Household business and Business household registration

| Updated: 11/09/2024

The article fully guides the issues of business households and the order of procedures for registration of the establishment of an individual business household.

Necessary knowledge when setting up a household business

Individual business households
HOUSEHOLD OF BUSINESS AND HOUSEHOLD BUSINESS REGISTRATION
1. What is a household business?

Household business is the official word specified in legal documents. In society, there are common words to call household businesses such as Individual Business Household, Personal Business Household.

Household business is defined as a business establishment registered by an individual or members of a household and is responsible with all his assets for the household's business activities.

In case household members register as business households, they shall authorize one member to act as the business household representative. Individuals registering business households, the person authorized by household members to act as the business household representative is the owner of the business household.

2. In which case must register the establishment of a Business Household?

Households engaged in agricultural, forestry, fishery, salt production, and those selling street goods, snacks, trips, mobile businesses, seasonal businesses, and service providers with low incomes are not required to register as household businesses. business, except for the business of conditional business lines. The People's Committees of the provinces and centrally-run cities shall stipulate the low-income levels applicable in the locality.

3. Who has the right to establish a Business House?

1. Individuals and household members who are Vietnamese citizens with full civil act capacity as prescribed by the Civil Code have the right to establish business households, except for the following cases:

a) Minors, persons with limited civil act capacity; persons who have lost their civil act capacity; people with difficulties in cognition and behavior control;

b) The person is being examined for penal liability, is detained, is serving a prison sentence, is serving an administrative handling measure at a compulsory detoxification establishment, a compulsory education institution or is being prosecuted by a court. ban from holding certain posts, practicing certain professions or doing certain jobs;

c) Other cases as prescribed by relevant laws.

4. How many business households can each person set up?

Individuals and household members are only allowed to register one business household nationwide and have the right to contribute capital, purchase shares, and purchase capital contributions in the enterprise as an individual.

5. Having established a Business Household, what type of business cannot be joined?

Individuals and household members may only register one business household nationwide and are entitled to contribute capital, purchase shares, and purchase capital contributions in the enterprise as an individual. Therefore, established business households can still establish and name the following types of businesses:

  • To contribute capital, buy capital contribution in a limited company
  • To contribute capital, buy shares in joint-stock companies

Individuals, household members register business households cannot be a sole proprietorship at the same time, general partners of the partnership, unless otherwise agreed by the remaining general partners.

6. Rights and obligations of business household heads and household members participating in business household registration
  • The owner of the business household shall perform the tax obligations, financial obligations and business activities of the business household in accordance with the law.
  • The owner of the business household represents the business household as a requester for settlement of civil matters, plaintiff, defendant, person with related interests and obligations before Arbitration, Court and other rights and obligations. according to regulations of the Law.
  • The owner of the business household may hire other people to manage and operate the business activities of the business household. In this case, the head of the business household and the household members participating in the business household registration are still responsible for debts and other property obligations arising from the business activities.
  • The owner of the business household and members of the household participating in business household registration are responsible for the business activities of the business household.
  • Other rights and obligations as prescribed by law.

Should I set up a company or a business household?

1. Advantages and disadvantages when comparing companies and business households

For the company

For business households

+ The ability to raise capital is quite high in many different forms for some types of companies such as joint stock companies, limited liability companies with two or more members.

+ Can expand the business on a large scale.

The number of employees is not limited.

+ The company's competitiveness will be higher because the brand is built by the prestige and quality of the product. services we provide. Limited liability in charter capital.

The management is relatively complicated.

+ The establishment and dissolution of household businesses are more complicated.

+ No capital constraints, business households can do business with large or small capital.

+ Procedures for establishment, change and dissolution of business households are not too complicated.

+ Fundraising is limited

+ Unlimited liability.

+ No legal personality.

+ Business households are only allowed to use no more than 10 employees, which makes the scale of business and production always limited.

2. Compare tax, invoice, accounting

In the scope of the article, we only describe the overview, if you need more detailed advice, please contact us or see more explanations in the FAQ section at the end of the article.

For the company

For business households

Apply a more complex business accounting regime.

Applying the accounting system for household businesses is less complicated. In case of flat tax payment, the accounting regime is not required.

Issue Deductible Invoice (Business buyers often require this type of invoice to get a tax deduction).

Direct invoice issuance (Buyer is a business often refuse because tax is not deducted.

Separate tax payment including deductible VAT or a few cases paying by direct method and basic CIT 20% x profit

Collecting tax including VAT and personal income tax in 2 ways: According to the flat rate (the accounting regime is not required) or According to the declaration (the accounting regime must be followed)

Tax must be finalised

No tax finalization
3. Comparison of participation in social insurance

In the scope of the article, we only describe the overview, if you need more detailed advice, please contact us or see more explanations in the FAQ section at the end of the article.

