Money and business / Chapter 12
This section counts only money and legal liability—not life expectancy. When you open a shop or form a company, which steps can wipe out your own money, family money, and your spouse's money together? What does the law require, and can you wall them off in advance? Items written from experience only, with no literature behind them, are grade C.
Items in this section are grouped by theme below; numbers in parentheses are item numbers.
Before opening, don't bet the nest egg: Only put in money you can afford to lose (item 1); don't sign personal guarantees on company loans (item 2); pick the right entity before you open (item 3); don't be a nominal shareholder (item 4); check franchise filing before joining (item 5); ask the right questions before paying someone to run your online store (item 24); when raising money for a business, only approach relatives, friends, and employees (item 26); put a partnership shop in a written agreement (item 28).
Registration and licenses: Fix name, premises, business scope, and registered capital before registration (item 6); don't open until licenses are in hand (item 7); before leasing a shopfront, check whether that unit can host your trade (item 27).
Food: See which regulatory tier you fall into (item 8); prepackaged food labels (item 9); ordinary food must not claim to treat disease (item 10); criminal lines for food (item 11).
Tax, annual reports, and invoices: File on time even with zero income (item 12); issue invoices only for real transactions (item 13); anyone posing as the tax bureau demanding payment is a scam (item 14); file last year's annual report online in the first half of each year (item 25).
Contracts and hiring: When taking money, write deposit (定金), not booking-fee wording (订金) (item 15); sign employment contracts within the first month (item 16); pay wages per contract and law (item 17); follow procedures on the job (item 22).
Products and sourcing: Sell first, then make (item 18); run samples through a mass-production checklist (item 19); keep purchase receipts and upstream supplier details (item 20); use your own designs or buy a license (item 21).
Exit: If you lose money, exit by the book (item 23).
Debts of a sole proprietorship come out of assets in your name. If it's unclear whether the whole family ran the business, creditors can reach family property. …
«Joint-and-several guarantee» means if the company doesn't pay, the creditor can skip the company and come straight to you. …
Sole proprietors and general partners owe without limit—pay what you owe until it's cleared. LLC shareholders owe only up to what they subscribed at registration. …
If your name is on the register, you're a shareholder in law. Pay subscribed capital on time; miss the deadline and you owe make-up plus company losses. …
By rule the franchisor needs at least 2 company-owned stores open 1 year, and must file with commerce authorities within 15 days after signing. …
Registration is free; the registration fee has not been charged since 2015—if someone charges you, it is not the registration fee. …
Opening without a license is handled by the department that governs that license under its rules. With no business license and no specific penalty rule: ordered to stop, illegal gains confiscated, plus a fine of up to 10000 yuan. …
Make and sell yourself—snack shop, braised goods, baking, homemade pickles—all need a license; small workshops and street vendors follow provincial rules. …
Food put in packaging and sold is prepackaged food in law; the package must have a label, and nine items are mandatory—including production date and shelf life. …
Labels, instructions, and ads for ordinary food must not claim disease prevention or treatment. Except medical, drug, and medical-device ads, no other ad may claim treatment or use medical-sounding words. …
Earlier items fine money; this one can put you in prison. Selling diseased meat, failed-inspection meat, or goods with pesticide, veterinary-drug, or heavy-metal residues far over limits: up to 3 years. …
After the license, file taxes on schedule. Earn nothing—you still file, with zeros throughout. Failure to file: ordered to correct within a time limit, and may be fined up to 2000 yuan; serious cases, 2000–10000 yuan. …
Through the end of 2027, small-scale taxpayers with monthly sales under 100000 yuan or quarterly sales under 300000 yuan owe no VAT. Where the rate would have been 3%, it is cut to 1% for the same period. …
Tax authorities will not phone you for bank-card passwords, payment passwords, or SMS verification codes, and will not give you an account to wire tax into. …
Only the words “earnest deposit” bring the double rule: if you break the deal, you do not get this money back; if they break it, they return double. The part above 20% of the contract amount does not count. …
If someone works a full month without a written contract, from the second month you owe double wages each month until the end of the first year. …
Wages must be paid on time and in full per contract and law. If wages are owed, the employee can ask a court for a payment order. Oral promises on raises, bonuses, or advances lose in a dispute if you can't prove them. …
An Italian study found that founders who set a hypothesis and tested it against market feedback ran better businesses. They were also more likely to pivot in time, and did not quit earlier. …
One prototype versus a thousand units differs in where money sits. Yield sets true unit cost. Minimum order and payment terms set how much you advance. Inventory sets when cash returns. …
Selling counterfeits: illegal gains of 30000 yuan, or sales of 50000 yuan, meets the criminal threshold—up to 3 years. Unsold warehouse stock counts if goods value reaches three times the sales threshold. …
Changing colors, swapping the background, or slapping on your own icon on someone else's work is still unlicensed use. …
Nurses, for example: regulations require immediate physician notice when a patient is critically ill, and raising non-compliant orders with the prescribing physician. …
No debts, no unpaid wages, tax, or social insurance: all investors sign a commitment; 20-day public notice with no objection → simplified deregistration. Sole proprietors skip the notice; no objection within 10 days → deregister. …
These scams take a first fee, then keep extracting more with «upgrade packages», advance goods payment, and unlock fees. Backend orders and earnings may be faked; withdrawal fails when you try. …
Companies and sole proprietors must file last year's annual report online in the first half of each year. Missing it puts you on the abnormal operation list; after catch-up filing you can apply to leave. Filing is free. …
Borrowing from relatives, friends, and employees, or taking them as co-investors, is not itself a crime. The crime is public promotion, taking money from strangers, and promising principal-and-interest repayment or returns. …
Converting a residence into a shop needs unanimous consent from the other owners in the same building—one household against is enough to block it. Neighbors asking for restoration and damages will be upheld. …
Without an agreement, the law sets default rules for you. Decisions need unanimous consent; profits follow each person's actual capital paid in; the person who watches the shop every day draws no wage by default. …
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