Procedure business registration in VietNam

Procedure business registration in VietNam (Apply for a business license)

Business registration in VietNam to establish an individual business household

Legal grounds

Decree No. 78/2015/ND-CP;

Decree No. 108/2018/ND-CP.

What is a sole proprietorship?

Procedures for registration of an individual household business license

• Identity card (ID card), citizen identity card (CCCD), notarized copy of passport.
• A title of house (if you are the owner) or a lease of the business location (if it is a rental).
• An application for registration of an individual household business license includes the following information:
• Name of individual business household, business location address and phone number.
• Business registered capital.
• Number of employees used for individual business households.
• Business license registration.
• Full name, signature, permanent address, identity card information. citizen identification, valid passport of the registrant or the representative of the business unit.

• Register the name of the business owner in accordance with regulations.
• Complete business registration requirements.
• The registered business lines are suitable, not in the prohibited business lines.
• When carrying out business registration procedures, if the company establishment dossier is not valid, the competent agency will notify in writing the contents that need to be corrected to the business household owner for appropriate adjustment and supplementation.

Advantages of setting up an individual business household

• No periodic tax returns. Simple paper and bookkeeping system.
• Small scale is suitable for those who are just starting a business. Especially suitable for the consumer goods industry, food service and groceries.
• The process of converting to a company form can be done quickly and simply.
• Managing and capturing production and business activities is simple due to the small number of employees.

Disadvantages of setting up an individual business household

• The number of employees is limited, maximum 09 employees, so it creates many disadvantages in production and business activities.
• There is no VAT invoice so no tax deduction. At the same time, it cannot meet the needs of partners who are companies and enterprises.
• Having unlimited liability with all assets when the business household has a risk, goes bankrupt.

>>>> See more: Procedures for setting up foreign invested companies in Vietnam >>>>

Business registration in VietNam in the form of business establishment

Legal grounds

Enterprise Law 2020;

Decree No: 108/2018/ND-CP.

Types of companies

• Establishment of a private enterprise: is a type of enterprise owned by an individual and that individual is responsible with all his assets for all activities of the business.
• Establishment of a partnership: an enterprise must have at least 02 members who are common owners of the company, doing business together under a common name (general partners). In addition to general partners, the company may have additional capital contributors.
• Establishment of a one-member limited liability company: an enterprise owned by an organization or individual; The company owner is responsible for the company’s debts and other property obligations to the extent of the company’s charter capital.
• Establishment of a limited liability company with 2 members: an enterprise with from 02 to 50 members. They can be organizations or individuals, responsible for debts and property obligations to the extent of the capital contributed to the business.
• Establishment of a joint-stock company: A joint-stock company is a business institution, a type of enterprise formed, existed and developed by the capital contribution of many shareholders.

Procedures for registration of a business license to establish an enterprise

• Step 1: Draft business establishment documents, prepare all necessary documents and information.
• Step 2: Submit an application for the Certificate of Business Registration at the registration office of the province/city where the head office is located.
• Step 3: If the application is valid, the competent authority will issue an enterprise registration certificate.
• Step 4: Receive the result – Certificate of business registration
• Step 5: Engrave the enterprise’s circular seal, publish the seal sample on the national business portal
• Step 6: Open a bank account, notify the bank account to the business registration agency
• Step 7: Buy digital signature, register for tax return – pay tax electronically with tax authorities and confirm registration for electronic tax payment at the bank
• Step 8: Declare license fee – pay license fee using electronic signature
• Step 9: Initial tax declaration, please use e-invoice
• Step 10: Periodically report tax according to state regulations to the tax administration agency in the locality where the company is located

Advantages of registering a business to establish a business

• The company has legal status, has a VAT invoice, so at the end of the accounting period, tax is deducted. At the same time, the corporate form also helps build trust with partners more than individual business households.
• Capable of growing strong according to the conditions because there is no limitation on labor, scale, technological process.
• To be allowed to do business in the conditional lines in the list of permitted by law.
• Capital can be easily mobilized, creating favorable conditions for promoting production and business activities, improving economic potential.
• In addition to a private company, other types only need to be responsible for the operation as well as the risks that occur to the business within the amount of capital contributed.

Disadvantages of registering a business to establish a company

• In addition to private companies and one-member limited liability companies, other forms of companies do not have full authority to decide all activities and direction of unit management.
• Responsibility and obligations towards the state are higher expressed through the payment of taxes.
• The management and administration process is more complicated due to the large number of employees, diverse production processes, and incomplete accounting records. Therefore, newly established businesses will often use outsourced accounting services.

How much does it cost to apply for business registration in VietNam?

