Tiếng Việt
中文Short answer: Choosing an enterprise type depends on the number of owners, risk tolerance, capital needs and development orientation. General rule: to limit asset risk, choose an LLC or a joint stock company (limited liability, legal entity status); for simple procedures and full decision-making power with acceptance of unlimited liability, choose a private enterprise; groups of professionals practicing together should consider a partnership. This article compares 05 enterprise types in detail under the Law on Enterprises 2020 (amended by Law No. 76/2025/QH15).
Legal basis
- Law on Enterprises 2020, as amended and supplemented by Law No. 76/2025/QH15 — provisions on single-member LLCs, multi-member LLCs, joint stock companies, partnerships and private enterprises;
- Decree 168/2025/ND-CP on enterprise registration.
Comparison of 05 enterprise types
| Criterion | Single-member LLC | Multi-member LLC | JSC | Partnership | Private enterprise |
|---|---|---|---|---|---|
| Number of owners | 01 | 02–50 | At least 03 shareholders | At least 02 general partners | 01 individual |
| Legal entity status | Yes | Yes | Yes | Yes | No |
| Liability regime | Limited within charter capital | Limited within contributed capital | Limited within contributed capital | General partners: unlimited, joint | Unlimited with all assets |
| Capital mobilization | Limited (no share issuance) | Moderate | Most flexible (share and bond issuance) | Limited | No securities issuance |
| Capital transfer | Transfer of entire capital | Priority to remaining members | Free (except voting preference shares, founding shareholders in first 3 years) | Strictly limited | No transfer (only type conversion) |
| Governance | Simple | Members’ Council | GMS, Board, Supervisory Board | Members’ Council of general partners | Owner has full authority |
Which type to choose? Scenario-based suggestions
Starting alone, wanting asset safety → Single-member LLC
Has legal entity status, limited liability, simple governance and full decision-making power. The most popular choice for individual startups today.
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.
Group of 2–5 people contributing capital → Multi-member LLC
Limited liability, lean structure; internal pre-emptive rights on capital transfers help keep the founding group stable.
Fundraising and expansion plans → Joint stock company
The most flexible capital mobilization mechanism, easy to add shareholders; in return, governance is more complex (General Meeting of Shareholders, Board of Directors).
Small business, low risk, wanting simplicity → Private enterprise
The simplest establishment and management procedures; but the owner bears unlimited liability — only suitable for small scale, low risk and well-controlled ownership.
Law firms, auditing, professional services → Partnership
Reputation tied to general partners’ unlimited liability creates trust among clients of professional services.
Common mistakes when choosing an enterprise type
- Choosing a private enterprise for “simplicity” without assessing unlimited liability risk;
- Choosing a JSC with only 1–2 people — having to “borrow” shareholders to meet the 03-person minimum, inviting disputes;
- Not anticipating capital transfers: LLCs restrict external transfers, causing difficulty when wanting to exit;
- Ignoring tax factors: each enterprise type has different tax calculation and declaration methods.
Frequently asked questions
Can the enterprise type be changed later?
Yes. The law permits enterprise-type conversion (e.g., LLC → JSC, private enterprise → LLC); the post-conversion company succeeds to the rights and obligations of the pre-conversion company.
Which type pays the least tax?
No type pays “less tax” in absolute terms; tax obligations depend on revenue, profit and the tax calculation method. Specific tax advice should be sought for your business model.
Can an LLC issue bonds?
Yes, under the law on corporate bond issuance; only joint stock companies may issue shares (stocks).
Notes on applying current legal provisions
The Law on Enterprises was amended in 2025; comparisons based on the Law on Enterprises 2014 (no longer effective) need updating. Choosing an enterprise type is a strategic decision — initial mistakes cost conversion expenses later. Contact ANT Legal’s lawyers at 0966.475.966 for advice on the enterprise type suited to your business plan.
Common risks to note
- Applying provisions of the Law on Enterprises 2014 that are no longer effective;
- Choosing a private enterprise for high-risk activities;
- “Borrowing” shareholders or members to meet statutory numbers;
- Not considering future transfer and exit possibilities.
How can ANT Legal help?
ANT Legal advises on choosing the optimal enterprise type for your business objectives; drafts charters and establishment dossiers; and advises on type conversion when expansion is needed. For quick advice, please contact our lawyers at 0966.475.966.
Related articles
- Procedures for converting from a limited liability company to a joint stock company
- Company and enterprise establishment services nationwide in Vietnam
- Procedures for registering a private enterprise in Vietnam
- Must ISPs comply with the national coordination authority’s incident response requirements?
- Key legal notes when establishing an enterprise in Vietnam
