The Ongoing Costs of Running a Company
Author: Junanda ConsultingReviewed by: Junanda Service Team2026-09-19
Many founders count only the registration fee when setting up, assuming a few thousand yuan is enough. The real surprise comes afterwards: as long as the company exists, it generates costs whether or not it trades. Working out the cost structure in advance tells you whether the business is worth doing, and when to expand or pull back. This article breaks ongoing costs down by category and gives a framework for estimating them, without quoting amounts, because every figure depends on the region, the industry and the service provider's quotation.
Fixed Administrative Costs
These costs have little to do with trading; they arise as long as the company exists.
- Registered address or office rent: amortisation of your own premises or rental payments. Where a park or incubator address is used, a maintenance fee is usually charged annually and must be renewed on expiry.
- Bookkeeping agency fee: the monthly or annual service fee for outsourced bookkeeping. The quotation depends on transaction volume, the number of documents and whether export tax rebate work is involved, as quoted by the service provider.
- Bank account management fee: account management, online banking, SMS notifications, printing of receipts and interbank transfers, charged on each bank's terms.
- Seal and licence maintenance: making and safekeeping seals, updating licence information, and annual fees for electronic seals or digital certificates.
- Accounting software and tools: subscriptions for bookkeeping software, the invoicing system, electronic archives or cloud storage.
- Other: courier charges, printing consumables, the annual enterprise report and similar items.
Fixed costs are rigid: they do not fall away when business pauses, which is why a dormant company still costs money.
People Costs
People are often the largest item, and total cost matters more than take-home pay.
- Wages: base salary, performance pay, bonuses and year-end payments.
- Employer portion of social insurance and housing fund: this differs from the employee's withheld share, so estimate on the employer's basis. Specific ratios and the floor and ceiling of the contribution base follow the latest local rules.
- Recruitment and training: recruitment channel fees, interview time, onboarding and skills training.
- Employment-related costs: desks, equipment, meal and transport allowances and other per-head costs.
- Hidden costs: handover, repeat recruitment and business disruption caused by turnover.
Each additional employee usually costs noticeably more than their monthly salary, so apply a reasonable uplift when estimating.
Tax Costs
Tax cost is not only the tax paid; it includes the price of compliance.
- The effective burden of each tax: enterprise income tax, VAT and surtaxes, stamp duty, property tax or urban land use tax (where owned premises or land are involved), and withheld individual income tax. Rates and the conditions for relief follow the tax law currently in force and the latest official rules, and vary considerably by taxpayer status, industry and scale.
- Invoice-related costs: the invoicing system or service fee, printing and mailing of documents, and handling voiding and reversal.
- Settlement and adjustment risk: adjustments and additional tax at the annual CIT settlement arising from non-compliant deduction vouchers or misallocated costs and expenses — avoidable, but often overlooked.
- Late costs: late payment surcharges and fines for filing or paying late — a straightforward loss.
The room to improve tax cost comes from claiming what is properly deductible and taking up what is available, not from under-reporting. Keeping compliant vouchers, applying reliefs promptly and filing on time are themselves ways of reducing cost.
Compliance and Professional Service Costs
These grow as the company grows.
- Annual audit: required for certain types of company or in certain situations, such as financing, government projects or industry regulation. Whether mandatory follows the rules currently in force.
- Licence annual review and renewal: periodic review, reissue and renewal of industry operating licences and qualification certificates.
- Trademarks and patents: registration fees, annuities and renewal fees, plus possible later spending on review of refusals and oppositions.
- Legal and advisory services: retained legal counsel, contract review, labour and HR advice, and specialist compliance support.
- Data and information security: companies handling customer data must also consider compliance assessment and security investment.
Operating and Occasional Costs
Operating costs move with the scale of the business and are relatively flexible.
- Platform commissions: commissions and technical service fees on e-commerce, delivery, travel booking and similar channels.
- Promotion: advertising, content promotion, influencer cooperation, exhibitions and samples.
- Logistics and warehousing: couriers, trunk haulage, warehouse rent and returns handling.
- After-sales and warranty: returns, repairs and service during the warranty period.
- Payment and settlement: payment gateway fees, cross-border settlement fees and exchange gains and losses.
