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Registration of individual industrial and commercial households in China


Small private business refers to the family or households whose citizens have been approved and registered according to law and engaged in industrial and commercial operations within the scope permitted by law. In the case of personal business, they shall bear personal property, and in the case of the family business, they shall bear the family property.

Chinese individual industrial and commercial households

I.Introduction of Small private business

The characteristics of individual industry and commerce in terms of flexibility in the establishment and simple registration procedures have the following characteristics:

  • Small private business is a natural person or family engaged in industrial and commercial operations.
  • Natural persons engaged in Small private business must be registered and approved according to law. The registration authority of Small private business is the administrative authority for industry and commerce. After obtaining the business license, it can start operations after obtaining the business license. Small private business should also go through the registration formalities if it is to be transferred, merged, changed, or closed.
  • Small private business can only operate industries that are permitted by law or policy.

II.Difference between Small private business and sole proprietorship

According to the relevant provisions of the “Regulations on Individual Industrial and Commercial Households” and the “Law on Sole Proprietorship Enterprises”, individual industrial and commercial households and sole proprietorship enterprises have the following similarities and differences:

  • The number of employees in Small private business is limited. The number of employees must not exceed eight, including the operators themselves, helpers and apprentices. The sole proprietorship has no restrictions on the number of employees. It can be operated by only the investors or more than eight employees.
  • A sole proprietorship enterprise may establish a branch office or may appoint another person as the head of a branch of a sole proprietorship enterprise, but the sole proprietorship enterprise that establishes the branch institution shall bear the responsibility. According to regulations, Small private business cannot set up branches.
  • Investors and operators of Small private business must be the same person, that is, natural persons who invest in individual industrial and commercial households. Investors of a sole proprietorship enterprise may entrust or hire others to manage the affairs of a sole proprietorship enterprise, that is, ownership and management rights may be separated.
  • A sole proprietorship can become a shareholder of the company, thereby enjoying the rights and obligations of the company’s shareholders in the name of the company, and the small private business can only become a shareholder of the company as an individual investor.
  • The requirements of the sole proprietorship and Small private business in terms of the financial system and tax policy are also different. Sole proprietorships must establish a financial system for accounting. The Small private business is more controversial because of the complicated situation and whether it is necessary to establish an accounting system. From the actual situation, Small private business can establish account books according to the requirements of the tax authorities. If the tax department does not require it, it can not be accounted for.

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