Chapter 8 Chapter VII Choice of Enterprise Form

According to the relevant laws of our country, entrepreneurs can choose the business forms of limited liability company, joint stock company, partnership and sole proprietorship.Due to the high requirements for registered capital and the approval of the provincial government, the joint stock limited company is not adopted by ordinary entrepreneurs.Partnership and sole proprietorship are relatively rare because entrepreneurs have to bear unlimited liability.A limited liability company is the preferred form of organization for most entrepreneurs. The new "Company Law" officially implemented on January 1, 2006 gave the legal status of a sole proprietorship for the first time.A sole proprietorship refers to a limited liability company in which one shareholder holds all the capital contribution or all shares of the company.Before the promulgation of the new "Company Law", my country only allowed the existence of wholly state-owned companies and wholly foreign-owned companies, and excluded corporate legal persons and natural persons from establishing one-man companies.

After the implementation of the new "Company Law", the threshold for registered capital has been lowered, prompting many entrepreneurs to turn their attention to limited liability companies with clear responsibilities and rights, especially the corporate organization form of sole proprietorship.At the same time, compared with traditional companies, a sole proprietorship company has advantages such as no need for multi-party consultation and high internal decision-making efficiency. This is also the reason why the sole proprietorship model is more attractive to investors.According to relevant sources from the Beijing Municipal Administration for Industry and Commerce, from January to June 2007, 5,688 sole proprietorship companies were newly registered in Beijing, accounting for 1/5 of the total number of newly established enterprises.

Among the industries selected by a sole proprietorship company, industries such as retail industry, architectural engineering design and catering industry have become the mainstream fields.That's because these industries have a common feature, that is, the scale of investment required is not too large, the operation is flexible, and the management is simple, which is more suitable for individuals to start their own businesses for the first time. college student who is the boss Chen Wenbin is a 2005 graduate of the Business Administration Department of Sunshine College, Fuzhou University.On July 8 of that year, he became the first person in the Sunshine College of Fuzhou University to receive the Graduate Entrepreneurship Fund.According to his business plan, he will open a special porridge shop in his hometown of Quanzhou.After graduation, he has been preparing for the opening of the store: site selection, decoration, staff training, application for licenses... Among the students who graduated that year, 4 people applied to the college, and only Chen Wenbin's entrepreneurial project passed the review and received 35,000 yuan. dollars of funding.His entrepreneurial move has become a highlight among the graduates.

Zhang Weiwu, who graduated from Xiamen University with a bachelor's degree in computer science in 2004, is also the first graduate of the department to start his own business.Zhang Weiwu tried to start a business as early as his freshman and sophomore year. At that time, he established a design studio specializing in commissioned design publications.But since his sophomore year, he really had the idea of ​​starting a business. However, due to insufficient funds and other reasons, he waited until his senior year before registering his own company.He founded Ruiye Soft Service, the first domestic company specializing in providing software services for the IT market, in Xiamen with sole proprietorship.Shortly thereafter, he hired Mr. Shaoying, Chief Information Officer of the German Chamber of Commerce, and went to Beijing to open an international business branch.At present, Ruiye Soft Service has successfully reached cooperation agreements with several large software companies in Germany, and the operation is going smoothly.

If you have a certain amount of experience in the industry, have a certain amount of capital accumulation, need to make quick business decisions, and need a certain corporate image, then you can consider sole proprietorship.In today's market competition, not all big fish eat small fish, but fast fish eat slow fish. Small businesses need to make quick decisions at the start-up stage, which is the biggest advantage of sole proprietorship. Entrepreneurs need to be reminded that a sole proprietorship is different from a one-person company. Let’s take a look at the characteristics of each: The characteristics of a sole proprietorship are: one person invests, there is no limit on the amount of investment; there is no registered capital, and there is no legal risk; the company name cannot use the words "limited company" or "limited liability company"; in terms of taxation, if it is a manufacturing enterprise, only Apply for small-scale taxpayers (6%); do not have Articles of Incorporation.

The characteristics of a one-person company are: a limited company needs registered capital; the suffix of the company name is the word "limited company"; in terms of taxation, if it is a manufacturing enterprise, a one-person limited company can apply for 17% value-added tax; the registered capital must be verified in place at one time , can not be paid in installments; have the company's articles of association and the company's appointed supervisor. The so-called "one-man company" is actually a common name for "one-man limited liability company". Although the "one-man company" has lowered the threshold, the supervision is more stringent.In terms of registered capital, the "starting price" of 100,000 yuan must be settled in one step.In terms of operation and management, a "one-person company" also needs to set up articles of association, provide independent financial statements and accept annual financial audits.

