How long does it take to withdraw the registered capital after it is paid? Will
April 28, 2024
2 CommentsWhat is registered capital,and what is the difference between paid-in capital system and subscribed capital system?
01 The difference between paid-in capital system and subscribed capital system
The subscribed capital system refers to the practice where,when registering a company,the recognized registered capital can be set with a deadline to be paid in installments,without the need to pay the full amount upfront.
The paid-in capital system means that the amount of registered capital recorded on the company's business license must be consistent with the amount of funds in the bank's capital verification account.
Before March 2014,it was the paid-in capital system,where the registered capital written on the business license required shareholders to transfer funds from their personal accounts to the company's public account according to their respective contribution ratios in the form of investment.The bank would then issue a capital verification report,which would be handed over to the auditing company to produce an audit report.
After March 2014,the new "Company Law" changed the paid-in capital system to the subscribed capital system,and the amount of registered capital no longer needed to be actually paid in.We would agree in the company's articles of association that the time for the registered capital to be in place could be 10 years,20 years,or even 99 years,and in some places,it could even be written as long-term.During this period,if there is no debt involved,many companies do not need to actually pay in the subscribed capital when they are deregistered.
Let's look at the recent revision plan of the "Company Law," which changes the subscribed capital system to a limited-term paid-in capital system.The scope of application includes not only newly established companies but also existing companies,and it requires the registered capital to be fully paid within five years from the establishment of the company.
02 What is registered capital?
When registering a company,the issue of registered capital will always be encountered.
Registered capital,also known as statutory capital,is the total amount of contributions or subscribed shares recognized by all shareholders or initiators as stipulated in the company's articles of association,and is legally registered with the company registration authority.In layman's terms,registered capital is the money that shareholders contribute to the company's account for its operation and development.Once this money is transferred to the company's account,it becomes the company's money and is no longer your personal money.This fund is meant to be spent by the company and can only be used in the company's name.
How long after the registered capital is paid in can it be withdrawn,and what issues might arise?
01 How long after the registered capital is paid in can it be withdrawn?
We can divide the company's spending into two directions: one is spending outwards,and the other is spending inwards.
What is spending outwards?For example,if our company rents a property or purchases equipment,as long as we can obtain an invoice with the company's name and tax number as the header,it can be considered an expense of the company.If we cannot get the invoice,this money cannot be taken out from the company's account,and even if it is taken out,it cannot be accounted for,which is very uncomfortable to have hanging there.Therefore,for spending outwards,it is essential to get the invoice back.
There is another way called spending inwards,such as paying salaries,bonuses,and social security contributions to employees.These are considered inwards spending,and we do not need to get the invoice back,nor can we get it back.
However,for inwards spending,personal income tax must be declared.
Only after declaring personal income tax for employees can it be considered an expense of the company.Therefore,the registered capital can be spent by the company,but for outward spending,an invoice must be obtained,and for inwards spending,personal income tax must be declared.
Some bosses ask,can I take this money out first for personal use?
It is possible to take it out,but after taking it out,the accountant can only record it as a loan in the accounting.However,we say that if there is a loan,there must be a repayment.The money you borrow from the company's account must be repaid later,and the period cannot be too long.
Generally,loans cannot span across years and must be repaid before the end of the year.If it is not repaid and spans across years,it may generate personal income tax in the following year.If it is a shareholder's loan and is not repaid across years,it is considered a shareholder's dividend and is subject to a 20% personal income tax.Will there be any issues with 02?
Although the legal representative of the company is oneself,and the company and its registered capital are all one's own,the registered capital cannot be taken out and used casually.Indiscriminate use of the registered capital is easily identified as capital flight.
For instance,if there is no accounting,no bookkeeping,and no legitimate reason for withdrawing the registered capital,this is considered capital flight.
The consequences of capital flight are mainly reflected in the annual company inspection.From the beginning of March to the end of June each year,when participating in the company's annual inspection,it is generally not possible to pass.Moreover,shareholders who have not fulfilled their payment obligations as stipulated in the articles of association will also face default liability and corresponding fines.