If you want to open a sole proprietorship in China, you can opt for the services offered by our specialists. With the help of our Chinese lawyers, you can better understand the formalities for setting up a sole trader in China, as well as the procedures involved when acting as a self-employed person in this country. We invite you to read this article and find out some useful information about this business structure.
| Quick Facts | |
|---|---|
| Who can be a sole trader in China? |
Local businessmen interested in being self-employed in China. Foreigners can establish a WFOE (Wholly Foreign-Owned Enterprise) or a joint venture instead of a sole proprietorship. |
|
Is a sole proprietorship in China a legal entity? |
No, the owner is fully responsible for invested capital and business debts. |
|
Legislation |
Sole Proprietorship Enterprise Law of the People’s Republic of China |
| Minimum capital | Not required. However, the owner can decide on the capital contribution. |
| Registration authority |
Administration for Industry and Commerce (AIC) |
| Requirements for sole traders to be registered in China |
– registered office, – name verification, – legal representative (recommended), – company seal, etc. |
| Documents to register as a sole trader in China |
– owner’s ID/passport, – application form, – certificate of approval issued after the business name is registered, etc. |
| Tax registration required (YES/NO) |
YES |
| Bank account needed (YES/NO) |
YES |
| Business licenses and permits |
According to the type of activities. The business license in China is issued by the State Administration for Market Regulation (AMR). |
| Time frame to register a sole trader in China |
About 15 days |
| Restrictions |
Foreigners cannot open this type of structure. |
| Signing documents and/or business contracts |
By the business owner |
| Benefits of sole traders in China |
– flexibility, – tax advantages, – suitable for various business activities |
| Our Chinese agents can help you with sole proprietorship registration | We can manage and prepare the paperwork, register with the local authorities, act as legal representatives when opening a sole trader in China, etc. |
Table of Contents
How to set up a sole proprietorship in China
If you want to start a sole trader in China, you should know that this is possible for Chinese nationals. In the case of foreign investors, they need a Chinese business partner to set up such a structure. If this is not possible, overseas entrepreneurs have other business structures at hand, such as WFOE in China (sometimes called WOFE) or Wholly Foreign-Owned Enterprise. Let’s review some of the procedures and formalities for opening a sole proprietorship in China:
- Although it is not mandatory to have a legal representative for opening a sole trader in China, we still recommend working with such a specialist. Our attorneys in China can represent you and help you overcome possible business complexities.
- An application form is required to be completed and signed at the time a sole trader in China is established.
- An identity document and proof of nationality are required.
- A sole trader must have a business address in China.
- A name verification is also needed when incorporating a sole trader with the Chinese Company Register. The verification is done with the State Administration for Market Regulation and the Administration of Industry and Commerce in China.
- Depending on the activities, special licenses and permits will be required for a sole trader in China.
- A bank account is also needed at the time a sole proprietorship in China is incorporated. A business bank account is recommended instead of a personal one.
- Tax registration is another requirement for opening a sole proprietorship in China.
It is worth mentioning here that a Certificate of Approval is issued after registering the business name of the sole trader in China. With the legal assistance offered by our lawyers in China, you can start your operations as a sole trader in a fast and reliable manner. Normally, such a business entity can be opened in about 15 days if all documents are accepted and all conditions are met.
The particularities of a sole trader in China
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 as a 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.
About China’s economy in a few lines
If you want to start a sole trader in China, it would be good to get an idea of the country’s economic direction:
- According to estimates, China’s GDP is likely to grow by approximately 4.8% – 5% in 2025.
- In 2024, around 25% of total foreign investment supported China’s economic growth.
In addition to support and assistance for opening a sole trader in China, we can also help you in other situations. For example, you can work with our immigration lawyers in China when relocating here. We can guide you through all the procedures for obtaining a residency in China. Our support is available if you are interested in obtaining citizenship in China. On the other hand, if you are interested in a divorce in China, you can contact our specialists. In addition, we guide entrepreneurs in trademark registration in China. We, therefore, invite you to contact our law firm in China and find answers and solutions to the problems you encounter.