Currently, many individuals and households with business plans choose the type of business household to operate. Compared to other business types, a business household is somewhat easier to establish. The state has facilitated to make the procedure simple. However, not everyone can carry out the procedure quickly. So, in this article, LSX legal firm will answer the question: “How to register an individual business household in Vietnam?”
Legal grounds
- Decree 01/2021/ND-CP
- Circular 85/2019/TT-BTC
What is an individual business household?
Individual business household, or in other words, business household, according to Article 79 of Decree 01/2021/ND-CP:
- A household business is established by an individual or family household members that shall take responsibility for business operations of the household business with all of their property. If a household business is established by members of a family household, one of them shall be authorized to act as the representative of the household business. The individual applying for registration of household business or the person authorized by the family household members to act as the representative of the household business shall be the owner of the household business.
- Households engaged in agriculture, forestry, aquaculture, salt production, street vendors, nomadic or seasonal businesspeople, and service providers earning low revenues not required to apply for the establishment of household businesses, except for conditional business lines. The provincial People’s Committees shall specify the low revenues applied within their provinces.
On the other hand, the Law on Enterprise 2020 does not regulate business households. Business households and enterprises are both considered economic organizations, carrying out commercial activities, however, business households are not a type of enterprise.
Characteristics of business households
Legal status: do not have legal status.
Member: Business household registered to establish by an individual or household members.
Business Location: A business household can operate at many locations, but must choose one location to register its head office. Also, Business households must notify the tax administration agency, the market management agency where they conduct business for the remaining business locations.
Business scale: Small scale, personal and household nature.
Invoice: Only direct sales invoices and can not issue VAT invoices (red invoices).
Seal: Do not have the seal of the business.
Tax:
- License tax: Revenue over 100 million VND to 300 million VND: 300k/year; Revenue over 300 million VND to 500 million VND: 500k/year; Revenue over 500 million: 1 million/year.
- Personal income tax: Depending on each industry and business line, the tax rate ranges from 0.5% to 2%.
- Value-added tax: Depending on each industry or business line, the tax rate ranges from 1% to 5%.
Procedures: Simple establishment procedure, easy tax declaration, and payment.
Conditions for setting up an individual business household
Certificates of household business registration shall be issued to household businesses that are duly established and operating under Decree 01/2021/ND-CP. The conditions to establish a business household:
- The registered business lines are not banned;
- The application for household business registration is valid;
- Fees for household business registration are fully paid.
- The name of the household business conformable with regulations of Article 88, Decree 01/2021/ND-CP:
“1, Each household business has its own name. The name of a household business shall consist of two elements as follows:
a) The phrase “Hộ kinh doanh”;
b) The proper name.
The proper name consists of letters in the Vietnamese alphabet, the letters F, J, Z, W, digits, and symbols.
2, It is prohibited to use words or symbols that contradict Vietnam’s tradition, history, culture, and ethics in the proper name of the household business.
3, The name of a household business must not consist of the phrase “công ty” or “doanh nghiệp”.
4, The proper name of the household business must not coincide with the name of another household business which has been registered within the same district.”
Procedures for registration of business household
An application for household business registration includes:
- Firstly, the application form for household business registration;
- Secondly, legal documents of the owner of the household business or family household members applying for household business registration;
- Thirdly, the copy of the minutes of the meeting of family household members on establishment of household business in case the household business is established by family household members;
- Fourthly, the copy of the letter of authorization made by the family household members to authorize a person to act as the owner of the household business in case the household business is established by family household members.
When receiving the application, the district-level business registration authority shall give a confirmation slip and issue the certificate of household business registration to the household business within 03 working days from the receipt of the valid application.
If the application not satisfied, within 03 working days from the receipt of the application, the district-level business registration authority shall give a written notification to the applicant or the household business founder. Such notification must specify necessary revisions (if any).
After 03 working days from the date of submission of the application for household business registration, if neither the certificate of household business registration is issued nor the notification of necessary revisions is given; the household business or its founder can lodge a complaint or denunciation in accordance with regulations of the Law on complaints and denunciation.
In the first week of every month, the district-level business registration authority shall send a list of household businesses registered in the previous month to the tax authority of the same district, the Business Registration Office, and regulatory agencies of the province.
Provinces and cities apply online individual business household registration
Some provinces and cities apply for online individual business registration through the online public service portal:
- Firstly, register a household business online in Hanoi via the Online Public Service Portal: http://123.25.28.178/dkkdqh/
- Secondly, register a household business online in Ho Chi Minh City via the Ho Chi Minh City Online Public Service Portal: https://dichvucong.hochiminhcity.gov.vn/
- Thirdly, register a household business online in Da Nang via the Danang Online Public Service Portal: https://dichvucong.danang.gov.vn/
- Fourthly, register a household business online in Dong Nai via the Dong Nai Online Public Service Portal: https://dichvucong.danang.gov.vn/
Besides, you can register for the establishment of an individual business household online through the National Public Service Portal at the website (https://dichvucong.gov.vn) and then select the location where you want to set up the business.
Legal service of LSX Legal Firm
LSX legal firm provides legal services to clients in various legal areas. To make your case convenient, LSX will perform:
- Legal advice related to new regulations;
- Representing in drafting and editing documents;
- We commit the papers to be valid, and legal for use in all cases;
- Represent to submit documents, receive results, and hand them over to customers.
With a team of experienced, reputable, and professional consultants; The firm is always ready to support and work with clients to solve legal difficulties.
Furthermore, using our service, you do not need to do the paperwork yourself; We guarantee to help you prepare documents effectively and legally.
Also, you will not have to waste time preparing the application, submitting application, or receiving results. At those stages, we will help you do it smoothly.
After all, LSX provides the service with the desire that customers can experience it the best way. Additionally, we guarantee the cost to be the most suitable and economical for customers.
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Related questions
Firstly, in terms of business scope: Some business lines can not register for individual business households. That means the scope of business is narrower than that of a company.
Secondly, in terms of capital: Since a household business is a model of a household, there is a reciprocal relationship between its members, so there is no complexity in capital management. But usually, no one invests in a household business because the percentage division among family members not really focused and separated.
Thirdly, in terms of import and export, the law limits household businesses more than companies.
Fourthly, about signing contracts: Signing a contract with a company always creates more certainty than with a individual business household. Because household businesses operate in a small model.
It isn’t. Business household does not have a seal, cannot open branches or representative offices, do not have the rights that enterprises have such as import-export activities or apply the Law on Bankruptcy when the business makes a loss.
Clothing and coffee businesses should register to establish an individual business household for cheaper, simpler, easier service fees, dossiers, and operating taxes.
For startups, optimizing the model to survive is important. At least for individual business households, they no need to hire an accountant to do reporting. They also face little risk of sanctioning by the management agency.
Contact LSX
Finally, hope this article is useful for you to answer the question about “How to register an individual business household in Vietnam?”. If you need any further information, please contact LSX Law firm: +84846175333 or Email: [email protected]
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