Setting up a Sole Trader in China
Setting up a Sole Trader in ChinaUpdated on Tuesday 19th April 2016
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The sole trader is a business form that is convenient for small companies that are run by a single individual. This small private company is simple to set up and it is a popular form of business registration, especially for certain businesses like restaurants or shops.
Our Chinese lawyers can help you understand the particularities of a sole trader in China and register your small private company.
The particularities of a sole trader in China
A Chinese sole trader must be owned by a Chinese national. As the name implies, it is owned by a single individual who bears complete liability for the small private company. Foreign investors who want to open a small enterprise in China will need to find a Chinese partner. The registration process is likely to be faster, if you are married in China to a Chinese national and wish to start a business.
Depending on your chosen business field, you will not only have to register the sole trader, but will also need special permits and licenses for certain types of businesses, like a restaurant. Our Chinese lawyers are able to help you obtain the necessary permits from the relevant Chinese authorities.
Other business options in China
China is a popular business destination because of its large market and valuable workforce. Although different regulations apply to foreigners who want to invest in China, there are some business forms that allow full foreign ownership. The WOFE (Wholly Owned Foreign Enterprise) and the Registered Office are two convenient options for those interested in opening a company in China.
Although the sole trader has its advantages, like smaller set-up costs and lower maintenance costs, a Chinese company gives the investor protection in case of bankruptcy, because his or her personal assets are separate from the company assets.
Before engaging in business activities with a Chinese company, you should require a copy of their business licence in order to be able to identify the type of company you are dealing with. For this purpose, our Chinese lawyers can help you with a company due diligence verification.
For more information about the types of companies in this country, you can contact our Chinese law firm.