How to choose the form of business organization for entrepreneurs

The most common forms of business organization include limited liability companies, joint stock companies, sole proprietorships, partnerships, and so on. Because each form of business organization has its own advantages and disadvantages, so entrepreneurs must consider the legal provisions of the form of business organization and the comparison between each other, on the basis of the selection of the most appropriate form of business organization. According to the Company Law of the People's Republic of China (hereinafter referred to as the Company Law) and its judicial interpretations, the Partnership Law of the People's Republic of China (hereinafter referred to as the Partnership Law), the Law of the People's Republic of China on Individual Sole Proprietorships (hereinafter referred to as the Law on Sole Proprietorships), and other laws, there are a number of different forms of business organizations such as Limited Liability Companies (including Ordinary Limited Liability Companies and Limited Companies), Joint Stock Companies, Partnerships, and Sole Proprietorships, and there are also a number of other forms of business organizations. Limited liability company, partnership, sole proprietorship four forms of business organization compared as follows: (a) the establishment of conditions 1. limited liability company: According to the "company law" article 23, the establishment of limited liability company, shall have the following conditions: (a) shareholders meet the quorum; (b) the shareholders of the capital to reach the minimum amount of legal capital; (c) shareholders * * * together with the formulation of the articles of association; (d) a company name, the establishment of a company that meets the requirements of limited liability company, and the establishment of a company name. According to Article 77 of the Company Law, the following conditions shall be met for the establishment of a joint stock limited company: (1) the promoters meet the quorum; (2) the share capital subscribed and raised by the promoters reaches the minimum limit of the legal capital; (3) the issuance of shares and the preparatory matters are in compliance with the provisions of the law; (4) the promoters have formulated the articles of association; (5) the shareholders *** together with the formulation of the articles of association. (d) The promoters have formulated the articles of association, and the founding meeting has adopted the articles of association if the company is established by means of fund-raising; (e) There is a name of the company, and the organizational structure conforming to the requirements of a joint stock limited company; (f) There is a domicile of the company. 3. Limited partnership: According to Article 14 of the Partnership Law, the establishment of a partnership enterprise shall be subject to the following conditions: (a) There are two or more partners. If a partner is a natural person, he or she shall have full capacity for civil behavior; (2) there is a written partnership agreement; (3) there is a capital contribution from the partners; (4) there is the name of the partnership and the place of production and operation; (5) other conditions stipulated by the laws and administrative regulations.4. Individual Sole Proprietorship: According to Article 8 of the Sole Proprietorship Enterprise Law, the establishment of a sole proprietorship enterprise shall be subject to the following conditions: (a) the investor is a natural person; (b) there is a legal name of the enterprise; (c) there is a capital contribution declared by the investor; (d) there is a fixed place of production and business operation and the necessary conditions for production and business operation; (e) there are the necessary employees. (B) the number of shareholders 1. Limited Liability Company: Article 24 of the Company Law provides that "a limited liability company shall be established by the capital contribution of less than fifty shareholders." 2. Joint Stock Company: Article 78 of the Company Law provides that "the establishment of a joint stock company may take the form of initiation or collection. The establishment of a company by initiation refers to the establishment of a company by the subscription of all the shares to be issued by the initiators. The establishment by collection refers to the establishment of a company by the subscription of a part of the shares to be issued by the promoters, and the establishment of a company by the collection of the remaining shares from the public or from specific objects." Article 79 of the Company Law stipulates that "To establish a joint-stock limited company, there shall be two or more than two hundred or fewer promoters, of whom more than half shall have their domiciles within the territory of China." 3. Limited partnership: Article 14 of the Partnership Law stipulates that "To establish a partnership, the following conditions shall be met: (1) There shall be two or more partners. If a partner is a natural person, he or she shall have full capacity for civil behavior; (2) there is a written partnership agreement; (3) there are capital contributions subscribed or actually paid by the partners; (4) there is the name of the partnership enterprise and the place of production and operation; (5) there are other conditions stipulated by laws and administrative regulations." Article 61 of the Partnership Law provides that "A limited partnership shall be established by two or more than fifty partners; however, unless otherwise provided by law. A limited partnership shall have at least one general partner." 