Cost comparison
Usually hiring a foreign-related professional accountant is quite expensive for a foreign invested enterprise in China. However if you choose to cooperate with an outsourcing firm and pay for fixed service charges monthly, can also be rendered higher quality accounting services.
In China the enterprise need undertake below expenditures for employee besides salary.
-
Social insurance fund and housing fund
-
Expenses for office equipments and office rent
-
Transportation allowance and lunch allowance
-
Annual bonus and other allowances
Example
Below table is a cost comparison between hiring an accountant and cooperating with an outsourcing firm, the service charge and salary are both supposed to be RMB 8,000 monthly.
|
Expenditure |
Outsourcing firm |
Hiring an accountant |
|
Service charge/Annual |
96,000.00 |
|
|
Salary/Annual |
|
96,000.00 |
|
Social insurance fund/Annual |
|
35,520.00 |
|
Housing fund/Annual |
|
6,720.00 |
|
Office equipment and other expense/Annual |
|
5,000.00 |
|
Office rent/Annual |
|
20,000.00 |
|
Transportation allowance （10/day） |
|
2,760.00 |
|
Lunch allowance （20/day） |
|
5,520.00 |
|
Annual bonus （2-months salary） |
|
16,000.00 |
|
Total |
96,000.00 |
187,520.00 |
In addition to the expenditure mentioned above, hiring an accountant may involve other hidden costs such as paid maternity leave，severance packages，injury risk，administration costs and others. These uncertain expenditures would bring financial and operational risk to enterprise in potential.
Other advantages
Outsourcing firm also has other advantages as below
Advantage
|
Outsourcing firm |
Hiring a accountant |
|
|
Professional service |
it is equivalent of hiring a professional team for accounting job |
one accounting person can’t take care the whole accounting progress and all fields |
|
Continuity of job |
ensure continuous work in accounting by service team |
company leaving and long vacations will interrupt the accounting job and may cause significant financial losses of company |
|
Risk avoidance |
clients could choose to clarify the related responsibilities in service contracts |
company should bear significant losses of taxation and fund which are caused by omission |
|
Supervision function by third-party |
play a better role for financial supervision and ensuring the benefits as independent third- party |
lack of independence and limited by internal relationships |
Our suggestion
By above comparisons it is clear to define that not only outsourcing accounting service has a huge advantage in cost, but also it could ensure the company’s smoothly operation and avoid risk. Thereby we strongly recommend that the small or middle-sized enterprise and start-up enterprise should take the outsourcing service as your first option in accounting.