However, compared with individual industrial and commercial households, "one-man company" can enjoy the benefits of "limited liability" of the company.For example, when there is a debt crisis, individual industrial and commercial households have to pay compensation with the personal property of the investor; while a "one-man company" bears limited liability to the company based on the amount of its capital contribution.For example, if the company has a debt of 150,000 yuan, and now the company's total assets are only 100,000 yuan, if you can prove that your personal assets and company assets are completely separated, then you only need to pay 100,000 yuan. The risk is relatively small.Moreover, compared with individual industrial and commercial households, the company is more standardized in terms of operation, has a higher degree of integrity, and customers are more willing to deal with the company.In the form of sole proprietorship, you don't have to worry about the distribution of benefits, you don't need to ask for opinions from others, and you can handle things more efficiently.

A joint venture company is a company in which two or more people, two or more joint-stock companies, trust companies, etc. jointly establish a new company to carry out trade or business activities. Each party to the cooperation provides funds, labor, property or Technology, but also share in the company's profits and bear losses.The existence of a joint venture company depends on the continuity of cooperation, especially in the partnership between two people, if one of them leaves or declares bankruptcy, the partnership will naturally disintegrate. A joint venture is also as easy to set up as a sole proprietorship, and sometimes a verbal agreement is enough.However, if funds and property will become a problem in the future, it is better to prepare a written agreement. The distribution of the company's profits and losses should be explained in the joint venture agreement.

In addition, joint ventures engaged in business other than trading, mining or manufacturing do not have to be registered.Simplified procedures can be adopted, that is, only registering with the local government department and obtaining a business license. There is also a special form of joint venture called Limited Partnership, which can be composed of one or more limited partners. Unlike a limited company, some shareholders of the company do not participate in the operation of the company, and the shareholders of the company only use their capital The amount is limited to the company. Although the initial investment of the joint venture company is large, it is definitely worth the investment.A joint venture is an independent entity that bears the legal responsibilities of the business.In case of any situation, the individual will not bear any legal responsibility.Therefore, it is also a good choice for entrepreneurs.

Open a law firm with friends Mr. Lu originally studied physics at Fudan University, which has nothing to do with his current job.In fact, he himself is very interested in law, so he has been learning about law, and he is also willing to study it.After graduating, he worked at Fudan University for nearly 20 years. During this time, because he had been studying and listening to lectures, his thoughts kept pace with the trend, and his thinking became more and more agile. At the same time, he felt that the school was not suitable for him after all. , so I came up with the idea of ​​starting my own business, and wanted to cooperate with a few classmates to open a law firm.

