Which type of enterprise is better to choose in the early stage of entrepreneurship?


It is not easy to start a business as a boss. Many entrepreneurs are confused when they choose the type of enterprise in the initial stage. I don't know how to choose the right type of enterprise?

In this issue, I will solve the confusion on the choice of enterprise type for entrepreneurs, so that we can register enterprises without confusion.


What are the common types of enterprises?

1 Sole proprietorship

A sole proprietorship refers to an enterprise invested and operated by one person.Individual investment, ownership and control An enterprise in which the individual bears the business risks and enjoys the operating income. The investor is liable for the debts of the enterprise with his personal property.It is suitable for small-scale workshops and restaurants.A sole proprietorship enterprise shall pay individual income tax in accordance with regulations.

2 Partnership

A partnership is a partnership agreement signed by two or more partners In the form of joint investment, profit and loss, and risk sharing, the enterprise shall bear joint and several liability for the debts of the enterprise.

The partnership is divided into general partnership and limited partnership

1、 The general partnership is composed of two or more general partners (without upper limit).

In a general partnership, partners are jointly and severally liable for the debts of the partnership.

2、 A limited partnership is composed of general partners and limited partners with more than 2 but less than 50 members, There are at least one general partner and one limited partner.When there are only general partners left in a limited partnership, it shall be transformed into a general partnership. If there are only limited partners left, it shall be dissolved.The general partners shall be jointly and severally liable for the debts of the partnership, and the limited partners shall be liable for the debts of the partnership to the extent of their subscribed capital contributions.

Generally, a partnership enterprise has no legal person status and does not pay enterprise income tax but individual income tax.

3 company

The company is established in China in accordance with the company law. It is a profit-making Association legal person, including limited liability company and joint stock limited company.

1、  A limited liability company (hereinafter referred to as a limited company) is established with the investment of less than 50 shareholders, Each shareholder shall bear limited liability to the company to the extent of its subscribed capital contribution, and the company shall be liable for the company's debts with its assets.

2、  A joint stock limited company is composed of more than two (including two) and less than 200 (including 200) promoters, The total capital of the company is equally divided into shares of equal amount. The shareholders bear limited liability for the company with the shares they subscribe for, and the company is liable for the company's debts with its assets.



Which type of enterprise is better to choose in the early stage of entrepreneurship?

 1 The control right, operation right and income right of the sole proprietorship enterprise belong to the investor alone, But for the investors, the risk is high and the responsibility is borne. Moreover, the development of the enterprise is limited by the sole proprietorship, so it is difficult to achieve large-scale operation.

2 Partnership: in general partnership, all partners bear the responsibility, and the risk is high;In a limited partnership, the general partner shall bear the liability, and the limited partner shall bear the limited liability, However, the management right of the enterprise is restricted accordingly, and disputes between partners are easy to occur, which will affect the future development of the enterprise.

3 company

The shareholders of the company shall bear limited liability to the extent of their capital contribution, On the legal level, the property of the company and the individual is separated, which can avoid the entrepreneurs from taking unnecessary risks.

Limited liability company is a kind of enterprise suitable for starting a business, with small risk, few institutions and simple structure, which is suitable for the initial development stage of enterprises. Moreover, most of the investment and financing schemes are designed based on the limited liability company. When the company grows stronger, it can also change the limited liability company into a joint stock limited company through the share reform, so as to prepare for listing in the future.

In the early stage of entrepreneurship, entrepreneurs, According to the development goal and its own risk tolerance, we should choose the appropriate enterprise type, plan the enterprise development and avoid unnecessary risks.

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