Household Business vs. Enterprise: 5 Key Differences

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Short answer: A household business is not an enterprise and has no legal personality; the household head is liable with all of their assets. An enterprise (except a private enterprise) has legal personality and bears limited liability within the scope of contributed capital (for LLCs and joint-stock companies). The two models fundamentally differ in legal standing, liability regime, accounting–tax obligations, and capital-raising ability. This article compares them in detail under the Law on Enterprises 2020 (as amended by Law No. 76/2025/QH15), Decree 168/2025/ND-CP, and Resolution 198/2025/QH15.

Legal basis

The Law on Enterprises 2020 (as amended and supplemented by Law No. 76/2025/QH15, effective from 01/07/2025);
Decree 168/2025/ND-CP on enterprise registration and household business registration (replacing Decree 01/2021/ND-CP, effective from 01/07/2025);
Resolution 198/2025/QH15: abolition of the presumptive tax for household businesses; termination of business license tax collection and payment from 01/01/2026;
The Civil Code 2015 (Article 74 — conditions of legal personality).

What is a household business? What is an enterprise?

A household business is registered and established by an individual or members of a household, liable with all of their assets for business operations. A household business has no legal personality and no legal-entity seal in the full sense like an enterprise.

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An enterprise is an organization with its own name, assets, and transaction office, established or registered in accordance with law for business purposes. LLCs, joint-stock companies, and partnerships have legal personality from the date of issuance of the Enterprise Registration Certificate; a private enterprise has no legal personality.

Comparison table: household business vs. enterprise

Criterion	Household business	Enterprise (company)
Legal personality	None	Yes (except private enterprises)
Liability regime	The household head bears unlimited liability with all assets	Owners/members/shareholders bear limited liability within contributed capital (except private enterprises and general partners)
Number of employees	No hard 10-employee cap as under old rules; employees are hired as needed in compliance with labor law	Unlimited
Branches, representative offices, business locations	May not establish branches or representative offices	May establish branches, representative offices, and business locations domestically and abroad
Seal	No legal-entity seal	May use a seal as needed (not mandatory by law)
Invoices	Uses e-invoices under invoice law	Uses VAT invoices, with deductible input VAT
Accounting regime	Simpler accounting regime for household businesses	Full enterprise accounting regime
Taxes	Pays tax under the declaration method (presumptive tax abolished from 01/01/2026)	Pays tax under enterprise rules (corporate income tax, VAT, etc.)
Business license tax	Collection and payment terminated from 01/01/2026	Collection and payment terminated from 01/01/2026
Capital raising	Limited; may not issue securities	Diverse: capital increases, admitting new members/shareholders, bond issuance, borrowing as a legal entity
Registration authority	Commune-level business registration authority	Business Registration Office under the Department of Finance

Should you choose a household business or an enterprise?

Choose a household business when

The business scale is small, mainly serving individuals and households;
You want simple establishment and governance procedures with low compliance costs;
You have no need to open branches, raise large capital, or transact with partners requiring VAT invoices.

Choose an enterprise (company) when

You want to limit asset liability to the contributed capital;
You plan to expand, open branches, and raise capital from multiple investors;
You frequently transact with enterprises and foreign partners needing VAT invoices;
You want to build a proper legal-entity brand and participate in bidding.

Notes on the new tax policy from 01/01/2026

Under Resolution 198/2025/QH15, from 01/01/2026, the presumptive tax for household businesses is abolished and business license tax collection and payment are terminated. Household businesses switch to paying tax under the declaration method. Old contents such as “household businesses pay monthly presumptive tax,” “business license tax levels 1/2/3,” and the “10-employee cap” no longer apply and should not be used when choosing a business model.

Frequently asked questions

Can a household business open a branch?

No. A household business may not establish branches or representative offices. If you need to expand business locations, the household head should consider converting into an enterprise.

Is the household head liable with personal assets?

Yes. The household head is liable with all of their assets for the household’s business operations — this is the biggest difference from LLCs/joint-stock companies (limited liability).

Is it difficult to convert from a household business to a company?

The procedure involves registering the enterprise at the Business Registration Office under the Department of Finance while terminating the household business at the commune-level business registration authority, and enjoying conversion incentives under the Law on Support for Small and Medium-Sized Enterprises.

Notes on applying current laws

This article is for general enterprise knowledge and is presented for reference, helping readers understand the legal issue at a general level before choosing a business model. Legal regulations may change over time and depending on specific circumstances. For advice on choosing a model suitable for your business plan, please contact an ANT Legal lawyer at 0966.475.966 for verification and advice before proceeding.

Common risks to watch out for

Applying old rules (presumptive tax, 10-employee cap, business license tax) that have expired.
Mistakenly believing a household business has legal personality like a company.
Underestimating the unlimited liability regime of the household head.
Choosing a model unsuitable for capital-raising and expansion plans.

How ANT Legal can help

ANT Legal advises on choosing a suitable business model, registers household businesses or establishes enterprises, converts household businesses into enterprises, and advises on post-establishment tax and accounting obligations. For quick advice, please contact our lawyers at 0966.475.966.

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