Should clothing & coffee business establish company or business household in Vietnam?
Starting a business by opening a coffee or clothing shop is the choice of many people. So, when trading in these products, should you set up a company or a business household? In this article, LSX legal firm would like to give you information about this problem.
Legal ground
- Law on Enterprise 2020
Business household
Business household registered by an individual or household members; take responsibility for all their assets for the business operations of the household.
In case household members register as business households, they shall authorize one member to act as the business household representative.
For individual registering business households, in another word, the person authorized by household members to act as the business household representative is the owner of the business household.
Advantages and disadvantages of individual business households
An individual business household or a family business is the simplest form of business according to Vietnamese law. This type of business limited in the number of employees (less than 10 employees) and location as they can only operate in one place. However, individual business households are very easy to manage and report taxes to state management agencies. Therefore, the householder can avoid the risk of paying fines when committing administrative violations.
For people who trade in coffee and clothing, these industries are also entitled to very preferential personal income and value-added tax rates (only about 1.5% of revenue). Declare revenue is also a way to fix taxes/license fees.
For example, the owner of a clothing business declares that the expected revenue in 2020 is 300 million, so the household head will be subject to the license tax rate of 500,000 VND/year and the fixed personal income and the value-added tax rate of about 4.5 million/year (1.5% of 300 million VND).
Advantages and disadvantages of companies
A company means a larger, more progressive, and more complex form of management than a business household. On the other hand, establishing a company is a way to professionalize business operations when the division of rights and responsibilities is very clear. The law does not limited companies in terms of using employees and business locations in the territory of Vietnam – very convenient to expand the business model.
However, when establishing a company, the business owner is under a lot of management from state agencies, especially from the business registration office, and tax authorities… And of course, taking a higher risk of paying administrative fines. For companies, corporate income tax is 20% of profits. When paying dividends, company members will be subject to personal income tax according to each income level (the highest is 35%).
Should clothing & coffee business establish company or business household?
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.
LSX legal firm’s service on company establishment
When establishing a company, people must carry out the procedure following the law at the competent business registration authority (under the Law on Enterprise 2020). The process of establishing a business includes many different steps and phases. If you are not familiar with the law, this process may take a lot of time.
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
The List of members/partners of a limited liability company/partnership; the list of founding shareholders and foreign shareholders of a joint stock company shall contain:
Firstly, full names, signatures, nationalities, mailing addresses of members/partners/founding shareholders/foreign shareholders that are individuals;
Secondly, names, EID numbers, addresses of headquarters of members/partners/founding shareholders/foreign shareholders that are organizations;
Thirdly, full names, signatures, nationalities, mailing addresses or legal representatives or authorized representatives of members/partners/founding shareholders/foreign shareholders that are organizations;
Fourthly, stakes and values thereof, holdings, types, quantities and values of assets contributed as capital, capital contribution time of each member/partner (for limited liability companies and partnerships); types and quantities of shares, holdings, types, quantities and values of assets contributed as capital, capital contribution period of each founding shareholder and foreign shareholder (for joint stock companies).
Established in accordance with the law on enterprises
Deposit for international travel service business at the bank
The person in charge of the travel service business must have a College or higher degree in tourism. If that person graduated from a College school or higher in another major, then he/she must have a certificate of international tourism management.
Contact LSX
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