Shocking news for Startups in Beijing- No Virtual Address Accepted

Shocking news for Startups in Beijing- No Virtual Address Accepted

In Beijing, a new rule has come into force where the business licenses will be suspended if start-up business uses the virtual address for registration purpose. The Administration for Industry and Commerce have stopped accepting business registration applications which uses the virtual address. However, there is no official announcement.

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What were the problems of Virtual address?

  • There were tax issues created by several companies as they operated from virtual address
  • There are discrepancies in company registered address and working address

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What is the new requirement in Beijing?

All companies must provide a physical location address while applying for business registration.

Who will be impacted by this new rule?

It is going to impact startups and co-working industry hugely.

The business registration process will be expensive for start-up companies as they need physical space to register whether they work in the same location or from a different location.

The new policy will affect the co-working space companies as startup company will restrict using space as it can no longer help the start-up companies with business registration.

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What is company registration process in relation to Address?

Basically, a Startup company uses 3 addresses in the whole process of operating a business in China. Generally, a virtual address is used during company registration.  Secondly, if an entrepreneur is willing to make work permit and work visa showing himself/herself as the employee of own company, then a physical office address must be used during this process. Usually, an officer visits the office space to confirm if the entrepreneur has booked any space in the company name. Thirdly, a startup can show the same registered address or a new working address to its client once it starts operating the business.

With regards to the new rule in Beijing, now Government has stopped accepting virtual address during company registration process. However, there is no such restriction in other cities of China.

If you need any information related to company registration, please contact Kudosbay at support@kudosbay.com.

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