Cost of applying for a business license for setting up an individual household

• Fee for filing an application for a business license in the form of an individual household: 100,000 VND
• The owner of the business household needs to carry out the initial tax declaration procedure after receiving the individual business household registration license.
• After receiving the business registration certificate, you need to carry out the procedures after registering the company establishment such as posting a statement, engraving the seal, declaring and paying taxes in accordance with the law, …

Expenses for business license

• Fee for business license registration at the Registration Office – Department of Planning and Investment: 50,000 VND.
• Fee for registration of business establishment statement on the National Portal: 100,000 VND.
• License fees/expenses.

Depending on the level of charter capital for business license registration, each business has different license fees. Fees are specified in the table below:

Specific charges

• Cost of making company sign: minimum 200,000 VND (Mica material, size 25×35). For some companies that have a need to engrave larger signs with other materials such as stone, high-grade aluminum, etc., the cost may be different.
• Cost of engraving business seal: 450,000 – 500,000 VND. According to current law, enterprises decide on the type, quantity, form and content of their seals. If this issue is still unclear, please contact Law VN for further advice.
• Cost of buying digital signature device (USB Token): There are many product packages including 1 year, 2 years, 3 years, .. with many different prices. Depending on the needs of the business to choose the appropriate signature package. Normally, new businesses will prioritize using the 1-year package with a cost of 1,650,000 VND.
• Cost of using value-added invoices: There are two forms of use including traditional paper invoices and electronic invoices.
• In case of using traditional paper invoices, businesses have to order printing of invoices costing about 350,000/book.
• If businesses use e-invoices according to the current trend, the price will be much more economical depending on each e-invoice package.
• The cost of depositing an account at the bank: 1,000,000 VND. This cost is used by the bank to maintain the business account and will be deducted from the bank’s monthly fees.

Time to apply for business registration in VietNam

• Compose all documents;
• Submit the client to sign the documents on the spot;
• Submit an application for a business license at the Department of Planning and Investment;
• Within 3 days, the Department of Planning and Investment will review the application and issue a business license;
• Business representative receiving business license at Department of Planning and Investment
• Handing over the business license and seal to the place.

• Expected company information: company name, address, business lines, charter capital and percentage of contributed capital of each member/shareholder…;
• Notarized copy of ID card/CCCD/passport not older than 6 months of legal representative, owner, capital contributor or founding shareholder

Documents when doing procedure business registration in VietNam

• Copy of ID card, passport not older than 3 months. In case the member is an organization, it is necessary to prepare an additional certificate of business registration or decision on establishment of the company and a power of attorney of the person representing the organization to contribute capital.
• Application for business registration
• Draft of Company’s charter
• Other relevant documents.

Frequently asked Questions

How many common types of business licenses are there?

• Certificate of business registration
• Investment registration certificate
• Certificate of registration of branches, representative offices, business locations, warehouses
• Licenses to operate for specific areas.

Where does the business / company carry out the procedure for changing business registration?

• The company is required to carry out procedures for changing business registration at: Business registration office / Department of Planning and Investment where the enterprise’s head office is located.
• In case the company changes the business registration of the branch/representative office/business location, it shall be done at: Business registration office / Department of Planning and Investment where the branch office is located/ Representative office/business location.

Common risks for business license misconduct

• Inappropriate business name: Failure to comply with the provisions of the law; the name is too long, difficult to pronounce and misleading when translated into English or abbreviated; The name is intended to include all planned business lines.
• Unrealistic charter capital: Wrongly declaring high charter capital; declare charter capital lower than the prescribed capital for business scale; Do not declare the capital contribution as assets used in business activities.
• Unclear establishment terms and insufficient procedures: No internal management rules; No member to sign and stamp on every page; Not properly stored; Do not make and maintain revisions
• Failing to set up a project or carry out procedures for enjoying tax incentives: conditions for enjoying tax incentives are not determined; No registration and optimization of tax incentives; Do not register for tax incentives.
• Failing to apply an appropriate business model: The business model is not suitable for the business scale and plan; Unforeseeable risks of responsibility, management and administration, especially in enterprises with two or more members; separation of ownership and operations.
• Inappropriate capital structure: In addition to declaring and registering capital in the form of cash, not declaring and registering capital as assets used in operations.
• Failing to collect and store legal documents as prescribed: Failure to keep records of establishment registration; Failure to maintain compliance records after authorization; Do not keep other internal records, especially the Internal Governance Regulations issued to shareholders/owners.
• Not updating current regulations: The new Investment Law and the 2014 Enterprise Law introduce a number of new regulations, requiring enterprises, especially foreign direct investment (FDI) enterprises to apply for adjustment of investment license and new investment certificate according to new regulations on business registration, etc.

How much does it cost to register a business license?

How long does it take to get a business license?

What is required for a business license?

Where can I get a business license?

How to apply for a business license?