At the beginning, he was under a lot of pressure to start a business, and he was worried that he could not do well, because it was related to his family.But because this is what he is interested in, and he has considered the factors of the general social background, so he finally decided to let it go and opened Guangsha Law Firm.At that time, the country had just allowed private law firms to operate, so it can be said that he chose the right time to start his business, so now their law firm is operating quite well. The reason why he chose the form of joint venture is that opening a law firm is not like other industries where one person can be the boss, and several people must work together.But the problem is that those who study law tend to have a strong personal subjective consciousness, and differences of opinion will inevitably arise during cooperation, so everyone needs to constantly adapt to work in partnership.In Mr. Lu's office, it is inevitable that he and his "hardcore" buddies sometimes have disputes.Maybe small quarrels and big quarrels are unavoidable, the key depends on how you deftly resolve differences.The worst time, he was cornered by a boy with his throat crossed because he had a dispute with his girlfriend, but within a few days they reconciled as before, after all, everyone wanted to do better.Therefore, there is no need to think of ways to avoid conflicts, just think of what is best. Generally speaking, there are more restrictions on starting a business with a small amount of capital, because personal ability and energy are limited after all.If you want to work in an industry where you can't be your own boss, you have to cooperate with others.The benefits of a joint venture are obvious, but as mentioned above, differences of opinion are likely to arise between you and your partner.And it is not limited to this, if there are conflicts in the distribution of interests and the distribution of rights and responsibilities, it will be even more serious.These are things that need attention. If you plan to start a joint venture with others, you must be decisive when things happen.The few of you can act separately, but whenever you encounter something that must be decided immediately, you must make a decision immediately.Although this decision is made by one person, it has to represent the opinions of the collective "partners". A limited liability company, also known as a "limited company", refers to an enterprise legal person that is jointly funded by less than 50 shareholders, each shareholder bears limited liability for the company with its capital contribution, and the company assumes responsibility for its debts with all its assets.Compared with a limited liability company, the establishment conditions and procedures of a limited liability company are simpler and more flexible.You can set up a one-person limited liability company alone, and you can also form a limited liability company with less than 50 partners.In an LLC, your liability is limited.In this way, if there is a problem in the business process in the future, it will not have a huge impact on you, and it is a more rational choice. Xiao Li's choice of business form Xiao Li, a graduate of the Department of Computer Science of a famous university, not only had excellent grades during college, but also actively participated in various social practice activities and applied for two patents. When he graduated in 2005, he planned to start a company with some like-minded partners.But after all, it is easier said than done, and when faced with the complexities of building a new company, just having technical knowledge is not enough. After being introduced, Xiao Li found a lawyer and specially consulted on the establishment of a company.According to the lawyer, enthusiasm alone is not enough. For college students to start a business, capital, social experience, activity ability, and psychological endurance are all challenging, so they must be psychologically prepared.First of all, it is necessary to choose a business form suitable for college students to start a business.At present, there are many forms of enterprises in the society, such as state-owned enterprises, foreign-funded enterprises, joint stock companies, sole proprietorship enterprises, and partnership enterprises.There are mainly three types of enterprises established by individual citizens: limited liability companies, partnership enterprises, and sole proprietorship enterprises.Among these three business forms, a sole proprietorship is started by one person; according to the current "Company Law", a limited liability company can also be established by a natural person or a legal person, and a partnership enterprise can only be established with at least two people.Among them, only the founder of the limited liability company bears limited liability, that is, the limited liability is assumed by the share invested in the company. Even if the company fails to repay the debt and goes bankrupt, it will never involve other personal properties of shareholders; For enterprises and partnerships, investors have to bear unlimited responsibilities, that is, when the enterprise fails, they will be chased by creditors all the way to their homes to ask for debts, and even their livelihood will be a problem if they fail.Undoubtedly, a limited liability company is the most suitable choice for Xiao Li and the others now. The lawyer further introduced some conditions and requirements for setting up a limited liability company to Xiao Li and his partners.Funding is the first mountain that college students must climb to start a business.The newly revised "Company Law" stipulates that the minimum registered capital of a limited liability company is reduced to RMB 30,000; if a one-person limited company (that is, a limited liability company with only one natural person shareholder or one legal person shareholder), the minimum registered capital is RMB 100,000 Yuan.The form of shareholder's capital contribution can be in currency, or in kind, intellectual property rights, land use rights and other non-monetary properties that can be valued in currency and can be transferred according to law.The new company law stipulates that the monetary contribution of all shareholders shall not be less than 30% of the registered capital of a limited liability company.That is to say, non-monetary property contribution can reach up to 70% of the registered capital, which shows the state's support and emphasis on intellectual property investment. Xiao Li was very excited after hearing the lawyer's introduction. Aren't these favorable policies of the country just to encourage entrepreneurs with knowledge and enthusiasm?He and his companions used their spare time to work part-time, and each of them accumulated funds ranging from a few thousand to tens of thousands. A classmate who lives in the local area can provide the company's office space. Xiao Li's two patented technologies can come in handy. .The registered capital was not a problem, so Xiao Li began to consider the specific matters of establishing a limited liability company, and he consulted lawyers one by one. The lawyer told him that the "Company Law" stated that, except for wholly state-owned limited liability companies, any legal person or natural person can establish a limited liability company, including corporate legal persons, public institutions and social organization legal persons, individual citizens and foreign investors.The organizational structure of a limited liability company is composed of the shareholders' meeting, the board of directors (or executive directors), and the board of supervisors (or supervisors) according to the law.After careful consideration and negotiation, Xiao Li decided to register a 100,000 yuan limited liability company, so he began to start various procedures for company registration with great enthusiasm. The above case basically describes the basic knowledge to be understood to become a limited liability company.We can see that if entrepreneurs do not have a lot of capital, they don’t have to worry, they can use their own technology and patents to invest in shares like Xiao Li. The original "Company Law" stipulates that the minimum registered capital of a limited liability company: RMB 500,000 for companies that focus on production and operation and commodity wholesale, RMB 300,000 for companies that focus on commercial retail, and RMB 300,000 for companies that focus on commercial retail. 