housing fund systems, the accounting system set up, and the capital contributed and verified. The company is now legally and operationally ready to start business.
The operational launch — the first customer engagement, the first supplier order, the first invoice — starts in the period from day 30 to day 60. The company that planned the 60-day timeline and executed it methodically starts the operational launch with the infrastructure in place. The company that didn’t plan the timeline discovers, during the operational launch, that the bank account isn’t active, that the fapiao system isn’t set up, that the social insurance registration isn’t complete, and that every operational step is blocked by an administrative prerequisite that should have been completed weeks before.
Day 45-60: Compliance Review
The compliance review is a check of the company’s administrative and regulatory status at the end of the 60-day period. The review confirms that the business license information is correct and current, that the bank account is active and the online banking is working, that the tax registrations are complete, that the fapiao system is set up and working, that the social insurance and housing fund registrations are complete and the first contributions have been paid, that the employees are employed under signed employment contracts and are enrolled in the social insurance and housing fund systems, that the accounting system is set up and the first transactions have been recorded, and that the capital verification report has been prepared.
The compliance review catches the items that were missed — the registration that was started but not completed, the document that was requested but not filed, the payment that was scheduled but not made. The review should be conducted by a person who’s not responsible for the day-to-day compliance tasks — the company’s external accountant, the company’s legal advisor, or the parent company’s financial controller — so that the review is independent of the people who did the work.
