Instructions on how to set up an individual business household in Vietnam

NguyenThiThuTrang September 24, 2022

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Business households belonging to individuals or groups of Vietnamese citizens over the age of 18, having full civil act capacity, and households may only register their business at one location, employ less than ten employees and take full responsibility for their business. set of assets used in business activities. Business households are granted business registration certificates for commercial activities. Business households must have a fixed business location, do not hire regular workers, have no seal, be responsible with all assets for business activities. In the following article, Lawyer X will Instructions on how to set up an individual business household in Vietnam. If you have a need to establish a business household, please contact us for the fastest advice.

Legal grounds

Decree No. 01/2021/ND-CP

What is a sole proprietorship?

Article 79 of Decree No. 01/2021/ND-CP on business registration defines individual business households as follows:

An individual business household is established by an individual or a household member and is responsible for all assets for household business activities. In case a household member registers a household business, he or she authorizes one member to act as the business household representative. Individuals registering as business households, the person authorized by family members to act as the business household representative is the head of the business household.
Many people, when starting a business, often hesitate whether to set up a company or register an individual business household to match the scale of their operations; What are the advantages and disadvantages of each type of business? Generally, the following individuals and households should register as individual business household instead of a corporation or enterprise.

Business household registration object

Being a Vietnamese citizen
Enough 18 years old
Have full behavioral capacity
Individual household members
Individuals and household members who are Vietnamese citizens aged 18 years or older with full civil act capacity and civil act capacity, have the right to establish a business household and have the obligation to register a household. family.

Conditions for setting up an individual business household

To be able to establish an individual business household, customers must meet the following conditions:

A member of an individual business household has a minimum of 1 person and a maximum of 10 people.
Members of an individual business household must satisfy the conditions that a Vietnamese citizen is 18 years or older and has full civil act capacity.
Individual business households are only allowed to conduct business in a certain group of industries and are not allowed to conduct business in a variety of business lines.
The name of an individual business household must meet the provisions of the law, such as fully containing two components, the business household name and the proper name. Do not use names with wrong words, which are not suitable with Vietnamese culture, traditions, fine customs and traditions.
The location of the individual business household must be in the territory of Vietnam, the address is clear and not in the buildings that are not allowed by law.

The process of setting up an individual business household

Profile of establishment of individual business household

To register a business household, the householder needs to prepare the documents mentioned in Clause 2, Article 87 of Decree No. 01/2021/ND-CP, including:

Application for business household registration (original).

Legal papers of: Head of household and members of household business (if any) including: Identity card or citizen identity card (with chip or without chip) or valid passport; household registration book or certificate of residence.

Minutes of meeting of household members (copy – if there are household members registered as individual business households).

Authorization document:

Family members in the household authorize the head of the household (if the household has other members with the same business household registration – copy).
The householder authorizes another individual to carry out the procedures for submitting business household registration documents to the competent authority (if any – copy).

Procedures for setting up an individual business household

Steps to set up an individual business household

Step 1: Individuals, groups of individuals or representatives of households send business household registration documents to the business registration office of the district where the business location is located.

Step 2: The business registration authority of the district shall hand over the receipt and grant the business household registration certificate to the household business within 03 working days from the date of receipt of the application, if all conditions are met. The following:

Business lines and trades not on the list of business lines and trades banned from business;
The name of the business household that intends to register must comply with the provisions of Article 88 of Decree No. 01/2021 on business registration;
Pay the required registration fee.
In case the dossier is invalid, within 03 working days from the date of receipt of the dossier, the district-level business registration agency must clearly notify in writing the contents to be amended and supplemented to the founder. household business.

How much does it cost to set up a sole proprietorship?

The fee level is decided by the Provincial People’s Council (according to Circular 85/2019/TT-BTC). Normally, the registration fee for household business is 100,000 VND/time.

The fee level as we see is relatively low to create opportunities for business households to participate in business registration in accordance with the law. However, if you do all the procedures for setting up a business yourself, the cost will be more expensive because of the additional costs of traveling, preparing documents and not counting in case the records are incorrect and need to be corrected.

Agency that collects fees for setting up individual business households

According to Clause 1, Article 4 of Circular No. 176/2012/TT-BTC stipulating:
“Fees and fees collection agency
a) The Business Registration Support Center under the Business Registration Management Department under the Ministry of Planning and Investment collects fees for providing business registration information.
b) Provincial Business Registration Office is the agency that collects business registration fees and collects fees for providing business registration information in the province.
c) The business registration authority of the district is the unit that collects the business household registration fee in the district.”

Thus, the agency that collects the business household establishment fee may be the business registration office of the district where the household business is established.

