Choose to establish a company or register as an individual business household?

Regulations on company establishment and individual business household registration

Before deciding whether to establish a company or register a business household. You should know the process of these two forms:

Regulations on company establishment

Establishing a company is no longer strange to many people but has a broad meaning that is difficult for each individual or organization to understand.

To establish a company, you need to choose and determine your business type:

• News in the same field
• Joint-Stock Company
• Limited Company
• Partnership
• Private enterprise

Once you choose your business type, you can carry out the prescribed processes and procedures. Each type of business will have its own strengths and limitations. Each type has its own strengths and limitations, mainly whether it is suitable for the business orientation of the enterprise or not.

Regulations if doing business as an individual

Individual business households or a group of people including individuals who are Vietnamese citizens at least 18 years old and have civil act capacity. In addition, an individual business household is also a household owner or can only register to do business in 1 location, has less than 10 employees and is responsible for all of its assets.

Households engaged in agricultural, forestry, fishery, salt production, or low-income street vendors, mobile businesses, and service providers will not be required to register their business except for conditional occupations. . Business households that employ 10 or more workers need to register to establish a business according to regulations.

Advantages - Disadvantages of enterprise and household business models

For business households

Advantages:

• The procedures are quite simple, not cumbersome like other business models.
• When registering a household business model, you will not have to declare monthly taxes
• Accounting documents are quite simple
• The scale of the business is quite compact and suitable for small individuals
• Frequently applied flat tax regime

Disadvantages:

• When registering for a household business model, you are only allowed to use a maximum of less than 10 employees. And you can only register your business at 1 location and are not allowed to open another location.
• This form will have no legal status or legal seal.
• Responsible for all assets of the individual household owner for business activities
• If you need to issue an invoice to a customer, you must contact the tax authority to purchase the invoice
• The nature of business operations may be the reason for little trust when customers cooperate for the first time.

For businesses

Advantages:

• For businesses with legal status and legal seal
• The business owner will decide all activities
• Can open additional office branches or other business locations
• Individuals can also establish businesses
• Fast organizational structure, simple procedures
• The number of workers will not be limited

Disadvantages:

• This type of business will not be able to issue shares, so capital mobilization will be limited.
• For this type of business activity, capital will not be withdrawn but only part or all of the capital will be transferred.

Is it possible to convert from a household business to an enterprise?

According to previous regulations, it is not possible to convert individual business households into enterprises. The business owner can only choose to dissolve and at the same time establish a new company.

However, currently, according to Decree No. 108/2018/ND-CP supplementing and amending business registration, in Clause 6, Article 1, a business household can convert into an enterprise.

The above is some useful information that Saco Inc would like to provide to readers. Hopefully the above information will help you answer the question "Should I establish a company or register as an individual?"