Occasional costs do not arise every year, but when they do they are not small, so set aside a reserve.
- Company changes: changes of address, business scope, equity or registered capital.
- Deregistration: tax clearance, liquidation, public notice and each step of the process.
- Tax-related matters: back filing, lifting abnormal status, assembling rebate materials.
- Disputes: litigation and arbitration, debt collection, labour disputes.
- Sudden compliance events: responding to an inspection, a complaint or a rectification order.
Summary of Cost Items
| Cost item |
Frequency |
Controllability |
Suggestion |
| Registered address or rent |
Monthly / annual |
Medium |
Choose premises to fit actual need; avoid renting space that is too large |
| Bookkeeping agency fee |
Monthly / annual |
High |
Organise documents properly to reduce catch-up work |
| Bank account fees |
Monthly / annual |
Medium |
Reduce the number of accounts; cancel unnecessary value-added services |
| Social insurance and housing fund |
Monthly |
Medium |
Contribute properly on the actual workforce to reduce back-payment risk |
| Wages and recruitment |
Monthly |
Medium |
Define roles clearly and control turnover |
| Taxes |
Monthly / quarterly / annual |
Medium |
Use compliant reliefs fully, keep complete vouchers, file on time |
| Audit and licences |
Annual |
Medium |
Track expiry dates to avoid expedited or re-application costs |
| Trademarks and patents |
Annual / irregular |
High |
Keep an expiry reminder register and renew on time |
| Platform commissions and promotion |
Monthly |
High |
Review return on investment and stop losses promptly |
| Logistics and warehousing |
Monthly |
High |
Compare prices and buy centrally; improve inventory turnover |
| Company changes |
Occasional |
High |
Combine changes into a single filing |
| Deregistration |
One-off |
Medium |
Decide early so that missing materials do not push up the cost |
A Cost Framework to Use Before You Set Up
No figures are given, only the calculation basis. Fill in the blanks and the result is close to reality.
- Total annual fixed cost = annual address or rent + annual bookkeeping agency fee + annual bank account fee + annual software and certificate fees + seal and licence maintenance. This is what you pay even without trading.
- Total people cost = Σ(monthly salary for each role × 12 × employer comprehensive factor) + annual recruitment and training spend. The factor covers the employer's social insurance and housing fund contribution and employment-related costs, set according to local practice.
- Variable cost ratio = (platform commissions + promotion + logistics and warehousing + payment fees) ÷ operating revenue. Multiply expected revenue by this ratio for total variable cost.
- Tax basis = estimated VAT and surtaxes and income tax according to your taxpayer status and industry; rates and reliefs follow the rules in force.
- Break-even revenue = (fixed cost + people cost + reserve for occasional costs) ÷ (1 − variable cost ratio − comprehensive tax ratio).
- Margin of safety = expected revenue ÷ break-even revenue. Below a certain multiple, the ability to absorb fixed costs is weak, and scale or pace should be reassessed.
- First-year cash peak: add setup spending, deposits, the first batch of inventory and the first few months of fixed cost, and confirm whether your own funds carry you until cash flow turns positive.
The three items most often underestimated in the first year are the bookkeeping agency fee, the registered address fee and social insurance and housing fund contributions. The first is tied to document volume and complexity and tends to rise as the business grows; the second is charged annually and must be renewed on expiry; the third becomes a monthly, rigid cost from the moment you employ anyone.
Common Pitfalls
- Deciding on the basis of "how much does registration cost" alone, ignoring the annual fixed costs of keeping the entity alive.
- Handing invoices and statements to the bookkeeping agency without keeping your own records, so that rework increases the service fee.
- Neither deregistering nor maintaining the company after business pauses, paying fixed costs all the while and adding late-filing risk on top.
- Assuming that "no profit means no need to worry about tax", overlooking filing obligations and voucher retention and the adjustment costs that follow.
- Leaving trademarks and licences untracked until they expire, when re-application costs far more than renewing on time.
This article is general business information prepared by Junanda Consulting. Specific policy positions, tax rates, deadlines and procedural requirements are subject to the latest official versions issued by the competent authorities. To understand how these requirements apply to your business, please contact Junanda Consulting for further information and support.
