Starting a business: don't bet the family savings✳
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).
English, Russian and Spanish use dlgrv’s unofficial translations. Newly revised entries appear in the Chinese original until a checked translation is available. The author’s latest Chinese text is authoritative. Translation revision: dlgrv/HowToLiveBetter · b25fa8a
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. A company doesn't fully shield you either: when the company can't pay, what you promised as subscribed capital but haven't paid yet can be called in early. Size your stake by «I could lose it all and still pay the mortgage and medical bills».
Cost
Zero upfront cost. Before you start, set a personal limit:…
Benefit
Losing money isn't the only risk. For a sole proprietorship, if you ran the business alone, debts are paid fro…
What you’re signing is a “joint and several liability guarantee”. If the company fails to repay its debts, creditors can bypass the company entirely and demand repayment from you. Choosing a “general guarantee” means creditors must first sue the company and liquidate all its assets before they can seek any repayment from you. If your spouse also signs the document, both of your personal assets become collateral, effectively nullifying the limited liability protection afforded by a limited liability company.
Cost
Zero expense. When a bank, supplier, or landlord asks you…
Benefit
The wording in a guarantee contract essentially translates to “if the debtor fails to repay, you are obligated…
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. But whatever you subscribe must be paid in within 5 years: write 1000000, you may owe up to 1000000. Mix company books with household books or use the company to dodge debt, and «limited» can fail. With only one shareholder, you must prove the books are not mixed.
Cost
Registration can be completed online via local government…
Benefit
Sole proprietorship debts are paid from personal property or from family property. General partners in an ordi…
Once your name is registered, you are legally a shareholder. You must pay the full amount of your subscribed registered capital by the deadline; failure to do so results in both payment and compensation for any company losses. If other shareholders fail to contribute their share during company formation, you are liable for that shortfall as well. While others run the business, all debts remain tied to you.
Cost
Zero expense. If someone asks you to “lend your ID to be l…
Benefit
A registered shareholder is a legal shareholder. Pay subscribed capital in full by the deadline in the article…
By law, a franchisor must first operate at least two company-owned stores for a full year, and must register those stores with the Ministry of Commerce within 15 days after signing the franchise agreement. Before signing, it must also furnish you with written disclosures on 12 specific topics, including franchise fees, refund policies for deposits, and the profitability of existing stores. If a brand fails to register, refuses to provide these disclosures, or demands payment before letting you see the contract, you should walk away immediately.
Cost
There is no cost involved. Simply visit the Ministry of Co…
Benefit
Legal requirements mandate that any franchisor maintain at least two company-owned stores that have been opera…
Registration is free; the registration fee has not been charged since 2015—if someone charges you, it is not the registration fee. Only five material types are required: application, identity or eligibility proof, premises documents, articles or partnership agreement, plus anything else the rules name. Complete papers: license on the spot; if not on the spot, within 3 working days; complex cases get 3 more working days.
Cost
There are no fees for the registration process itself. Sin…
Benefit
The regulation fixes the materials as five items. «(1) Application form». «(2) Applicant qualification documen…
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. Selling monopoly or restricted goods, or doing securities, futures, insurance, or payment settlement—serious cases are illegal business operation; the lowest tier is up to 5 years.
Cost
No cost involved. Before opening, verify whether your busi…
Benefit
Authorities designated by law will investigate any unlicensed businesses. For operations without a license whe…
Making food to sell, such as a snack shop, braised foods, baking or homemade pickles, requires a license; small workshops and vendors follow provincial rules. Selling only prepackaged food that meets the applicable standard’s definition does not require a food-business license, but does require filing. Fresh meat and vegetables do not require a license. Where a license is required but missing, goods worth less than 10000 yuan still bring a fine of 50000 to 100000 yuan.
Cost
There is no fee for the permit itself. However, your premi…
Benefit
Food Safety Law: food businesses need a license first—produce food, sell food, or do catering, all need a lice…
Classification as prepackaged food depends on advance packaging in measured quantities with a uniform weight or volume declaration, not simply on having a bag. Food weighed and bagged at purchase, made for immediate sale, or packed as catering takeaway is not prepackaged merely because it has a bag or box. Missing required prepackaged-food labels brings fines of 5000 to 50000 yuan for goods worth less than 10000 yuan. Bulk food also needs names, dates and other information.