4. Sole Proprietorship Enterprise: Article 16 of the Sole Proprietorship Enterprise Law stipulates that: People who are prohibited by laws and administrative regulations from engaging in profit-making activities shall not apply for the establishment of a sole proprietorship enterprise as an investor. 5. One-person Limited Liability Company: Paragraph 2 of Article 58 of the Company Law stipulates that: A one-person Limited Liability Company as referred to in the present Law refers to the Limited Liability Company which has only one shareholder who is a natural person or a legal person. (C) registered capital 1. limited liability company: the minimum registered capital of limited liability company is RMB 30,000 yuan, which is relatively low. According to "Company Law" Article 26 "limited liability company registered capital for all shareholders registered in the company's registration authority for the amount of capital contributions. The initial contribution of all shareholders shall not be less than twenty percent of the registered capital, nor less than the statutory minimum registered capital, and the remainder shall be paid up by the shareholders within two years from the date of the establishment of the company; among them, the investment company can be paid up within five years. The minimum registered capital of a limited liability company is RMB 30,000 yuan. Where laws and administrative regulations provide for a higher minimum limit of registered capital for a limited liability company, such provisions shall apply." Article 27 of the Company Law "Shareholders may make capital contributions in money, or in kind, intellectual property rights, land use rights and other non-monetary property that can be valued in money and can be transferred in accordance with the law; provided, however, that property that is not allowed to be used as capital contributions under the provisions of laws and administrative regulations shall be excluded. The non-monetary property used as capital contribution shall be appraised and verified, and shall not be over- or under-valued. Where laws and administrative regulations stipulate that the appraisal price shall be determined, such regulations shall apply. The monetary contribution of all shareholders shall not be less than thirty percent of the registered capital of the limited liability company." 2. The minimum registered capital of a limited liability company is RMB 5 million, which is relatively high. According to the "Company Law" Article 81 "limited liability company to take the initiation of the establishment of the establishment, the registered capital of the company registered in the company's registration authority of the total amount of share capital subscribed by all the initiators. The company's first contribution of all promoters shall not be less than twenty percent of the registered capital, the rest of the promoters from the date of establishment of the company within two years to pay up; of which, the investment company can be paid up within five years. No shares may be raised from others before they are fully paid up. If a joint-stock company is established by way of fund-raising, the registered capital shall be the total amount of paid-up share capital registered with the company's registration authority. The minimum registered capital of a joint stock limited company shall be five million yuan. Where laws and administrative regulations provide for a higher minimum limit of registered capital for a joint stock limited company, such provisions shall apply." 3. limited partnership: there is no limit. 4. sole proprietorship: For a sole proprietorship, the law does not require a minimum registered capital. Article 18 of the Sole Proprietorship Law provides that: if an investor in a sole proprietorship enterprise applies for registration of the establishment of the enterprise and explicitly uses his or her family***owned property as personal capital, he or she shall assume unlimited liability for the debts of the enterprise with his or her family***owned property in accordance with the law. 5. One-person limited liability company: Article 59 of the Company Law provides that: the minimum registered capital of a one-person limited liability company shall be RMB 100,000 yuan. Shareholders shall pay in full at one time the amount of capital contribution stipulated in the articles of association. (D) decision-making procedures 1. limited liability company limited liability company shareholders' meeting for the company's authority, composed of all shareholders, unless otherwise provided for in the articles of association of the company or otherwise agreed by all shareholders, shall be convened fifteen days prior to the meeting to notify all shareholders; shareholders' meeting of shareholders' meeting by shareholders in accordance with the proportion of capital contribution to exercise the right to vote, the shareholders' meeting of the way of proceeding and the voting procedure, generally by the articles of association. However, the resolution of the shareholders' meeting to amend the