100,000 yuan for consulting and service companies, and requires a one-off payment.However, during the revision process in 2006, all parties generally believed that the amount of this provision was too high, which was not conducive to private capital entering the market.Requiring the registered capital to be paid in full at one time may also easily cause funds to be idle.According to this, the law has been amended accordingly. One is to cancel the requirement of distinguishing the minimum registered capital according to the company's business content; the other is to allow the company to pay off the capital contribution in installments within 2 years according to the prescribed ratio. Among them, the investment company can pay in full within 5 years. ; The third is to reduce the minimum registered capital of a limited liability company to RMB 30,000. The purpose of the country's revision of the "Company Law" is to facilitate the entry of private capital into the market and open the door for small entrepreneurs.If you want to start a business, of course you must seize the opportunity and chase your entrepreneurial dream. The capital of the joint venture is paid by each shareholder. At the beginning of the establishment, each shareholder has considered various factors within the scope of his ability to determine the capital he invested and his share.Everyone expects to get a certain proportion of returns according to their respective inputs and assume corresponding responsibilities.However, have you carefully discussed each other's responsibilities and interests before entering into a joint venture with others? The joint venture contract is the basic document for all shareholders to establish a limited liability company. It aims to stipulate the rights and obligations between shareholders, between shareholders and the enterprise, as well as the establishment and management system of the limited liability company.Only through the explicit agreement of the joint venture contract can we fight for the corresponding rights.Therefore, before cooperating, entrepreneurs should clarify their respective rights and responsibilities through written contracts, so as to effectively avoid various disputes in the future. Unclear rights and responsibilities, endless disadvantages The first entrepreneurial project of Shao Yibo, the founder of eBay, was not eachnet (EBay), but an IT company in the US medical industry. He was 22 years old that year, and his boss at Boston Consulting Group (BCG) and his friends established This company invited him to join.They did a big business: bought companies for a billion dollars, combined them for a few years, put the company in front of the world, it was still a big deal, and it flopped.What is the reason?His boss had serious disagreements and quarrels with his friends. Of course, disagreements and quarrels among founders are normal, and it is not a good thing if founders are always on the same page.However, in this case, the focus of the dispute is who should own 51% of the shares and who should own 49% of the shares.Shao Yibo's boss said: I have contributed so much to this company, I should hold 51% of the shares; his friend also said: We made a decision a year ago, we are equal, how can you talk differently? What's the deal?The two quarreled for months and finally separated.After that, Shao Yibo went to Harvard Business School and founded eBay after graduation. In the following two years, the experience of five startups made him understand this issue more clearly.Of these five companies, 4 were on the verge of failure due to disputes among the founders, and 3 of these 4 companies were due to share distribution problems. One of them failed completely, and the other two were resolved with his help. Overcome each other's quarrels and differences, and survived. These experiences allowed him to sum up two mistakes that entrepreneurs usually make: first, on the first day of cooperation, he did not clearly discuss and record the distribution of equity; second, he did not consider that if a partner leaves midway, How the shares should be distributed. His former boss at Boston Consulting Group made the first mistake. Many times, founders don’t want to have a hard debate about who should own how much shares. They avoid full discussions or make them ambiguous. For example, if we are equal, discuss it later; we are all reasonable people, if there is anything to say, we will talk about it later... If there are 3 or more partners, the discussion will be more complicated, so people tend to talk to each other. Delay discussion.But the end result is often an unhappy breakup. Discussing the allocation of mutual interests and responsibilities is an unavoidable issue among all partners, although everyone is unwilling to face it.Americans are still like this, and we Chinese are of course even more reluctant to discuss it explicitly.But the problem is that the longer this discussion drags on, the harder it is to make a decision, and the worse things get.Therefore, it is better to discuss the issue of share allocation as early as possible. The ideal time for discussion is: after the founders have reached a cooperation intention and before actually starting the entrepreneurial work. Similarly, it is not enough to just discuss the allocation of shares. If a founder gets a lot of shares, what should he do if he does not work well in the later stage?What if a founder leaves the company or the company wants to remove a partner?What to do with his shares?These are all things to consider at the very beginning, and it is better to say something ugly in front of you than to tear yourself apart when you encounter problems later.Clear rights and responsibilities can ensure that your company will not die due to conflicts among shareholders. In addition, in the process of operation, the accounts must be clear, the procedures are complete, and can withstand inspection at any time; the entry and exit of all accounts, the operating conditions and profit and loss of cooperative entities must be disclosed among partners on a regular basis, and the distribution of benefits must be strict. Handle in accordance with the provisions of the cooperation agreement, so that all parties know what they are doing, so as to avoid unnecessary misunderstandings and troubles.