The most important step that many people vacillate at the beginning of their business is to decide the registration address. Apart from finding a suitable address; rental fee is another important aspect to consider. As a one-person company, you still need to bear the expenses even though you have the luxury to choose your work location. Don’t worry, this articles will shed light the most cost-saving option for you!
Description 1: Understanding the difference between residential and business expenses
1. Housing tax will increase from 1.2% to 3%
2. Land price tax will increase from 0.2% to 1% (progressively up to 5.5%)
3. The water fee is the same, but business tax will vary
4. Electricity bill will increase from $1.63 to $2.12 per unit
Description 2: What type of exemptions/benefits are available
1/6 business land usage
If the residential house is used as a tax registration place, you can apply for 1/6 of the land used for business purpose. In this way, only 1/6 of the house tax and land value tax will be calculated at the business tax rate, and the remaining 5/6 will be calculated at the original household tax rate.
※This method is easy to verify, but the application should not be less than 1/6 of the business usage.
Apply to maintain the home tax rate
This plan is suitable for online auction operators to register their own home as a business address. If there is no storage of goods, they can apply to maintain the home tax rate. However, if there is storage of goods; the first option of 1/6 business land usage will be applicable.
※This method is more difficult to verify. However, for some online auction dealers of daily necessities, the approval rate is higher due to the nature of the products (it is more difficult to define the products you are selling).
Register your company name in water bill
Residential and business water charges are the same. So don’t use your personal name for the water bill because you will not be able to deduct your business tax. It is advisable to use your company name for the benefits of tax offsets.
Register your company name in electricity bill
The consideration of changing the company name for electricity bill is the same as the water bill. This can be used to deduct the business tax too. Electricity fee for business purpose may appear more expensive at the beginning. But you will save a huge amount in the long run, if you carefully estimate your electricity usage for business purpose. It is certainly cheaper than residential usage. (Tricky point to consider!)
Description 3: What are the ways to register business address
Personal, relatives, friends or shareholders ‘s accomodations
If there is no additional capital in the early stage of the business, you can consider using relatives and friends’ accomodations for business use. You can then apply for 1/6 of the business land to reduce tax burden, which is a fairly cost-saving choice. Please remember though in the case of free usage, it is recommended to sign a lease contract and specify the rent (such as NT$1000 per month). Otherwise it may be taxed in the future according to law, and the decision is still based on the normal price which is fairly expensive.
Personal, relatives, friends or shareholders’ business land usage
If there is no additional funds in the initial stage of your business, you can also register in the location where relatives and friends are using it for business purpose. Generally speaking, location that is already used as business purpose can register multiple companies, and the tax will not increase. But the threshold for how many business addressses can be registered in the same location should be in accordance with the tax jurisdications.
Rental Office
You can try to negotiate with the landlord for the registration place. If the rent is more than NT20,000, landlord will need to withhold 10% of the rent and pay the second-generation health insurance of 1.91% per month. You can try to negotiate with the landlord who is going to cover this extra fee. Based on the current scenario, it is mostly tenants who will cover the extra cost so you will need to consider this carefully.
Borrowed Address
If convenience if your main concern, you can choose the business registration address provided by the agent. Charges are around NT$2,500-$3,000 per month in Taipei. Your company can use this address as your business registration address. Services provided include letter collection, forwarding, and phone calls. The fax line is also provided. It resembles a mobile office. Of course, Fastart also provides this service, the price is NT$2,500/month).
Rent an Office
If you need a quiet office environment or have a small team, you can consider renting an office. Usually, the office renting service includes a registered address and comes with office hardware, which can save a lot of trouble.
Description 4: Which method is the most economical?
After the explanation of the different options above, I believe that readers should have fairly good understanding. Let’s see which way is more economical for different situations.
One person online auction
For this scenario, the most cost-saving option is to change your residence address to your business address. You are operating single person online business and there is no face-to-face need to meet customers. You may even have the opportunity to apply to maintain residence tax rate. It saves you a lot of cost.
One person business company
You will fall into this category if you are not 100% online sales. That is, you need to greet customers or sell products. Based on this scenario, you will be advised to rent an address.
Small team company
If you have a team, of course, renting an office package to register the address is definitely the most cost-effective way. However, many startups are working remotely so you can choose the option of borrowing an address.
Summary
In fact, for most cases, the most recommended option is to borrow an address. Why? Well, you need to take into consideration of the following points. First, if it is located in the home of your relatives and friends; it will surely cost you more in the long term. Second, if it is located in the home of your relatives and friends; it can possibly add to relationship pressure. Guests may visit the location and there may also be privacy issues related to mixing someone else home address to your business address. The option of borrowing an address can avoid the above potential problems. Fastart is well aware of the difficulties of starting a business, and we provide affordable registration rates for borrowing addresses, and you can choose from the best locations in Taipei. Welcome to our official website.