articles of association, to increase or reduce the registered capital, and the resolution of the company to merge, separate, dissolve or change the form of the company must be passed by the shareholders representing more than two-thirds of the voting rights. Article 38 of the Company Law provides that "the shareholders' meeting shall exercise the following powers and functions: (1) to decide on the Company's business policies and investment plans; (2) to elect and replace directors and supervisors who are not employee representatives, and to decide on matters relating to the remuneration of directors and supervisors; (3) to consider and approve the report of the Board of Directors; (4) to consider and approve the report of the Supervisory Committee or the Supervisors; (5) to consider and approve the Company's annual financial budget plan, the final accounts, the annual budget and the final accounts of the Company. (e) to consider and approve the annual financial budget and final accounts of the Company; (f) to consider and approve the profit distribution plan and the plan to make up for losses of the Company; (g) to make a resolution on the increase or reduction of the registered capital of the Company; (h) to make a resolution on the issuance of bonds of the Company; (i) to make a resolution on the merger, demerger, dissolution, liquidation, or change of the corporate form of the Company; (j) to amend the Articles of Association of the Company; and (k) to make any other resolutions prescribed by the Articles of Association of the Company. (k) Other powers and functions as stipulated in the articles of association of the company. If the shareholders unanimously express their consent in writing to the matters listed in the preceding paragraph, a decision may be made directly without convening a shareholders' meeting, and the decision document shall be signed and sealed by all shareholders. Article 42 of the Company Law stipulates that "A meeting of the shareholders' meeting shall be convened and all shareholders shall be notified fifteen days prior to the convening of the meeting; provided, however, that the Articles of Association of the Company provide otherwise or all shareholders agree otherwise." Article 43 of the Company Law provides that "the shareholders shall exercise their voting rights at the meeting of the shareholders' meeting in accordance with the proportion of their capital contributions; however, unless otherwise provided for in the articles of association." Article 44 of the Company Law stipulates that "The mode of proceedings and voting procedures of a shareholders' meeting shall be prescribed by the articles of association of the Company, except as otherwise provided in this Law. Resolutions made at a shareholders' meeting to amend the articles of association, to increase or reduce registered capital, or to merge, demerge, dissolve or change the form of the company must be passed by shareholders representing more than two-thirds of the voting rights." 2. Joint stock limited company The general meeting of shareholders is the authority of a joint stock limited company and consists of all shareholders. The powers and functions of the general meeting of shareholders of a joint-stock company are the same as those of the shareholders' meeting of a limited liability company. Since the number of its shareholders is generally larger, there is a longer time limit for notification of meetings, and since its shares are divided into a number of equal parts, each share has one vote. Resolutions of the shareholders' meeting must be passed by a majority of the votes held by the shareholders present at the meeting. However, resolutions made by the general meeting to amend the articles of association, increase or decrease registered capital, and resolutions on merger, demerger, dissolution or change of corporate form must be passed by more than two-thirds of the votes held by the shareholders present at the meeting. Article 100 of the Company Law provides that "The provisions of Paragraph 1 of Article 38 of this Law concerning the powers and functions of the shareholders' meeting of a limited liability company shall apply to the shareholders' meeting of a company limited by shares." Article 103 of the Company Law stipulates that "When a shareholders' general meeting is convened, the shareholders shall be notified of the time and place of the meeting and the matters to be considered 20 days prior to the convening of the meeting; an extraordinary shareholders' general meeting shall be notified to the shareholders 15 days prior to the convening of the meeting; and if bearer shares are issued, the time and place of the meeting and the matters to be considered shall be announced 30 days prior to the convening of the meeting. Shareholders who individually or collectively hold more than three percent of the Company's shares may put forward a temporary proposal and submit it in writing to the Board of Directors ten days prior to the convening of the shareholders' meeting; the Board of Directors shall notify the other shareholders of the proposal within two days after receiving the proposal and submit the temporary proposal to the shareholders' meeting for deliberation. The contents of the temporary proposal shall fall within the terms of reference of the shareholders' general meeting and have clear topics and specific