Cost
Printing labels costs only a few cents to a few dimes each…
Benefit
As of October 2026, the current GB 7718-2011 requires prepackaged food to be packaged or made in packaging mat…
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. Penalty: 1–3 times ad spend; if spend can't be figured, 100000–200000 yuan. Serious cases can revoke the business license.
Cost
No cost involved. Simply review all promotional copy, prod…
Benefit
Food Safety Law: «Labels and instructions for food and food additives must not contain false content and must…
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. «Sufficient» to cause serious poisoning is enough—no need for someone to have been harmed. Adding toxic or harmful non-food substances to food: falls in a lowest sentencing bracket of up to 5 years, regardless of how much you sold.
Cost
No direct cost is involved. Follow the approach outlined i…
Benefit
Criminal Law Article 143 covers this tier. Food you produce or sell that doesn't meet food safety standards an…
Even with no tax due, file on schedule and report revenue, costs and expenses truthfully. No revenue does not mean every field is zero. Non-filing brings an order to correct, possibly a fine up to 2000 yuan, or 2000 to 10000 in serious cases. Three consecutive months without returns for any tax type brings abnormal-taxpayer status and suspension of invoices.
Cost
There’s no direct cost involved. You can file electronical…
Benefit
Taxpayers with no tax payable for a period must still file as required: even if no tax is due, the return rema…
Small-scale taxpayers are the category of smaller businesses paying tax under simplified rules. 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. The other way around, paying someone to issue invoices so you can offset tax is fictitious invoicing: starts at up to 3 years, plus a fine of 20000–200000 yuan.
Cost
No cost at all. There is no need to purchase or sell invoi…
Benefit
Businesses that are small and tax under the simplified method are small-scale taxpayers. The law says «sales t…
Tax authorities never ask for your bank card passwords, payment codes, or SMS verification codes over the phone, nor do they provide an account number for you to send tax payments to. Legitimate on-site tax inspections require officials to present an inspection notice and identification. When receiving such calls, hang up first and call 12366 to confirm. If you’ve already transferred money, immediately call 110 or 96110 to request a payment reversal.
Cost
No cost involved. If you receive calls or texts claiming a…
Benefit
The State Taxation Administration explicitly states: “Tax authorities never request bank card passwords, payme…
Only when the word “deposit” is used does the double‑return rule apply: if you break the contract, you lose that money; if the other party breaks it, they must pay you twice the amount. Anything above 20% of the contract value does not qualify as a deposit. If you write “advance payment” instead, the law offers no such protection. Offering credit terms is essentially lending your own money to the buyer interest‑free; if they go bankrupt, it becomes a bad debt.
Cost
No cost at all. Simply include the term “deposit” in the c…
Benefit
A deposit only becomes valid once the money is actually received by the seller (the effective date is when del…
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. Social insurance must be registered within 30 days of hire; failure to register and failure to correct after the deadline draws a fine of 1–3 times the premiums due. There is no «employee voluntarily waives social insurance» in law.
Cost
The portion of social insurance premiums that employers mu…
Benefit
Employers must pay double wages to employees who have worked for at least one month but still lack a written c…
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. Money you lend an employee isn't forced into writing by law between natural persons, but write an IOU with amount, interest, and repayment date.
Cost
No expense is incurred. The contract clearly states the wa…
Benefit
A labor contract must specify how wages are paid and how social insurance is handled. The employer must pay wa…
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. Following this reasoning, if nobody prepays or places a small order, don't trust «make it and buyers will appear».
Cost
Just a few dozen to a few hundred yuan is needed to create…
Benefit
A randomized controlled trial tracked 116 Italian startups for about one year. A randomized controlled trial r…
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. Products on the mandatory certification list cannot leave the factory or be sold without certification and the mark on the product.
