Depending on financial conditions, human resources, … as well as the needs of each person, the choice of which type to establish a business; and operate it is also an important and complex matter. Each type of business has its advantages and disadvantages. For a private enterprise, what are the risks when choosing this type of business? Refer to the following article of Lawyer X.
Legal grounds
– Enterprise Law 2020
-Land Law 2013
Consulting content
Limited capital and access to capital
If a private enterprise is established, this type is different from all other types of enterprises; A private enterprise is established, operated, and owned by only one individual.
A sole proprietorship is an enterprise owned by an individual who is solely responsible for all his assets for all activities of the business. The capital source of a private enterprise is only formed from the investment capital of the business owner.
Thus, it is clear that the capital source of an enterprise has only one investment source, which is the owner’s assets. With other types, the channel to attract capital can be more members; issue bonds, shares, private enterprises are not allowed to issue any type of securities….But with this type of business, it is; A private enterprise can only increase its capital by making an additional investment by the business owner.
Therefore, the expansion of investment capital is small, making it difficult for private enterprises in production and business activities due to a lack of capital, even limited participation in export markets and the global economy.
Self-managed and self-responsible private business owners
All business decisions are at the discretion of the owner of the private business. This is the great advantage and disadvantage of private enterprise. Because that will make the problem-solving come from an individual will; all activities so sometimes the development is spontaneous; there is no specific plan; sometimes the risk of the settlement will be high.
What’s more, the Business Owner has unlimited liability for all debts. Because there is no property independence; The sole proprietorship owner is unlimitedly liable for all the debts and other financial obligations of the business. That is, the debts arising from the business activities of the business are also the debts of the business owners. This is also one of the characteristics that make private enterprises riskier than other types of businesses.
Private enterprise without a legal entity
A legal entity has legal status when it meets 4 conditions, including:
– Established by the law.
– Having an organizational structure according to regulations.
– Having assets independent of other individuals or legal entities and taking responsibility for their assets.
– Independently participate in legal relations in their name.
Because of not meeting the above requirements, private enterprises do not have legal status. Legal status will help businesses create trust before customers when transacting. Because an enterprise with legal status will show independence in assets; liability in the event of higher risk. Therefore, the lack of legal status is a rather big drawback of this type of business. Difficult to create trust in transactions with customers.
The above is the “difficulty” that private enterprises will encounter when choosing this type to develop their work.
Related article:
What are rights and obligations of private enterprise owners?
Instructions to convert a Private Enterprise into a Partnership Company in Vietnam
Frequently asked questions
According to the provisions of the Enterprise Law, the time to receive the Certificate of business household registration is 03 days; from the date of receipt of a valid application.
– Business Name: not duplicate, not confusing.
– The headquarters must be legal and clear with 4 administrative levels.
– Business lines by the provisions of the law, are not prohibited
– Capital: for industries that require legal capital, capital must be guaranteed.
– Business owners: do not violate the provisions of the enterprise law.
Services of Lawyer X.
Prestigious professional services: Firstly, the team of consultants and consultants for many years in the field of civil status, and customer support.
On-time: Certainly, with the motto “Get your lawyer right at your fingertips”, we ensure the service always performs on time. The rights and interests of customers always come first.
Cost: Besides, Lawyer X’s service costs are highly competitive; depending on the nature of the particular case. So, we want our guests to have the best possible service experience. Therefore, costs which guaranteed to be the most suitable and economical for customers.
Confidentiality of client information: Finally, all personal information of clients Lawyer X will be 100% confidential.
Please contact us immediately with questions about “The risks when choosing the type of private enterprise”
Contact LSX Lawfirm
Finally, we hope this article is useful for you to answer the question about: “The risks when choosing the type of private enterprise”. If you need any further information, please contact LSX Law firm: at +84846175333 or Email: [email protected]
Conclusion: So the above is The risks when choosing the type of private enterprise in Vietnam. Hopefully with this article can help you in life, please always follow and read our good articles on the website: lsxlawfirm.com