resolutions. The general meeting of shareholders shall not make resolutions on matters not specified in the notices of the preceding two paragraphs. Holders of bearer shares attending a meeting of the General Meeting of Shareholders shall deposit their shares with the Company five days prior to the convening of the meeting until the close of the General Meeting of Shareholders." Article 104 of the Company Law provides that "A shareholder attending a meeting of the general meeting shall have one vote for each share held. However, the shares of the Company held by the Company do not have voting rights. Resolutions of the shareholders' general meeting must be passed by a majority of the votes held by the shareholders present at the meeting. However, resolutions made by a shareholders' general meeting to amend the Articles of Association, to increase or reduce the registered capital, or to merge, demerge, dissolve or change the form of the Company must be passed by a majority of two-thirds of the votes held by the shareholders present at the meeting." Article 105 of the Company Law provides that "Where this Law and the Articles of Association provide that a resolution must be made by the general meeting of shareholders on matters such as the transfer or assignment of material assets or the provision of guarantees to foreign parties by the Company, the board of directors shall convene a meeting of the general meeting of shareholders in a timely manner for the general meeting of shareholders to vote on the aforesaid matters." Article 106 of the Company Law provides that "The election of directors and supervisors by the general meeting of shareholders may be carried out by a cumulative voting system in accordance with the provisions of the articles of association of the Company or the resolution of the general meeting of shareholders. The cumulative voting system referred to in this Law means that in the election of directors or supervisors at a shareholders' meeting, each share is entitled to the same number of votes as the number of directors or supervisors to be elected, and the voting rights owned by shareholders may be used in a centralized manner." Article 107 of the Company Law provides that "A shareholder may appoint a proxy to attend a meeting of the general meeting of shareholders, and the proxy shall submit to the Company a power of attorney from the shareholder and exercise the voting rights within the scope of the authorization." 3. Limited Partnership: Unless otherwise agreed, a limited partnership shall adopt the voting method of one partner, one vote and approval by a majority of all partners. Article 30 of the Partnership Law stipulates that "Partners shall make resolutions on matters relating to the partnership in accordance with the voting method agreed upon in the partnership agreement. If the partnership agreement is silent or the agreement is unclear, the voting method of one partner, one vote and approval by a majority of all partners shall be implemented. Where this Law otherwise provides for the voting method of a partnership, such provisions shall apply." Article 31 of the Partnership Law provides that "Unless otherwise agreed in the partnership agreement, the following matters of the partnership shall be unanimously agreed by all partners: (1) changing the name of the partnership; (2) changing the scope of business of the partnership and the location of the principal place of business; (3) disposing of the real estate of the partnership; (4) transferring or disposing of intellectual property and other property rights of the partnership; (5) transferring or disposing of intellectual property and other property rights of the partnership; and (7) transferring or disposing of intellectual property rights of the partnership; and (8) disposing of intellectual property rights of the partnership. (d) Transferring or disposing of intellectual property rights and other property rights of the partnership; (e) Providing guarantees for others in the name of the partnership; (f) Appointing persons other than the partners as the management personnel of the partnership." Article 67 of the Partnership Law provides that "A general partner shall execute the partnership affairs of a limited partnership. The managing partner may request that the remuneration for the execution of affairs and the manner in which the remuneration is to be drawn be determined in the partnership agreement." Article 68 of the Partnership Law provides that "A limited partner may not represent the limited partnership externally without executing partnership affairs." 