What Is a Family Company? Can a Family Business Operate as a Household Business?

“Family company” is a common term in business life referring to an enterprise in which members of a family jointly contribute capital and manage together. However, Vietnamese law does not provide for a separate type of enterprise called a “family company”. So can a family’s business be organized as a household business? This article analyzes the issue under Decree No. 168/2025/ND-CP on enterprise registration (effective from 1 July 2025, replacing Decree No. 01/2021/ND-CP).

Is a Family Company a Type of Enterprise?

The Law on Enterprises 2020 recognizes only the following types: private enterprises, partnerships, single-member limited liability companies, multi-member limited liability companies, and joint stock companies. A “family company” is not an independent legal type — it merely describes a family-based ownership and governance structure.

In practice, a “family company” is usually established in one of the following forms: a multi-member limited liability company (family members jointly contributing capital), a joint stock company (shareholders being family members), or a single-member limited liability company (one family member as the owner).

What Is a Household Business? Does It Suit the Family Company Model?

Under Decree No. 168/2025/ND-CP, a household business is registered and established by an individual or members of a household and bears liability for the business activities of the household with all of their assets. This is a form suited to small-scale business, and household members may jointly register as members of the household business.

However, household businesses have important limitations compared with “companies”: a household business has no legal entity status; the household business owner bears unlimited liability with all of their assets; a household business may not issue shares or bonds like a joint stock company; and raising capital, expanding scale, and transferring capital contributions are much more restricted than for companies.

Should You Choose a Household Business or Establish a Company?

The choice depends on scale and development orientation:

Choose a household business when: the business scale is small, family members directly participate in management; you want simple registration and tax declaration procedures; and there is no need yet to raise capital from outside the family or open many branches.

You should establish a company (LLC/joint stock) when: there are plans to expand scale or raise capital from investors outside the family; you want to separate personal assets from enterprise assets (limited liability within the scope of contributed capital); you need legal entity status to sign large contracts or participate in bidding; or you aim to transfer and inherit the enterprise across generations in an orderly manner.

An important tax note: from 1 January 2026, lump-sum tax for household businesses has been abolished (Resolution No. 198/2025/QH15) — household businesses now perform tax obligations under the declaration method; at the same time, the collection and payment of business license tax has been terminated. This is a major change to consider when choosing a model.

Procedures for Registering a Household Business for a Family

The dossier for household business registration under Decree No. 168/2025/ND-CP comprises: the application for household business registration; personal legal documents of the household business owner and of household members registering the household business (where members jointly register); and a copy of the minutes of the household members’ meeting on the establishment of the household business (where household members jointly register). The dossier is submitted to the business registration authority at the commune level where the household business’s head office is located, under the current two-tier local government model.

Notes on Governing a “Family Company”

Whichever model is chosen, business families should: prepare clear written agreements on capital contribution ratios, profit distribution, and each member’s decision-making rights; separate family finances from business finances; and build a mechanism for resolving internal conflicts from the outset — most “family company” disputes arise because all agreements remained merely verbal.

Need advice on choosing a business model for your family, drafting household business/company registration dossiers, or capital contribution agreements among members? Please contact ANT Legal’s lawyers via Hotline/Zalo 0966.475.966 for case-specific consultation.