Cost
A few hundred yuan for a small trial batch, plus hours to…
Benefit
The main difference between producing one prototype and producing a thousand units lies in where your money ge…
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. «I didn't know it was fake» is not yours alone to decide: buying far below market without a good explanation supports knowledge. Keeping purchase contract, invoice, payment trail, and upstream identity is the path to the no-damages defense.
Cost
Zero upfront expense. For each batch of goods, retain esse…
Benefit
Knowingly selling goods bearing counterfeit registered trademarks: illegal gains of 30000 yuan meets the crimi…
Even if you alter an existing image by changing its colors, background, or adding your own icons, you still have not obtained permission to use that artwork. Making money by reproducing someone else’s artwork—whether you earn 30,000 yuan, reach 50,000 yuan in sales, or print 500 copies—constitutes copyright infringement and can lead to a prison sentence of up to three years. In trademark law, any mark that is “likely to cause confusion” is considered infringing as well.
Cost
Licensing fees from legitimate stock image libraries start…
Benefit
Copyright law lists «using a work by adaptation, translation, annotation, or similar means without the copyrig…
Nurses, for example: regulations require immediate physician notice when a patient is critically ill, and raising non-compliant orders with the prescribing physician. Other jobs are the same—know where your procedures draw the «must report» line. Separately, voluntary emergency aid that injures the person helped does not create compensation liability.
Cost
No cost involved. Simply follow institutional rules, medic…
Benefit
Taking nurses as the example, regulations set duty boundaries as follows. Critical illness: notify the physici…
If no debts, wages, taxes or social-insurance contributions remain unpaid, all investors must write a commitment and publish it for 20 days. If there is no objection, they can simply cancel it. Self-employed individuals do not need to publish it. If a company cannot pay its due debts and its liabilities exceed its assets, it can file for bankruptcy. If the company fails to file an annual report for two consecutive years, fails to change its status in the abnormal list, and cannot be contacted, its license will be revoked and the responsible legal representative will no longer be able to serve as a representative for three years.
Cost
Simplified deregistration can be handled independently: ju…
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. Fake-order boosting is itself illegal; agencies caught are fined.
Cost
No upfront cost is needed. Before paying, obtain three thi…
Benefit
Guangdong Higher People's Court ruled on an agency fraud: Jiang, Xu, and 55 others ran companies in Guangzhou,…
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. Calls saying you missed it and must pay via a mini-program or official account are scams—lead defendants have been sentenced to over 10 years. Check the publicity system yourself first.
Individual businesses may also submit the annual report on paper.
Cost
Free. Log in to China's National Enterprise Credit Informa…
Benefit
Companies must «from 1 January to 30 June each year, submit the prior year's annual report to market supervisi…
Borrowing money or raising equity only from relatives, friends and existing employees, without having them recruit outsiders for you, is not in itself illegal. The crime is public promotion, taking money from strangers, and promising principal-and-interest repayment or returns. Taking in 1000000 yuan, or money from 150 people, meets the criminal threshold—starts at up to 3 years. Money used mainly in normal production, and fully repaid before indictment, may avoid criminal punishment.
Cost
No money. Borrowing or bringing in shareholders: only appr…
Benefit
Criminal Law Article 176 covers «illegally absorbing public deposits or absorbing them in a disguised form, di…
Converting a home into a shop requires consent from every other owner in the same building, as well as owners in other buildings who can prove they are affected. Courts support neighbors’ claims for restoration and compensation. New restaurants producing cooking fumes are prohibited in residential buildings; in mixed residential-commercial buildings they are prohibited if there is no dedicated flue. Authorities first order correction. Failure to correct leads to closure and a fine of 10000–100000 yuan, potentially costing the renovation money and deposit.
Cost
No money. Before signing a lease, paying deposit, or renov…
Benefit
Civil Code Article 279: «An owner who changes a residence into business premises shall, besides complying with…
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. With no partnership term agreed, anyone may exit after reasonable advance notice to the others. Changing those defaults only works if written into the agreement in advance.
Cost
No money. Sit down once or twice with the partners, write…
Benefit
Partnership Enterprise Law Article 4: the partnership agreement is made in writing by unanimous negotiation of…
