Small and medium-sized companies often opt to hire an accounting firm to assist them in maintaining accurate financial records. This decision is a wise one because bookkeeping is far from a simple task. It requires not only procedural expertise but also a thorough understanding of national tax laws, regulations, and local tax policies. In essence, it is a professional job that necessitates experience and meticulous attention to detail.
This is the primary reason why hiring a reputable accounting firm is so important.
According to Chinese law, individuals who wish to practice accounting must establish a company and obtain an accounting agency license. Additionally, the following requirements must be met:
- Employ a minimum of three full-time employees who possess a solid understanding of basic accounting principles and possess the necessary skills to independently handle routine accounting tasks.
- Maintain a reasonable staff configuration that adheres to regulations, ensuring the presence of field accountants, bookkeeping accountants, audit accountants, tax accountants, etc.
- The staff responsible for bookkeeping must be qualified accountants or above and should have a minimum of three years’ experience in the field.
- The accounting firm should have well-established internal operational norms.
Unfortunately, many mediocre accounting firms fail to meet these requirements. They often rely on extensive sales teams to secure business and attract clients with lower prices. Consequently, they cannot afford to hire qualified and experienced accountants to perform the work. Instead, they rely on inexperienced graduates or unqualified staff who have received only brief training.
These employees lack the necessary expertise to handle accounting matters effectively. Moreover, the high turnover rate within such firms often leads to unfavorable outcomes for their clients. Different employees working on the same accounting matter may handle it in entirely different ways due to knowledge gaps, poor management, insufficient training, or the absence of internal guidelines.
One often overlooked fact about accounting is that ordinary individuals often struggle to discern whether it is being performed properly and in accordance with industry standards. This means that people typically only realize their accountants’ grave mistakes when it is already too late. Business owners often have to invest additional time and money to rectify these errors.
Occasionally, we hear complaints from businesses that have been blacklisted by their local Administration for Industry and Commerce (AIC) because their accounting agency neglected to conduct the annual compliance check on their behalf. Others discover that their books are in disarray when seeking investors or pursuing mergers, despite initially hiring a “cheap” accounting firm.
While it is understandable for start-ups to seek cost control measures, compromising on professional services is not a viable long-term solution.
Relevant Regulations:
Article 36 of Accounting Law of the People’s Republic of China: Organizations that are not equipped to establish an accounting organization must entrust an approved intermediary to provide bookkeeping services and handle their accounting matters.