4. Sole Proprietorship Enterprise: Article 19 of the Sole Proprietorship Enterprise Law stipulates that an investor in a sole proprietorship enterprise may manage the affairs of the enterprise on his own, or he may entrust or employ other persons with civil capacity to be responsible for the management of the affairs of the enterprise. When an investor entrusts or employs another person to manage the affairs of a sole proprietorship enterprise, he or she shall sign a written contract with the trustee or the person employed, specifying the specific content of the entrustment and the scope of the rights granted. The trustee or the person employed shall fulfill the obligations of honesty and diligence and be responsible for the management of the affairs of the sole proprietorship in accordance with the contract signed with the investor. The investor's restriction on the authority of the trustee or the hired personnel shall not be against a bona fide third party. Article 20 of the Sole Proprietorship Law stipulates that: The person entrusted or employed by the investor to manage the affairs of the sole proprietorship enterprise shall not do any of the following: (1) Solicit or accept bribes by taking advantage of the convenience of his position; (2) Misappropriate the property of the enterprise by taking advantage of the convenience of his position or work; (3) Misappropriate the funds of the enterprise for his own personal use or loan them to others; (4) Open an account for storage of the enterprise's funds in the name of the investor or others; or (D) unauthorized funds in the name of an individual or in the name of another person to open an account for storage; (E) unauthorized use of enterprise property to provide security; (F) without the consent of the investor to engage in business competing with the enterprise; (G) without the consent of the investor to enter into a contract or transaction with the enterprise; (H) without the consent of the investor to unauthorized transfer of the enterprise's trademark or other intellectual property rights to others; (IX) the disclosure of the enterprise's commercial secrets; (J) laws, (j) Other acts prohibited by laws and administrative regulations. 5. One-person limited liability company: Article 61 of the Company Law stipulates that the articles of association of a one-person limited liability company shall be formulated by the shareholders. Article 62 of the Company Law stipulates that there shall be no shareholders' meeting in a one-person limited liability company. When the shareholders make the decisions listed in paragraph 1 of Article 38 of this Law, it shall be in writing and signed by the shareholders and placed in the company. (E) Decision-making and Executive Body 1. Limited Liability Company: The shareholders' meeting of a limited liability company shall act as the company's authority to make decisions on the company's affairs. According to Article 37 of the Company Law, "the shareholders' meeting of a limited liability company shall be composed of all shareholders. The shareholders' meeting is the authority of the company, and exercises its power in accordance with this Law." 2. Joint-stock company: The shareholders' meeting of a joint-stock company acts as the company's authority and makes decisions on company affairs. According to Article 99 of the Company Law, "The shareholders' meeting of a joint-stock company shall be composed of all shareholders. The general meeting of shareholders is the authority of the company and exercises its power in accordance with this Law." 3. Limited partnership: limited partners do not execute partnership affairs and have limited liability for the enterprise. The general partner executes the partnership affairs and bears unlimited joint and several liability to the enterprise, and may request to determine the remuneration for executing the affairs and the way of drawing the remuneration in the partnership agreement. According to Article 67 of the Partnership Law, "The general partner of a limited partnership shall execute the partnership affairs. The managing partner may request that the remuneration for the execution of the affairs and the manner in which it is to be drawn be determined in the partnership agreement." Article 68 of the Partnership Law "A limited partner shall not represent a limited partnership externally without executing partnership affairs. The following acts of a limited partner shall not be regarded as the execution of partnership affairs: (1) participating in deciding on the admission or withdrawal of the general partner; (2) making suggestions on the operation and management of the enterprise; (3) participating in the selection of the accounting firm that undertakes the auditing business of the limited partnership; (4) obtaining the audited financial and accounting report of the limited partnership; (5) inspecting the financial and accounting books and other financial information of the limited partnership for the cases that involve its own interests; (6) reviewing the financial and accounting books and other financial information of the limited partnership for the cases that involve its own interests. (vi) Claiming rights from or filing lawsuits against liable partners when their interests in the limited partnership are infringed upon; (vii) Urging the executive partner to exercise his/her rights when he/she is negligent in exercising his/her rights or filing lawsuits on his/her own behalf for the benefit of the enterprise; (viii) Providing guarantees for the enterprise in accordance with the law." (vi) Changes in shareholdings and the mechanism for entering and exiting 1. Shareholders of a limited liability company may transfer all or part of their shareholdings to each other. The transfer of equity by a shareholder to a person other than a shareholder shall be approved by a majority of the other shareholders. The other shareholders shall have the right of first refusal under the same conditions for the shares transferred. After the transfer of equity, the Company shall amend the Articles of Association and the Register of Shareholders accordingly with respect to