Tiếng Việt
中文Short answer: There is no one-size-fits-all answer. Choose a company when you need to limit asset liability, mobilize capital, open branches and issue VAT invoices; choose a household business for small scale, simple procedures and low compliance costs. From 01/01/2026, household businesses have switched to paying tax under the declaration method (presumptive tax abolished) and the business license tax has been terminated — these changes directly affect the choice. This article analyzes in detail to help you decide correctly.
Legal basis
- Law on Enterprises 2020 (amended and supplemented by Law No. 76/2025/QH15, effective from 01/7/2025);
- Decree 168/2025/ND-CP on enterprise registration and household business registration (effective from 01/7/2025);
- Resolution 198/2025/QH15: abolishing the presumptive tax for household businesses; terminating collection and payment of the business license tax from 01/01/2026;
- Labor Code 2019; Law on Social Insurance 2024 (41/2024/QH15).
Quick comparison: company vs. household business
| Criterion | Household business | Company (LLC/JSC) |
|---|---|---|
| Legal entity status | None | Yes (except private enterprises) |
| Asset liability | Owner bears unlimited liability with all assets | Limited liability within contributed capital |
| Establishment procedures | Simple; register at commune-level business registration authority; 03 working days | More dossier requirements; register at Business Registration Office under Department of Finance; 03 working days |
| Branches, representative offices | Not permitted | Permitted domestically and abroad |
| Capital mobilization | Limited | Diverse: capital increase, adding members/shareholders, bond issuance |
| Invoices, VAT | E-invoices as prescribed; no input VAT deduction like enterprises | VAT invoices, input VAT deductible |
| Accounting regime | Simpler | Full under the enterprise accounting regime |
| Tax (from 01/01/2026) | Declaration (presumptive tax abolished) | Declaration under enterprise regulations |
| Labor, social insurance | Employs labor as needed; must comply with labor and social insurance laws as an employer | Full compliance with labor and social insurance laws |
Common misconceptions to clarify
“A household business may employ fewer than 10 workers”
This is an outdated rule. Current law imposes no hard cap on the number of workers of a household business in the old sense; a household business employs labor according to actual needs and must fully comply with laws on labor, wages and social insurance. However, with a large workforce, the company model is usually more suitable and professional.
Related services
M&A, Equity Transfer and Project Transfer
If you are preparing an equity transfer, M&A transaction, project transfer or restructuring, ANT Legal can help review legal risks and transaction structure.
“A household business may not open a bank account”
Wrong. The household business owner can absolutely open and use a bank account to serve business activities; transactions should go through the account for cash-flow transparency and easier tax declaration.
“A household business need not pay social insurance for employees”
Wrong. A household business employing workers subject to compulsory social insurance must register and pay social insurance, health insurance and unemployment insurance for employees as prescribed by social insurance law.
“A household business pays presumptive tax, so it is cheaper than a company”
No longer true. The presumptive tax for household businesses has been abolished under Resolution 198/2025/QH15; household businesses switch to paying tax under the declaration method. The tax-cost comparison must be recalculated based on the revenue and actual costs of each model.
When should you establish a company?
- To limit liability within contributed capital and protect personal assets;
- Planning to mobilize capital from multiple investors and partners;
- Needing to open branches and representative offices and expand geographically;
- Frequently contracting with enterprises, state agencies and foreign partners — needing VAT invoices and legal entity status;
- Aiming for long-term development, brand building and fundraising.
When should you register a household business?
- Small-scale business: eateries, grocery stores, personal services, moderate-scale online sales;
- Wanting lean procedures, self-management and low initial compliance costs;
- No plans for large-scale fundraising or system expansion;
- Accepting the owner’s unlimited liability regime.
Where to register, and how long?
- Household business: file the dossier at the commune-level business registration authority where the head office is located; the Household Business Registration Certificate is issued within 03 working days if the dossier is valid.
- Company: file the dossier at the Business Registration Office under the Department of Finance where the head office is located (in person or online); the Enterprise Registration Certificate is issued within 03 working days if the dossier is valid.
Frequently asked questions
Can one person be both a household business owner and a company owner?
The law does not prohibit an individual from being both a household business owner and a company member/shareholder, except that a private enterprise owner may not simultaneously be a household business owner (Article 188 of the Law on Enterprises 2020).
How does a household business upgrade to a company?
Carry out the household-business-to-enterprise conversion procedure: register the enterprise establishment with the Business Registration Office while terminating the household business, enjoying conversion incentives under the Law on Supporting Small and Medium Enterprises.
How much does it cost to establish a company/household business?
Costs depend on the enterprise type, business lines, sub-license needs and accompanying legal services of each specific dossier. Please contact ANT Legal’s lawyers at 0966.475.966 for cost advice suited to your case.
Notes on applying current legal provisions
This article belongs to the enterprise knowledge group and is presented for reference, helping readers understand the legal issue at an overview level before choosing a business model. The tax policy for household businesses is in a transition phase, and detailed regulations may continue to be supplemented. Where model advice for a specific business plan is needed, you should contact ANT Legal’s lawyers at 0966.475.966 for review and advice before proceeding.
Common risks to note
- Applying outdated regulations (presumptive tax, the 10-worker limit, “may not open accounts”) that are no longer effective.
- Underestimating the unlimited liability regime of the household business owner.
- Choosing a model unsuited to fundraising and expansion plans.
- Filing the dossier with the wrong competent authority (commune level for household businesses; Business Registration Office for companies).
How can ANT Legal help?
ANT Legal advises on choosing a suitable business model, carries out full-package household business registration or company establishment procedures, converts household businesses into enterprises, and advises on tax, accounting and labor obligations after establishment. For quick advice, please contact our lawyers at 0966.475.966.
Related articles
- Distinguishing household businesses from enterprises
- What is a household business? Latest legal regulations on household businesses
- Converting a household business into an enterprise
- Procedures for registering a private enterprise in Vietnam
- Must household businesses register for tax?
