|Why Use Us?|
Why You Should Use a Lawyer to Establish Your Company
Many foreign investors use Chinese commercial companies to assist them with the establishment of their businesses in China. Often this decision is made in an attempt to save costs and is based on the mistaken belief that lawyers will charge exorbitant fees to do exactly the same thing. This is a fallacy. In fact, all these commercial companies do is help with the registration of the new company. A few commercial companies train their secretaries in the registration process, but many companies do not and some even employ free lance operators who have dubious or no qualifications. The risk is that the services offered by these companies may be unreliable and possibly illegal. At Jay and Shaw our fees are comparable with those of the commercial companies, and in some instances, even more cost effective than some.
Establishing a business in China involves much more than registration. A business structure has to be established, legitimate employment contracts have to be written, the company has to choose a salary structure, and the scope of the business has to be described within guidelines. There are legal implications in all these areas which can only be addressed by lawyers. A lawyer will ensure that the company’s Articles of Association and investment agreements are clearly written and legally enforceable. All this work is beyond the capabilities of the commercial companies who are not lawyers.
Lawyers can also advise on the correct description of the scope of a business which can give the business enormous tax benefits. For example a software company which devotes some of its energy to research and development can be classified as a high technology company. High technology companies pay just 15% capital income tax, when all other companies pay 25%.
Companies that are located in high technology industrial zones enjoy generous tax advantages and qualify for the tax stimulation package. Such companies do not pay any capital income tax for some years, and then only half the normal business tax for some years afterwards. These companies may also be eligible for a refund of taxes as a reward for their activities in high technology development.
When a lawyer is engaged in the initial establishment of the company, the benefits of a properly constructed company will be immediately apparent from the smooth registration of the company, the expedient signing of the well constructed, legitimate employment contracts, to the first day of trading. In addition a lawyer will assist the company with all its future legal work as he has the benefit of a full knowledge and understanding of the structure of the company. He will be able to skillfully navigate the company through what could be a potential minefield of Chinese law.