Three Ways to Pay Your Own Social Insurance
Founders of one-person companies have three routes, with very different costs and benefits:
- Option 1: pay employee pension and medical insurance as a "flexible employment" individual — fully self-funded but with employee-level benefits;
- Option 2: have your own company pay the five insurances as salary — the employer share is tax-deductible as a cost;
- Option 3: resident pension and medical insurance as a fallback — cheapest, but clearly weaker benefits.
| Option | Monthly Cost (Hangzhou) | Key Benefit Notes |
|---|---|---|
| Flexible-employment employee insurance | ~1400-1800 CNY | High medical reimbursement, pension years accumulate |
| Company-paid five insurances | ~1800-2400 CNY | Includes injury/unemployment/maternity; employer share deductible |
| Resident insurance | ~300-600 CNY | Basic floor only, low reimbursement and pension |
For most OPCs, option 2 wins: it looks priciest, but the employer share reduces taxable income, and cities like Hangzhou and Chengdu subsidize 50% of it under their OPC policies.
Small-Scale vs General VAT Payer
Under 5M CNY annual revenue you default to small-scale status: a lower VAT levy rate, and under current incentives, monthly invoicing under 100k CNY is VAT-exempt. For most service OPCs, staying small-scale with quarterly filing is optimal, unless anchor clients demand special VAT invoices at high volume.
Booking Revenue and Cost Invoices
Two red lines: revenue must flow through the corporate account — long-term personal WeChat/Alipay collection is the most common audit trigger; and cost invoices must be genuine, with contracts and payment records backing service fees. Legitimate deductible costs include office and hosting fees, equipment depreciation, software subscriptions, and travel (with caps).
Common Audit Triggers
- Commingled accounts: paying personal credit cards from the company account;
- Perpetual zero filings: six-plus months of zero declarations despite real operations;
- Mismatched invoices: large consulting-fee invoices with no corresponding staff or deliverables;
- Shareholder loans spanning year-end: treated as dividends with 20% personal income tax.
Bottom line: OPC finance is not about saving tax — it is about drawing a clean line between personal and business money. The 200-300 CNY monthly bookkeeping fee buys exactly that line.