the shareholders and their capital contributions. According to Article 72 of the Company Law, "Shareholders of a limited liability company may transfer all or part of their shareholdings to each other. The transfer of equity interests by shareholders to persons other than shareholders shall be approved by a majority of the other shareholders." Article 73 of the Company Law "When the People's Court transfers a shareholder's shareholding in accordance with the compulsory execution procedures prescribed by law, it shall notify the company and all shareholders that the other shareholders have the right of first refusal under the same conditions. If the other shareholders do not exercise their right of pre-emption after the expiration of twenty days from the date of notification by the people's court, they shall be deemed to have waived their right of pre-emption." Article 74 of the Company Law "After the transfer of shareholdings in accordance with Articles 72 and 73 of this Law, the Company shall cancel the certificates of capital contribution of the original shareholders, issue certificates of capital contribution to the new shareholders, and accordingly amend the Articles of Association of the Company and the register of shareholders with respect to the shareholders and the amount of their capital contributions. Such amendment to the articles of association need not be voted on again by the shareholders' meeting." 2. Shares held by shareholders of a joint-stock company may be transferred in accordance with the law, and there are no restrictions as in the case of a limited liability company. In particular, the transfer of bearer shares is effective upon delivery. According to Article 138 of the Company Law, "Shares held by shareholders may be transferred in accordance with law." Article 139 of the Company Law: "The transfer of shares by shareholders shall be effected in a securities exchange established in accordance with the law or in any other manner prescribed by the State Council." Article 141 of the Company Law "The transfer of bearer shares shall take effect when the shareholders deliver the shares to the transferee." 3. limited partnership: When partners transfer all or part of their shares of property in a partnership among themselves, they shall notify the other partners. Unless otherwise agreed in the partnership agreement, the transfer by a partner of all or part of his share of property in the partnership to a person other than a partner shall require the unanimous consent of the other partners, who shall have the right of first refusal under the same conditions. A new partner shall be admitted to the partnership with the unanimous consent of all the partners, unless otherwise agreed in the partnership agreement, and a written admission agreement shall be concluded in accordance with the law. Moreover, for a limited partner, it may transfer its share of property in the limited partnership to a person other than a partner in accordance with the partnership agreement, but it shall notify the other partners thirty days in advance, and the newly admitted limited partner shall be liable for the liabilities of the limited partnership prior to the admission to the limited partnership up to the amount of the capital contribution made by the partner. According to Article 22 of the Partnership Law, "Unless otherwise agreed in the partnership agreement, the transfer of all or part of a partner's share of a partnership enterprise to a person other than a partner shall require the unanimous consent of the other partners. When a partner transfers all or part of his share of property in a partnership enterprise between partners, he shall notify the other partners." Article 23 of the Partnership Law "Where a partner transfers his share of property in a partnership enterprise to a person other than a partner, the other partners shall have the right of first refusal under the same conditions; provided, however, that the partnership agreement stipulates otherwise." Article 24 of the Partnership Law "A person other than a partner who is legally assigned a partner's share of property in a partnership shall become a partner of the partnership upon modification of the partnership agreement, and shall enjoy the rights and fulfill the obligations in accordance with this Law and the modified partnership agreement." Article 43 of the Partnership Law "Unless otherwise agreed in the partnership agreement, the entry of a new partner into a partnership shall be unanimously agreed upon by all the partners and a written entry agreement shall be concluded in accordance with the law. When entering into a partnership agreement, the original partners shall truthfully inform the new partners of the business and financial status of the original partnership." Article 73 of the Partnership Law "A limited partner may transfer his share of property in a limited partnership to a person other than a partner in accordance with the partnership agreement, but shall notify the other partners thirty days in advance." Article 77 of the Partnership Law "A newly admitted limited partner shall be liable for the debts of the limited partnership prior to its admission to the partnership to the extent of the amount of capital contributed by him." 4. Sole Proprietorship Enterprise: Article 17 of the Sole Proprietorship Enterprise Law stipulates that the