For the company

For business households

Must participate in social insurance and comply with regulations on labor and salary method. The state management is strict.

Must participate in social insurance and comply with regulations on labor and basic salary. The state management is still lax.

Procedures for registration of establishment of a business household

Procedures for setting up a household business
PROCEDURES FOR REGISTRATION FOR ESTABLISHMENT OF BUSINESS HOUSEHOLD
1. Procedure for setting up a business household

The person who establishes a business household or a business household shall register the business household at the business registration office of the district where the business household is located (the Finance and Planning Department under the district-level People's Committee).

– Upon receipt of the application, the business registration authority of the district shall hand over the receipt and issue a certificate of business household registration to the household business within 03 working days from the date of receipt of a valid application.

– In case the application is invalid, within 03 working days from the date of receipt of the application, the business registration authority of the district must notify in writing the applicant or the person establishing the business household. . The notice must clearly state the reason and the requirements to amend and supplement the dossier (if any).

Upon successful registration, Business Households will be issued according to the following form: Appendix VI-1 Form of business household registration certificate

2. How to establish a business household?

Submission form

Time limit for settlement

Fees and charges

Direct

Within 03 (three) working days from the date of receipt of complete and valid dossiers.

Fees: Specific fees are decided by the Provincial People's Council

Receipt of business household establishment documents: Department of Finance - Planning under the District People's Committee

3. Components of the application file for establishment of a business household

Name of the document

Application form, declaration

Quantity

(i) Application for business household registration;

Appendix III-1 (sample download Appendix III-1 Form of application for business household registration

Original: 1

(ii) Legal documents of the individual, for the head of the household business, the household member registering the business household in case the household members register the business household;

 

Original: 1

(iii) A copy of the minutes of the meeting of household members on the establishment of the business household in case the household members register as a business household;

 

Copy: 1

(iv) A copy of the household member's written authorization for one member to be the head of the household business, in case the household members register as a household business.

 

Copy: 1

Profile of the business household's head office:

House rental contract, house loan contract or red book in case the household head is in the name of the business household's address.

4. How to name the business household?

The naming of business households shall comply with the following regulations:

1. Household business has its own name. The name of a business household consists of two elements in the following order:

a) The phrase "Household business";

b) Personal name of the business household.

Proper names are written with the letters of the Vietnamese alphabet, the letters F, J, Z, W, possibly accompanied by numbers and symbols.

2. Do not use words or symbols that violate the historical, cultural, ethical and fine traditions of the nation to name a business household.

3. Business households are not allowed to use the terms "company", "enterprise" to name the business household.

4. The proper name of a business household must not coincide with the proper name of a registered business household within the district.

5. Registration of business lines of business households

Business households have the right to freely conduct business in industries and trades that are not prohibited by law. Therefore, it is not allowed to register a business that is prohibited from doing business. (Industries and trades prohibited from doing business are specified in Article 6 of the Law on Investment)

- For conditional business lines, business households may only do business when they fully satisfy the prescribed conditions. The list of conditional business lines is specified in Appendix IV issued with the Law on Investment. See List of conditional business lines

Detailed instructions for professional registration are as follows:

1. When registering for establishment, registering for change in business household registration information, the business household must write business lines on the application for business household registration, and the notice of changes in business household registration information. . The business registration authority of the district shall record information about business lines on the Certificate of Business Household Registration.

2. Business households are entitled to conduct conditional business lines from the time they fully meet the conditions prescribed by law and must ensure that they are satisfied throughout the course of operation. The state management of business lines subject to conditional investment and inspection of business households' compliance with business conditions falls under the competence of specialized agencies in accordance with specialized laws.

3. In case the business registration office of the district receives a document from a competent authority that the business household conducts business in a conditional business line or line of business, but does not fully satisfy the conditions prescribed by this Law. According to the law, the business registration authority of the district shall issue a notice requesting the business household to suspend its conditional business lines and investment lines, and at the same time notify the competent state agency for handling in accordance with the law. provisions of law.

FAQ - Question about Household Business

Business households, after being established, must register for tax, be granted a tax identification number and declare and pay tax according to regulations.

Looking up tax codes for business households is essential to see if your tax information has been updated online. The steps to perform the search process are as follows:

Step 1:

Visit the link of the General Department of Taxation: http://tracuunnt.gdt.gov.vn/tcnnt/mstdn.jsp

Step 2:

Enter 1 of 4 information: 

  • Tax code
  • Name of organization or individual paying tax
  • Address of the head office of the household business
  • Identity card number or identity card of the representative.

