What Bookkeeping Records Must a WFOE Keep in China?

TL;DR

• A WFOE should keep more than invoices. Contracts, bank proof, approvals, payroll files, tax returns and reconciliation schedules are all part of the evidence trail.
• Good records make tax filing, audit, annual reporting, profit repatriation and deregistration easier.
• The practical rule is simple: if a number appears in the accounts, the company should be able to show where it came from.

If your files are scattered across email, chat and personal folders, talk to ChinaBizPro before missing records become a tax or audit problem.

Core record categories

Start with contracts and commercial documents. Keep customer contracts, supplier contracts, service statements, purchase orders, delivery proof and amendment records. These explain why money moved and what was delivered.

Next keep invoice and tax documents. This includes issued fapiao, received fapiao, VAT filing schedules, CIT prepayment records, IIT withholding records, annual reconciliation files and tax payment proof.

Bank and payment records are equally important. Keep bank statements, payment slips, receipt proof, foreign exchange documents, cross-border payment approvals and bank communication for unusual transactions.

Payroll and HR records should support salary, IIT, social insurance, housing fund and employee reimbursements. Keep employment contracts, salary sheets, attendance or leave records where relevant, reimbursement forms and approval evidence.

Accounting records

A WFOE should maintain accounting vouchers, accounting books, financial statements, fixed asset registers, reconciliation schedules and working papers used for filings. The accounting entry is only the summary. The support behind it is what makes it defensible.

For expenses, keep the business purpose clear. A valid fapiao helps, but it does not replace the need to show that the expense belongs to the company and relates to the business.

How long should accounting records be retained?

China's Measures for the Administration of Accounting Archives provide a retention schedule. The commonly relevant periods below should be treated as minimum archive periods, counted and applied under the detailed rules rather than from the date someone scans a file.

Record	General archive period under the schedule
Accounting vouchers	30 years
General ledgers, detailed ledgers, journals and other accounting books	30 years
Monthly, quarterly and semiannual financial accounting reports	10 years
Annual financial accounting reports	Permanent
Bank balance reconciliation statements and bank statements	10 years
Fixed-asset cards	5 years after the asset is retired and cleared

Tax rules generally require tax-related books, accounting vouchers, statements, tax-payment vouchers and other relevant materials to be retained for ten years unless another rule provides otherwise. Where several rules cover the same file, use the longer applicable period. Corporate, employment, customs, foreign-exchange, intellectual-property or industry rules may impose a different period.

Do not destroy records simply because the scheduled period appears to have expired. Documents connected with an unresolved receivable, tax review, litigation, employee dispute, asset, investigation or other pending matter should remain available. The company should approve and document any archive destruction rather than allowing users to delete folders informally.

Digital storage

Digital storage is useful, but the company should have a controlled naming and folder system. Files should be searchable by month, supplier, customer, tax type or transaction. Avoid leaving key evidence only in one employee's inbox.

Use consistent names: year-month, counterparty, document type and amount. Keep final filed versions separate from drafts. If a document supports a tax position, link it to the relevant filing schedule.

Electronic accounting archives should remain authentic, complete, usable and readable throughout the retention period. Keep access controls, backups and a migration plan when systems or providers change. Saving only a link to an invoice portal is risky because the account or download may no longer exist years later.

A simple folder structure

For a small WFOE, a practical structure is enough: one folder for each month, subfolders for sales, purchases, bank, payroll, tax, reimbursements, contracts and management approvals. Keep annual folders for financial statements, audit files, annual reporting, CIT reconciliation and major corporate documents.

The file system should survive employee turnover. At least two responsible people should know where final records are stored, how they are named and which documents are still missing.

Common mistakes

The first mistake is keeping only fapiao and not the contract or payment proof. The second is saving files by person instead of by company process. The third is letting headquarters keep the agreement while the China accountant sees only the invoice. The fourth is not archiving final tax returns. The fifth is losing reimbursement support after employees leave.

The sixth is applying one ten-year rule to every document even though key accounting archives require 30-year or permanent retention. The seventh is keeping data in a finance system without testing whether it can be exported in a complete, readable form when the subscription ends.

For the monthly workflow, see WFOE accounting and compliance checklist. For invoice evidence, read why fapiao matters.

FAQ

Is a fapiao enough support for an expense?

Usually not by itself. The company should also keep evidence of business purpose, approval, payment and the underlying transaction.

Can records be stored digitally?

Yes, subject to the applicable archive conditions. The company should keep records authentic, complete, readable, backed up and available for export and review throughout the required period.

Who should own record keeping?

Finance should coordinate the system, but sales, operations, HR and management must provide source documents on time.

Official references

• National Laws and Regulations Database - Accounting Law and related legal texts.
• Ministry of Finance: Measures for the Administration of Accounting Archives