Abstract: As a very important part of market economy in China, the operation of individual businesses is related to the social and economic development in China. In recent years, the state has also strongly advocated the transformation and upgrading of individual businesses, so the transformation and upgrading problem of individual businesses is a research hotspot in recent years. Through investigation and research, from the perspective of individual businesses, on the basis of discussing the factors affecting the transformation and upgrading of individual businesses, this study analyzed the real option characteristics of individual business, constructed the decision-making model using the real option theory for the transformation and upgrading of individual businesses, took landscaping industry as an example to validate and apply, and come to a conclusion combined with the tax analysis. In order to provide reference for individual businesses, especially in landscaping industry, when considering their own transformation and upgrading problems.

Key words: individual businesses, transformation and upgrading, the tax policy, model building