Other costs when registering an individual household business

After obtaining the Certificate of Business Household Registration and going into operation, the Business Household needs to pay the following taxes to the state agency:

Excise

Business households pay license tax at 6 levels: 1 million, 750 thousand dong, 500,000 dong, 300 thousand dong, 100,000 dong, 50,000 dong. This tax is paid once in the whole year, corresponding to the monthly income of Business Households respectively: over 1.5 million, over 1 million – 1.5 million, over 750 thousand – 1 million, over 500 thousand dong-750 thousand dong, over 300 thousand dong- 500,000 dong and from 300 thousand dong or less.

VAT tax

Calculated based on the value-added ratio (%) on sales applied for VAT calculation for business households and individuals (issued together with Official Letter No. 763/BTC-TCT dated January 16/ 2009 by the Ministry of Finance.

Pursuant to Circular 92/2015/TT-BTC, the flat tax method is based on revenue in each field, industry or trade that needs to pay business household tax according to the ratio:

Distribution and supply of goods: 1%;
Services, construction excluding raw materials: 5%;
Production, transportation, services associated with goods, construction including raw materials: 3%;
Other business activities: 2%.

Personal income tax

In Circular 92/2015/TT-BTC, individuals with a turnover of 100 million VND/year or less are not required to pay personal income tax. The rest must pay personal income tax according to the flat tax method:

Distribution and supply of goods: 0.5%;
Services, construction excluding raw materials: 2%. Particularly for property leasing, insurance agents, lottery agents, multi-level sales agents: 5%;
Production, transportation, services associated with goods, construction including raw materials: 1.5%;
Other business activities: 1%.

Why should you set up a household business?

Decree 01/2021/ND-CP takes effect from January 4, 2021, the regulations on business households have more incentives than before. Specifically:

Regarding business locations: According to the provisions of Article 86 of Decree 01/2021, “A business household may conduct business at many locations, but must choose one location to register its head office and must notify notify the tax administration agency, the market management agency where business activities are conducted for the remaining business locations. Thus, with the new regulations, business households are no longer limited in the number of business locations.
Regarding the number of employees: Decree 01/2021 no longer specifies the number of employees. While the old regulations in Decree 78/2015/ND-CP limit the number of employees of business households to 10 people, if there are more than 10 employees, a company must be established. Thus, from January 4, 2021, business households are not limited in the number of employees as before.
It can be seen that, at present, setting up an individual business household has many advantages as much as setting up a company.

Related articles

Service of setting up individual business households Lawyer X

Lawyer X with a team of professional and highly specialized lawyers will support consulting and registering to establish a business household for customers. We provide the following services:

Advising on conditions and procedures for setting up individual business households for customers;
Drafting dossiers of establishment of individual business households;
Representing clients to carry out procedures for setting up individual business households at competent state agencies;
Advising on issues arising during the operation of business households;
Support and advice on trademark registration, tax issues, and related licenses in the operation of individual business households.

Contact LSX Lawfirm

Finally, we hope this article is useful for you to answer the question about: “Instructions on how to set up an individual business household in Vietnam”. If you need any further information, please contact LSX Law firm: +84846175333 or Email: [email protected]

Frequently asked questions

In which case will the business household registration certificate be revoked?

In case the information declared in the business household file is forged; household business by a person who does not have the right to establish a household business (see also Article 78 of Decree No. 78/2015/ND-CP).
In case the information declared in the business household file is forged, the business registration authority of the district shall issue a notice of the violation of the household business and issue a decision to revoke the household registration certificate.
When changing business household registration information, the business household must notify the changed content to the business registration office of the district where it is registered. In case the registration dossier for change of business household information is forged, the district-level business registration agency shall issue a notice of violation of the business household and cancel the change of registered content.
The business household registration shall be carried out on the basis of fake information, restore the granted business household registration certificate on the basis of the most recent valid registration dossier, and at the same time notify the competent authority. authority to handle according to the provisions of law.

Are business households allowed to conduct business in conditional business lines?

According to Article 89 of Decree 01/2021/ND-CP stipulating the business lines of business households as follows:
When registering for establishment, registering for change in business household registration information, the business household must write business lines on the application for business household registration, and the notice of changes in business household registration information. . The district-level business registration agency shall record information about business lines on the business household registration certificate.
Business households are entitled to conduct conditional business lines from the time they fully meet the conditions prescribed by law and must ensure that they are satisfied throughout the course of operation. The state management of business lines subject to conditional investment and business and inspection of business households’ compliance with business conditions falls under the competence of specialized agencies in accordance with specialized laws.