Should I open company in Vietnam? Limited Liability/Sole Proprietorship?

The economic development of Vietnam currently growing stronger and stronger in the modern world. Nowadays, business is very simple; all you need is a little capital, passion, experience, and capacity; Then you can start a business. When a business reaches a certain level. A question of whether to establish a company raised? Which type of company operates efficient and profitable? LSX legal firm provide this article to answer the question: “Should I open company in Vietnam? Limited Liability or Sole Proprietorship?”

Legal ground

• Law on Enterprise 2020

Should you open a company in Vietnam?

Setting up a company is very popular nowadays, and the procedure is quite simple. To answer the question of whether to establish a company or not? We would like to give you a number of reasons for you to decide whether you should establish a company or not:

• When establishing a company, your business will be more open to the market and will be known by many people. If the company operates well, you will be able to open more branches over the country
• You can become a Director, having the right to decide and manage your company.
• Setting up a company helps you build your brand. Your product is known, trusted, and used by many people, thereby bringing more profits.
• When you establish a company, you must register your business. This aims to secure your business. The company operates under the regulations as well as the protection of the law, making your business process more serious and complete.
• Furthermore, other businesses do not have the right to use your trademark to conduct business as the law protects it
• Your company will create jobs for many people.
• Lastly, a company with valid legal status will enjoy benefits in accordance with the law.

From the above reasons, we believe you can make your own answer.

Limited liability or Sole Proprietorship?

When setting up a company, one of the most important issues is choosing the type of company that suits your needs. Recently, Limited liability and sole proprietorship are the two types of businesses that are preferred by many people. Each type has its advantages and disadvantages. So, establishing what type of business depends on the needs and abilities of each person.

Limited liability

Advantages

• Have the right to decide all matters of the company. Setting up a limited company is not too complicated because it does not have many members, and they usually know each other. Thus, the company operates and manages easily.
• Due to the strict regulation of the transfer of contributed capital; investors can control the change of company members with ease.
• The owners of the limited company will be liable only by the company’s assets. This limits the risk. The company owner is responsible to the extent of his/her contributed capital.
• The limited company has the right to contribute capital to establish or buy shares; contributed capital in partnerships and joint-stock companies.

Disadvantages

• Because this type of company does not have the right to issue shares, the company’s capital mobilization is limited.
• Besides, managing a single-member limited liability company may be more difficult than a sole proprietorship.

Sole Proprietorship

Advantages

• Because there is only one owner, he/she has full rights to decide on everything related to the operation of the company.
• A sole proprietorship has a simple and compact organizational structure.
• Easy to manage
• Since a private enterprise has unlimited liability with the entire owner’s assets, it will be easy to create trust for partners and customers as well as promote business cooperation.

Disadvantages

• Owners of sole proprietorships are subject to high risk because they have unlimited liability with all their assets for all business activities of the business.
• The owner is always responsible for every business activity of the business.
• A sole proprietorship does not have the right to contribute capital to the establishment, purchase shares, or contributed capital in a partnership, limited liability company, or joint-stock company.
• This type of company does not have legal status. As a result, the problem of raising capital will also face difficulties.

Benefits of establishing a company

• A company is an organization with its own name, assets, transaction office, and seal.
• When you set up a company, you will have legal status to do the business you want.
• Have the right to issue red invoices (also known as VAT invoices) to partners and customers when they need an invoice to legalize the company’s expenses.
• You will create trust with your partners
• After establishing a company, business transactions or procedures with state agencies are also easier such as signing contracts, importing and exporting, paying social insurance for officials and employees, mobilizing capital from individuals, organizations, lending capital from banks, etc.
• Business is protected by law.

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.
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.

Related articles

Conditions for establishing a limited liability company in Vietnam

Registration of a single-member limited liability company in Vietnam

Registration of a multi-member limited liability company in Vietnam

Related questions

Contact LSX

Finally, hope this article is useful for you to answer the question about “Should I open company in Vietnam? Limited Liability or Sole Proprietorship?”. If you need any further information, please contact  LSX Law firm: +84846175333 or Email: [email protected]

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