HowToLiveBetter.THE BETTER LIFE HANDBOOK
English
YOUR LIFE, YOUR OWN PACE

Starting a business without losing the family's savings

Explore each chapter to understand the effort, benefits and context.

Read the chapter introduction

This chapter counts money and legal liability, without converting them into years of life. When opening a shop or company, which steps put your personal assets, family assets or spouse's money at risk? What does Chinese law say, and can you separate those risks beforehand? The easiest ways to avoid the largest household losses come first, so decisions about signatures precede methods requiring more work. Advice based only on experience is graded C. Legal rules, public services and RMB amounts in this chapter concern China.

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⌘ K
Found:23 ideas
Money & work

Invest only money you can afford to lose; leave household reserves and borrowed money out

A Chinese individually owned business's debts can reach your personal property, or family property if family operation cannot be distinguished. Incorporating does not remove every risk: if the company cannot pay debts due, you can be required to pay promised capital before its scheduled date. Set your investment by what you could lose completely while still meeting essential expenses.

B Research support
No costQuick and easy
Money & work

Avoid personally guaranteeing company loans, especially with your spouse's signature

Under Chinese law, a joint-and-several guarantee lets the creditor pursue you directly when the company does not pay. An ordinary guarantee generally requires proceedings and enforcement against the company first, with you covering the remaining shortfall. A spouse's signature can expose both spouses' property, defeating the personal protection of limited liability.

A Stronger evidence
No costQuick and easy
Money & work

Choose the legal form before opening: sole operators and general partners have unlimited exposure; companies can limit it

Chinese individually owned businesses and general partners must cover all debts. Limited-company shareholders generally risk their subscribed contribution, but the promised amount must actually be paid within 5 years. Writing RMB 1 million can create RMB 1 million of exposure. Mixing company and household finances can defeat limited liability.

A Stronger evidence
Small costSome time
Money & work

Before buying a franchise, check its Ministry of Commerce filing, obtain written disclosures and specify a withdrawal period

A Chinese franchisor must have at least 2 directly operated stores running for at least 1 year and file within 15 days of its first franchise contract. Before signing, it must disclose 12 categories, including fees, deposit refunds and existing outlets' performance. Walk away if no filing can be found, disclosures are refused or payment is demanded before seeing a contract.

A Stronger evidence
No costSome time
Money & work

Decide the name, premises, business scope and capital before registering; complete applications can receive a license immediately

Five categories of material are required: the application, identity or qualification documents, premises documents, articles of association or partnership agreement (not for individually owned businesses), and any additional items expressly required by law. Complete applications can be registered on the spot, otherwise within 3 working days. Charges are often an intermediary's service fee.

A Stronger evidence
No costSome time
Money & work

For licensed trades, do not open before the permit arrives

In China, unlicensed operation can bring closure, confiscation of proceeds and a fine up to RMB 10,000 under the general rules. Restricted goods and unapproved securities, futures, insurance or payment-settlement businesses can constitute illegal business operations in serious cases, with a basic sentencing band up to 5 years. Renovating before checking eligibility and “trial operation” before approval are common traps.

A Stronger evidence
No costSome time
Money & work

Identify your food-business category: production and catering need permission, packaged-only sales need filing, fresh agricultural produce needs neither license

Making snacks, braised meats, baked goods or homemade pickles for sale generally requires permission. Selling only food packaged by others uses filing with the county-level-or-higher market regulator. Fresh meat and vegetables do not need a food-operation license. Unauthorized food production or operation can bring a minimum fine band of RMB 50,000–100,000, exceeding many small businesses' starting funds.

A Stronger evidence
Small costSome time
Money & work

Ordinary food cannot claim to prevent or treat disease, whether on labels, advertisements or livestreams

In China, ordinary food labels, instructions and advertising cannot claim disease prevention or treatment. Except medical-service, drug and medical-device advertisements, ads may not claim treatment or use language that makes a product sound like medicine. Fines are 1–3 times advertising costs, or RMB 100,000–200,000 when costs cannot be established. Serious cases can lose their business license.

A Stronger evidence
No costQuick and easy
Money & work

Food safety has criminal thresholds: diseased meat, dangerous contamination and toxic nonfood ingredients can lead to imprisonment

Earlier entries concern financial penalties; this one concerns criminal proceedings in China. Meat from diseased animals, failed inspections or severely excessive pesticide, veterinary-drug or heavy-metal contamination can be criminal when sufficient to cause serious poisoning, without anyone actually becoming ill; the basic band is up to 3 years. Adding toxic or harmful nonfood ingredients has a basic band up to 5 years regardless of sales amount.

A Stronger evidenceHigh value
No costQuick and easy
Money & work

Verify tax-payment demands independently through the electronic tax office or China's 12366 hotline

China's tax authorities do not request bank passwords, payment passwords or SMS verification codes by phone, nor provide an account for you to transfer taxes into. Actual inspectors must show an inspection notice and credentials. Hang up and verify through 12366. If money has already been sent, immediately call China's 110 or 96110 to request a payment stop.

A Stronger evidence
No costQuick and easy
Money & work

Distinguish a statutory earnest-money deposit from an advance payment, specify damages and assess trade credit as lending

The Chinese term “定金” triggers the deposit rule: a defaulting payer loses it; a defaulting recipient returns double. The portion above 20% of contract value does not qualify. “订金” does not automatically carry these consequences. Allowing a payment period lends your money to the buyer; failure can leave a bad debt.

A Stronger evidenceHigh value
No costQuick and easy
Money & work

Keep purchase documents and supplier details for every batch; suspiciously cheap goods can expose the owner even when staff bought them

In China, knowingly selling counterfeits can become criminal at RMB 30,000 in proceeds or RMB 50,000 in sales, with up to 3 years in the basic band. Unsold stock can count too. Unexplained prices far below market can establish knowledge despite denial. Contracts, invoices, payment records and identifiable suppliers are essential to a possible civil exemption.

A Stronger evidence
No costQuick and easy
Money & work

Follow workplace procedures, and identify who bears responsibility before offering help outside your authority

For example, China's nursing regulations require immediate notification of a physician when a patient becomes critical, and raising unlawful orders with the issuing physician. Other workers should identify their own mandatory-reporting boundaries. The law also protects voluntary emergency rescuers from civil liability for injuries caused during rescue.

B Research support
No costQuick and easy
Money & work

Exit properly after losses: use simplified deregistration when eligible, bankruptcy when insolvent, and do not abandon the entity

If no debts, wages, taxes or social contributions remain, all investors can give written commitments and use simplified deregistration after 20 days without objections. Individually owned businesses need no public notice and can be deregistered after 10 days without departmental objections. Insolvent companies should apply to court. Neglect can bar a legal representative from holding that role elsewhere for 3 years.

A Stronger evidence
No costSome time

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