How to set the capital of a one-person company? 5 strategies that entrepreneurs must know

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The setting of the capital of a one-person company is crucial for entrepreneurs. This article will help you understand the basic concepts of capital, setting strategies and considerations, and help you gain the trust of customers, banks and the government on your entrepreneurial journey, and build a solid foundation for your business.

What is the capital of a one-person company? Why this matters

The "capital" of a one-person company refers to the total funds that the founder (i.e. the sole shareholder) commits to invest in the company's operations when the company is established.The amount of capital is not only related to the company's start-up capital, but also affects the trust and cooperation opportunities between you and your customers, banks, and the government.According to current laws in Taiwan, except for certain industries, the capital of a one-person company isNo hard limit, but the capital must be verified by an accountant and become part of the public documents.

Reminder: The capital amount is not the paid-in capital. As long as there is sufficient amount in the account during the capital verification, the limited company establishment process can be passed; after establishment, this money can be used for operating expenses.

5 strategies that entrepreneurs must know

1. Set according to business scale and expenditure budget

The first thing to consider is the necessary expenses for the next six months.For example, rent, salary, equipment, marketing promotion, etc. A reasonable approach is to assess how much working capital will be needed over a six-month period and use this amount as the basis for the capital amount. The following table shows examples of recommended "one-person company capital" for companies of different sizes:

In the early days of establishment, Capital If the price is too low, it will easily cause partners to doubt the company's integrity. It is recommended that small companies should not set the price lower than 50,000 yuan, and medium and large companies should start at at least 100,000 yuan. Special industries must comply with statutory standards.

2. Balancing trust and loan needs

The amount of capital directly affects your Bank Trust and the difficulty of applying for a business loan. Several banks have indicated that although a capital of 100,000 yuan can meet the minimum requirements of the Company Law, the loan amount and review flexibility are limited. If financing needs are expected during operations, the company may consider increasing the capital to 300,000 to 500,000 yuan, which will help improve its financial health.

Expert advice: If you plan to apply for government subsidies, Ministry of Science and Technology programs, Ministry of Labor startup loans, etc., it is best to set the capital in the range of 500,000 to 1 million yuan.

Comparison table of one-person company capital and bank loan benefits

3. Pay attention to tax planning and capital management flexibility

The capital of a one-person company is too high, and the transfer of cash on the account must comply with tax laws. It is not advisable to falsely report excessive amounts in order to save taxes.The capital amount is set too high but there is no actual operation or cash outflow. If funds are withdrawn or shareholder loans occur in the future, the IRS can easily check whether there is any suspicion of evading personal income tax.

Best practices: Make sure that every capital investment can be explained, such as purchasing equipment, prepaid rent, etc., and keep complete invoice and voucher records.

4. Pay attention to industry regulations on statutory special capital

Some industries have special statutory capital thresholds (such as insurance brokerage, securities, medical equipment, etc.).Before starting a business, be sure to check relevant announcements in the government gazette or industry associations. If it does not comply with the regulations, the Ministry of Economic Affairs will not approve the establishment.

5. Must be audited by accountants, processes and documents cannot be ignored

When establishing a one-person company, the capital must be audited by an accountant and a capital verification report must be issued; otherwise, the company registration with the Ministry of Economic Affairs cannot be passed.Once the capital is verified, any future capital increase (or reduction) must be re-processed by an accountant.

Key points of capital verification process for one-person company:

• Prepare "Company Name Approval Letter"
• Open a preparatory account at a financial institution and deposit capital
• Apply for capital verification from an accounting firm and prepare deposit certificates and related documents
• Obtain the capital verification report and submit it together with the required documents to the Ministry of Economic Affairs for registration
• After the establishment is completed, the balance in the preparatory account can be transferred to the official company account