Note: To look up the correct business household tax code, you should enter information that is easy to correct (For example, the ID card number is easier to correct than the address) or enter 2 or more information fields.

look up business household tax code
look up business household tax code

Step 3:

Enter the Confirmation Code correctly and you will receive the full tax registration information of the Household Business, including the Household's tax identification number.

Individual business households do not have legal status.

According to the law on seals, current business households will not have a legal entity seal (Round Seal) like other forms of business.

Business households can use square seals, signature and title seals, or business household logo seals for the purpose of providing information to partners and customers.

Some information for the household seal that you can engrave such as logo, full name of the business household owner, etc., but there are 3 basic information included.

  • Name of household registered business.
  • Tax identification number of the business household is granted.
  • Address of business household.
Sample of household seal
Sample of household seal

Previously, Circular 23/2014/TT-NHNN allowed business households to open accounts at banks; but after being amended by Circular 32/2016/TT-NHNN; Only organizations that are legal entities can open a payment account at a bank.

However, according to Circular 02/2019 (effective from March 01, 3); established organizations; lawful activities in accordance with the law of Vietnam may open a payment account; foreign bank branches in accordance with the law

Article 11. Objects to open payment accounts

1. Individuals opening a payment account at a bank or foreign bank branch include:

a) Persons aged full 18 years or older with full civil act capacity as prescribed by Vietnamese law;

b) Persons between full 15 years of age and under 18 years of age have not lost or restricted their civil act capacity;

c) Persons under 15 years of age, persons with limited civil act capacity, persons who have lost their civil act capacity as prescribed by Vietnamese law open a payment account through a legal representative;

d) Persons with difficulties in perception and behavior control as prescribed by Vietnamese law shall open a payment account through a guardian.

2. Organizations legally established and operating in accordance with Vietnamese law include: organizations being legal entities; private enterprises; business households and other organizations may open payment accounts at banks; foreign bank branches as prescribed by law.

According to the provisions of this Circular; organizations that are allowed to open current accounts are no longer limited to legal entities; but still includes other types of organizations that are not legal entities as previously prescribed.

If these non-legal entities do not want all members to participate in account transactions in particular; general civil transactions; can authorize 1 transaction representative.

Thus, business households can open payment accounts at banks; foreign bank branches as prescribed by law.

According to the current Law on Social Insurance and Law on Health Insurance, employers, whether small businesses, cooperatives or individual business households, must pay social insurance and health insurance premiums for employees.

Maybe because the number of businesses is very large, the inspection agencies mentioned above are focusing on businesses, have not really paid attention to inspecting and checking with business households, so many people think that establishing new businesses They have to pay health insurance and social insurance premiums for employees, and business households do not have to fulfill this obligation, so they do not want to set up a business. 

Before some press information about the fact that business households are no longer allowed to borrow money from banks according to the new regulations of the State Bank, the representative of the Ministry of Justice affirmed that the subject "household" has been removed from the Civil Code 2015. , therefore, if the bank continues to sign a credit contract with the “household”, the contract becomes void.

 The State Bank of Vietnam has just issued Circular No. 39/2016/TT-NHNN regulating lending activities of credit institutions and foreign bank branches to customers. Accordingly, there are only two types of borrowers: natural persons and individuals. Non-legal entities such as households, cooperative groups, and other organizations without legal status will no longer be eligible to borrow capital at a credit institution.

In fact, the laws of all countries stipulate that there are only two types of subjects, and there are two types of civil law subjects: individuals and legal entities. Households, business households or cooperative groups are virtual subjects, actually 2 or a group of individuals, so they are removed from the 1 Civil Code.

The removal of the household loan subject (or business household) is only a change in the form of the name, but in the gut, the essence remains the same.

The other is, from 2017 onwards, households and business households will transact as one or several individuals, but the head of the household will no longer automatically represent the household as before.

License tax is the amount of money that businesses, households and individuals must pay annually or when they are new to production and business. The annual license tax payment is not large, but it is a mandatory obligation, except for cases where it is exempted.

License fee for business households

Revenue

Payment rate

Over 500 million VND/year

1.000.000 VND / year

Over 300 to 500 million VND/year

500.000 VND / year

Over 100 to 300 million VND/year

300.000 VND / year

Revenue used as a basis for determining license fee rates for individuals, groups of individuals, households, and new business locations of business households is as follows:

– Is the total revenue for calculation of personal income tax in the preceding year of production and business activities (excluding property leasing) of business locations according to Circular 40/2021/TT-BTC .

- In case an individual, group of individuals, or a household is dissolved, suspends production or business and then resumes business, the revenue of the preceding year cannot be determined, the turnover as the basis for determining The rate of license fee collection is the revenue of the tax year of production and business establishments of the same size, geographical area and business lines as prescribed in Circular 40/2021/TT-BTC.

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