The licensing application process is bureaucratic and time consuming, so unless you have plenty of time on your hands and know what you are doing it’s probably best to hire a professional firm to carry this out for you. It normally takes about 2-3 months from start to finish to complete all necessary paperwork and to receive your RO license.

Local staff have to hired via an organization known as "FESCO" (there are regional variations and competing companies with different names but they're all essentially the same), which is unfortunately still a mandatory requirement. The RO pay the staff salary, plus their mandatory welfare payments, and a small service fee to FESCO, who then ensure the relevant money are properly dispersed to the various welfare departments and that the individuals file is properly credited.

RO are not permitted to invoice themselves, and are not supposed to be used as 'profit centers' in their own right. Generally such offices will bill clients from Hong Kong or an alternative location (so the money isn't invoiced from China at all) and receive money there. Under these circumstances some RO owners strike up a friendly relationship with a local Chinese company to bill on their behalf, and then receive the RMB in cash.

Representative Offices are generally subject to tax at a rate of 10% - against monthly overheads - including salaries, and all normal overheads, most of which will be fixed costs. This amount needs to be calculated, filed, and paid monthly. Most RO out-source this and ask their accounting consultants to handle the Expat Individual Income Tax and Staff Payroll as well. RO are also subject to annual audits, China having a calendar fiscal year. Annual licences also have to be renewed, and upon expiry of the licence (usually 2-3 years) the RO is required to re-register - going through the whole application process again.