What do I need to file on the US side if I want to set up a subsidiary (software development team) in China?


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Here is my situation, I'm running a single-person C-Corp in the US. (I'm a US permanent resident). My company is running several content-rich websites (focus on US market), the advertising revenue is the main income source.

Now, I'm considering to establish a subsidiary in China and hire some developers and editors there, so no income will be generated from this subsidiary, only expenses.

My question is, on the US side, do I need to apply any license to do so? And what paperwork do I need to file? Is there a checklist for that?

Thank you!

Foreign Subsidiary Corporation

asked Nov 8 '12 at 09:16
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Silent
111 points
  • A lot of tax related paperwork, on both sides. Talk to your CPA about it. – Littleadv 6 years ago

2 Answers


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There is a good answer here on what you need to file on the China side.

The short answer on the US side is you generally need to file nothing to open up an overseas subsidiary. It's like buying shares in a foreign company. You don't need the government's permission to buy shares in Nestle (a Swiss company). You just buy them. No license required.

You may have income or gains through holding (shares in) a foreign entity. The tax authorities care about that. So it will matter a lot for your accounting. You don't need a US license to get started: it's all about what you have to file for China.

answered Aug 30 '13 at 23:47
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Kamal Hassan
1,275 points

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IF you are directly hiring people in China, then you must register as a WFOE which means a lot of upfront capital. At the moment the govt is cracking down on labor laws and as a single person C-corp, unless you have someone trusted running the china - side, you are exposed to a lot of potential liability, not to mention potential IP infringement ... for example how do you know the employees are doing original work instead of copying elsewhere and claiming credit? The US side (incorporating subsidiary as accounting entity) is relatively simple by comparison.

The alternative is to ask the editors/writers to form a domestic company (which is much less paperwork, they can register even out of own home even if technically unlawful or unzoned) and you have a services contract ... preferably out of HK because at least English jurisprudence has half a chance of being comprehensible.

answered May 1 '13 at 13:07
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Drllau
501 points

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Foreign Subsidiary Corporation