Traditional enterprise partnership enterprise tax

Both enterprise forms have their own advantages and disadvantages. The advantages of a sole proprietorship enterprise lie in its low threshold for establishment, simplicity and quickness, relatively free mode of operation, and enjoying various preferential policies of the state. However, the corresponding investors have greater business risks, and their development prospects are not as broad as those of the company in the long run. Compared with sole proprietorship, one-man company has a broader development prospect, and at the same time, due to the limited liability of shareholders, it is more in line with the needs of future investors to further expand their scale.

Advantages and disadvantages of one-person limited liability company and sole proprietorship enterprise investment

The system of one-person limited liability company is still a new company system in China, and the state is still conservative and cautious about it, so it is strict in legal regulation. Comparatively speaking, sole proprietorship enterprises have existed in China for a long time, and the system can be said to be relatively mature, and the attitude of the state is also encouraged and supported. However, one-man company, as a more advanced commercial system, is more in line with the needs of China's economic development in the future. In this context, investors need to weigh the advantages and disadvantages of the two forms from all aspects.

1. Set thresholds and degrees of freedom.

From the comparison of the previous establishment procedures, it is obvious that the establishment of a sole proprietorship enterprise is much simpler than that of a one-man company, which involves the procedures of establishing articles of association, capital contribution and capital verification. From the point of view that economic life requires high efficiency and rapidity, the sole proprietorship enterprise obviously meets the needs of investors. Judging from the substantive requirements of its establishment, a sole proprietorship enterprise requires far less investors than a one-man company. Therefore, as far as the threshold is concerned, sole proprietorship enterprises have greater advantages and are more conducive to attracting investors.

2. Operating costs of enterprises

According to the above analysis, the tax burden of investors setting up a one-person company is obviously higher than that of a sole proprietorship enterprise. In addition to the most important tax cost, the hidden cost of one-man company is also higher than that of sole proprietorship enterprise. For example, the company law requires investors to make capital verification after capital contribution, and the company needs to set up accounting books, which need to be audited and verified by accounting firms every year. All these require investors' time and energy. Based on the requirements of different laws and the difference of state control, it is an inevitable result that the cost of one-man company is higher than that of sole proprietorship enterprise.

3. Freedom of investors

One-man company is still a limited company in essence, but the control of the company as a commercial organization in China is still relatively strict, although there is a trend of gradual relaxation. Moreover, due to the particularity of the company system itself, one-man company also needs to meet the mandatory requirements of the company law. For example, when a shareholder makes a major decision, it must be made in writing, signed and kept in the company for future reference. In contrast, investors in sole proprietorship enterprises do not have these requirements and have much more freedom in decision-making.

4. National policy trends

The establishment of one-man company system in China has gone through a complicated process, in which there have been heated discussions due to the influence of ideas, traditions, economic development and other factors. Although this system was finally established in 2005, it can be seen from the restrictive conditions set by the Company Law that the state's attitude towards the one-person company system is relatively conservative and mainly regulated, which is inconsistent with the overall trend of the state's decentralization to the market. However, sole proprietorship enterprises have been supported by the state for a long time, and various rules and regulations tend to be mature. The state has formulated many preferential policies to encourage the development of sole proprietorship enterprises. For example, laid-off disabled workers who establish or participate in the establishment of a sole proprietorship enterprise may, upon their own application and with the approval of the competent tax authorities, reduce their personal income tax according to the scope and extent of tax reduction stipulated by the people's governments of provinces, autonomous regions and municipalities directly under the Central Government. The annual loss of a single enterprise is allowed to be made up by the production and operation income of the enterprise in the next year, and the shortage in the next year is allowed to be made up year by year. These preferences are also clearly reflected in the Law on Sole proprietorship Enterprises.

In the above four aspects, a sole proprietorship enterprise has obvious advantages over a one-man company.

But as a new system, one-man company also has its own advantages, mainly in the following aspects:

1, operational risk

An important advantage of the company system lies in the limited liability of investors. Therefore, the operating risk of investors in one-person limited liability company is much smaller than that of investors in sole proprietorship enterprises who need to bear unlimited liability. This is also more conducive to stimulating the creativity of investors, thus creating more economic value. Comparatively speaking, sole proprietorship enterprises need investors to bear unlimited responsibilities, and generally speaking, investors are more conservative in their business methods and pursue steady operation. For individuals, this method is the best. But in the long run, this way is not conducive to the expansion of economic scale and the improvement of efficiency.

2. Business reputation

Because the company has a certain registered capital and engages in activities in its own name, it is strictly regulated and supervised by national laws, and it has more institutional stability than a sole proprietorship enterprise that mainly relies on the personal credit of investors. Therefore, from the general social concept, the business reputation of the company is higher than that of the sole proprietorship enterprise. The main effect of this is that one-man company has stronger financing ability and better sustainable development ability in the financial market.

3. Development prospect

Due to the above two reasons, in the long run, the company has a broader development prospect. When the conditions are met, it can change its organizational form, thus gaining stronger financial support and operational ability. However, due to its own limitations, sole proprietorship enterprises are difficult to meet the requirements of operators to expand their scale and pay more attention to the safety and stability of investors, so their prospects are narrower than those of companies.