investor of a sole proprietorship enterprise enjoys ownership of the property of the enterprise in accordance with the law, and its relevant rights may be transferred or inherited in accordance with the law. (VII) Financial 1. Limited Liability Company: A limited liability company shall prepare a financial accounting report at the end of each fiscal year, which shall be audited by an accounting firm in accordance with the law, and the financial accounting report shall be sent to the shareholders in accordance with the time limit stipulated in the articles of association of the company. According to Article 165 of the Company Law, "A company shall prepare a financial accounting report at the end of each fiscal year and have it audited by a CPA firm in accordance with the law. The financial accounting report shall be made in accordance with the laws, administrative regulations and the provisions of the financial department of the State Council." Article 166(1) of the Company Law: "A limited liability company shall deliver the financial accounting report to the shareholders in accordance with the time limit stipulated in the articles of association." 2. Company Limited by Shares: A company limited by shares shall prepare a financial accounting report at the end of each fiscal year, which shall be audited by a CPA firm in accordance with the law, and the financial accounting report shall be placed in the Company for shareholders' inspection twenty days prior to the date of the annual shareholders' meeting. Pursuant to Article 165 of the Company Law, "A company shall prepare a financial accounting report at the end of each fiscal year and have it audited by a CPA firm in accordance with the law. The financial accounting report shall be made in accordance with the laws, administrative regulations and the provisions of the financial department of the State Council." Article 166(2) of the Company Law: "The financial accounting report of a joint stock limited company shall be placed in the Company for shareholders' inspection 20 days before the annual general meeting; a joint stock limited company that publicly issues shares must announce its financial accounting report." 3. Limited partnership: no special requirements. 4. Sole proprietorship: Article 21 of the Sole Proprietorship Enterprise Law stipulates that: a sole proprietorship enterprise shall set up accounting books and carry out accounting in accordance with the law. 5. One-person limited liability company: Article 63 of the Company Law stipulates that: a one-person limited liability company shall prepare a financial accounting report at the end of each fiscal year and shall be audited by a CPA firm. 6. (H) form of liability 1. limited liability company: limited liability company shareholders limited to the amount of their capital contribution to the company with limited liability. Article 3 of the Company Law provides: "The company is an enterprise legal person, has independent legal person property, enjoy the right of legal person property. The company shall be liable for its debts with all its property. The shareholders of a limited liability company shall be liable to the company to the extent of their capital contributions; the shareholders of a joint-stock company shall be liable to the company to the extent of the shares subscribed by them. 2. Article 3 of the Company Law stipulates: "A company is an enterprise legal person, has independent legal person property and enjoys legal person property rights. The company shall be liable for its debts with all its property. The shareholders of a limited liability company shall be liable to the company to the extent of their capital contributions; the shareholders of a joint stock company shall be liable to the company to the extent of their subscribed shares." 3. Limited Partnership: A limited partnership is divided into general partners and limited partners. Among them, the general partner has unlimited joint and several liability for the debts of the partnership, while the limited partner has limited liability for the debts of the partnership to the extent of the amount of capital contributed by him. Article 2(3) of the Partnership Law stipulates: "A limited partnership consists of a general partner and a limited partner; the general partner bears unlimited joint and several liability for the debts of the partnership, while the limited partner bears limited liability for the debts of the partnership to the extent of the amount of capital contributed by him/her." 4. Sole Proprietorship Enterprise: Article 2 of the Sole Proprietorship Enterprise Law stipulates that: A sole proprietorship enterprise, as referred to in this Law, means a business entity established within the territory of China in accordance with this Law, in which a natural person invests, in which the property is owned by the investor personally, and in which the investor bears unlimited liability for the debts of the enterprise with his personal property. Article 18 of the Sole Proprietorship Enterprise Law stipulates that an investor in a sole proprietorship enterprise who applies for registration of the establishment of the enterprise and explicitly makes a personal contribution from his or her family's ****owned property shall, in accordance with the law, assume unlimited liability for the debts of the enterprise from his or her family's ****owned property. 5. One-person Limited Liability Company: Article 64 of the Company Law stipulates that: If the shareholders of a one-person Limited Liability Company are unable to prove that the company's property is independent of their own property, the company shall be liable for the debts of the company. If the shareholders cannot prove that the company's property is independent of the shareholders' own property, they shall be jointly and severally liable for the company's debts. (IX) Distribution of Income 1. Limited Liability Company: Unless otherwise agreed by all shareholders, shareholders of a limited liability company shall receive dividends in proportion to their paid-in capital. According to Article 35 of the Company Law, "shareholders shall receive dividends in proportion to their paid-in capital; when the company adds new capital, the shareholders shall have the right to preferentially make contributions in proportion to their paid-in capital. However, unless all the shareholders agree not to receive dividends in proportion to their capital contributions or not to subscribe capital in priority to their capital contributions in proportion to their capital contributions, the shareholders shall have the right to subscribe capital in priority to their capital contributions." 2. Joint Stock Company: A joint stock company shall be distributed according to the proportion of shares held by the shareholders, unless the articles of association of the joint stock company stipulate that dividends shall not be distributed in accordance with the proportion of capital contribution. 3. Limited Partnership: Unless otherwise agreed in the partnership agreement or decided by the partners through consultation, the partners of a limited partnership shall be distributed and shared according to the proportion of the paid-in capital, or if the proportion of the paid-in capital is not determinable, it shall be distributed and shared equally by the partners. According to Article 33 of the Partnership Law, "The distribution of profits and the sharing of losses of a partnership shall be handled in accordance with the provisions of the partnership agreement; if there is no agreement in the partnership agreement or if the agreement is unclear, it shall be decided by the partners through negotiation; if the negotiation fails, it shall be distributed and shared by the partners in accordance with the proportion of the paid-in capital; if it is impossible to determine the proportion of the paid-in capital, it shall be distributed and shared by the partners in equal shares. The partnership agreement shall not agree to distribute all profits to some partners or to have some partners bear all losses." 4. Sole proprietorship: No special provisions. (x) Tax Liability 1. Limited Liability Company: As an enterprise legal person in China, a limited liability company is subject to the Enterprise Income Tax Law of the People's Republic of China (PRC) and is subject to enterprise income tax and individual income tax. According to the Enterprise Income Tax Law of the People's Republic of China, Article 4(1) of the Law states that "The tax rate of the enterprise income tax shall be 25%".2. Limited Liability Company: As an enterprise legal person within the territory of the PRC, the Limited Liability Company is subject to the Enterprise Income Tax Law of the People's Republic of China and is required to pay enterprise income tax and personal income tax. According to Article 4(1) of the PRC Enterprise Income Tax Law, "The tax rate of enterprise income tax is 25%".3. Limited Partnership: Compared to limited liability companies and joint stock companies, limited partnerships have a lighter tax burden. It does not have to pay enterprise income tax and only levies individual income tax on the partners' income. According to Article 1 of the Law of the People's Republic of China on Enterprise Income Tax, "Within the territory of the People's Republic of China, enterprises and other organizations that derive income (hereinafter collectively referred to as enterprises) shall be the taxpayers of the enterprise income tax, and shall pay the enterprise income tax in accordance with the provisions of this Law. This Law shall not apply to sole proprietorships and partnerships." Article 6 of the Partnership Law provides that: The production and business income and other income of a partnership shall be subject to income tax by the partners separately in accordance with the relevant state tax regulations.4. Sole proprietorship enterprises: Article 4(2) of the Sole Proprietorship Enterprise Law provides that: Sole proprietorship enterprises shall fulfill their tax obligations in accordance with the law. Limited liability company, joint-stock companies, sole proprietorships, partnerships and other forms of business organization have their own advantages and disadvantages, so entrepreneurs must consider the legal provisions of the form of business organization and the comparison between each other, based on which to select the most appropriate form of business organization. Of course, the form of business organization is not set in stone, if you think that along with the development of the enterprise's initial form of business organization is not suitable, then you can also according to the actual situation of the enterprise restructuring, not to mention. (End)