Vietnam is an exciting and developing market, attracting many foreign investors to start companies here. However, without a proper understanding of the regulations and laws in Vietnam, a business may easily be exposed to unnecessary risks. Therefore, using company establishment services can help a business avoid problems during the establishment process. Let’s explore how to establish a business in Vietnam with Informly.
A brief overview of company types in Vietnam
In Vietnam, the main company types are:
- Limited Liability Company (LLC): Common for small and medium businesses, with 1 to 50 members. Liability is limited to the capital contributed by each member.
- Joint Stock Company (JSC): Suitable for larger businesses, with over 50 shareholders. Shareholders’ liability is limited to their shares. JSCs can issue public shares.
- Private Enterprise: It is owned by a single individual, who bears unlimited liability for the company’s debts. This structure is ideal for small businesses but not suitable for larger operations due to the risk associated with unlimited liability.
- Partnership: Involves two or more partners, who share both profits and liabilities. This structure is less common due to the shared personal liability.
- Representative Office: A non-commercial entity for foreign companies to monitor and promote business activities in Vietnam without engaging in direct commercial transactions.
Steps to establishing a company in Vietnam
Starting a company in Vietnam involves a number of legal steps and requirements. Here’s a summary of the essential legal requirements:
Step 1: Choose the type of company
In Vietnam, you can choose from various business structures, such as:
- Limited Liability Company (LLC)
- Joint Stock Company (JSC)
- Private Enterprise
- Partnership
- Representative Office
Step 2: Register the company name
The name must not be identical to an existing company and must follow Vietnamese naming conventions. Additionally, it must comply with Vietnamese naming conventions, which require that the name reflects the company’s legal structure, such as including terms like “Công ty TNHH” (Limited Liability Company) or “Công ty Cổ phần” (Joint Stock Company), depending on the type of business entity being established.
This ensures clarity and helps avoid any potential legal disputes regarding intellectual property or confusion with other companies.
Step 3: Register the business with the authorities
Submit an application for business registration to the DPI. This process includes submitting the company’s name, business scope, and details of the founding members or shareholders. Additional documentation is required for foreign investors. This may include proof of financial capacity, a feasibility study for certain sectors, and other supporting documents to demonstrate the business’s viability.
Foreign-owned companies must also establish a legal representative within Vietnam and comply with specific regulations regarding foreign investment.
Step 4: Obtain a tax code and open a bank account
The tax code serves as the company’s identification for tax purposes and is necessary for issuing invoices, paying taxes, and fulfilling various legal and financial obligations. Without a tax code, the company cannot legally operate or perform official financial transactions in Vietnam.
Besides, to facilitate financial transactions, businesses in Vietnam must open a corporate bank account with a local bank. This account is essential for managing company funds, paying vendors, and receiving payments from customers. It is a requirement for businesses to have a Vietnamese bank account in the company’s name, and the bank will require the business registration certificate and other relevant documents before opening the account.
Step 5: Comply with ongoing reporting and tax obligations
After the company is established, ongoing compliance with Vietnam’s reporting and tax obligations is essential. Businesses are required to maintain proper accounting records, submit periodic tax filings, and provide detailed reports to the relevant authorities.
Additionally, companies must comply with other ongoing legal obligations, such as reporting changes in company structure, shareholder composition, or business activities.
Essential procedures for company establishment in Vietnam
Setting up a company in Vietnam requires compliance with certain administrative procedures to ensure that the company operates legally. Below are the necessary procedures:
Minimum Capital Requirements
While Vietnam typically does not have a set minimum capital requirement, the registered capital is evaluated by the Department of Planning and Investment to ensure sufficient funds for initial business operations. Certain industries may have specific capital thresholds.
Charter Capital and Total Investment Capital
Charter Capital, which reflects the owners’ financial contributions, along with Total Investment Capital (which combines charter capital and loans), must be registered. Modifications to these amounts can be made with approval from the local authorities.
Transferring Funds to FIE
Foreign investors are required to open a capital bank account in Vietnam for the transfer of funds, which will facilitate domestic transactions.
Company Registered Address
A legal address in Vietnam is required for the business. Physical office locations are typical, although service-based businesses can opt for virtual offices. The Department of Planning and Investment may confirm the address during the registration process.
Legal Representative
A Legal Representative (e.g., Company President or Director) is mandatory for the company. The representative must have a residential address in Vietnam, though permanent residency is not required at the time of company registration.
Accounting and Tax Obligations
Companies must comply with Vietnam’s accounting and taxation rules, including regular filings for corporate income tax, value-added tax (VAT), and personal income tax. Both routine and occasional filings may be necessary.
Annual Audit Obligations
LLCs and representative offices are required to submit annual audit reports according to Vietnam’s fiscal year. Representative offices generally face less stringent audit requirements.
Employment Regulations
Hiring practices must follow Vietnam’s labor laws, including restrictions on employee types, work permits for foreign workers, and mandatory social insurance contributions.
Register for social and health insurance
Companies in Vietnam are required to register with the Vietnam Social Security Agency to ensure their employees are covered by social and health insurance.
Obtain licenses and permits
Depending on the nature of the business, specific licenses and permits might be required, such as construction licenses, food safety certifications, or environmental permits.
Foreign Investment Reporting
Foreign investors must submit quarterly, semi-annual, and annual reports that cover the implementation of investments and compliance with regulatory requirements.
Time and costs for company registration in Vietnam
The time and costs for company registration in Vietnam can vary depending on several factors, including the type of company, the complexity of the documents, and whether external services are used. Below is a detailed overview of the typical time and costs involved.
Time for Company Registration
- Document processing time: Typically, it takes about 3 to 5 business days for the company registration to be processed if the documents are complete and accurate.
- Certificate of Business Registration: After the approval of the registration application, the company will receive the Business Registration Certificate within about 1-2 days.
- Additional steps: In addition to document submission and obtaining the business license, the company will need time to complete procedures such as stamp carving, opening a bank account, and tax registration, which usually takes another 1-2 weeks.
Costs for Company Registration
- Business registration fee: The fee usually ranges from 200,000 VND to 1,000,000 VND, depending on the type of company and the province/city where it is registered.
- Stamp carving fee: Around 100,000 VND to 300,000 VND.
- Consulting and service fees (if applicable): If using a company formation service, the fee can range from 3,000,000 VND to 10,000,000 VND, depending on the complexity of the process and the services offered.
- Other costs: Additional costs such as notifying changes in company information, tax registration, or renting office space should also be considered as part of the total registration cost.
Why you should use Company Formation Services at Informly
Starting a business can be an exciting journey, but it comes with its own set of challenges and complexities, particularly when navigating legal and regulatory requirements. Here’s why you should consider using professional services at Informly when starting your business:
Expert guidance
Informly provides professional assistance through every step of the company formation process. With extensive knowledge of Vietnam’s business laws and regulations, their experts help ensure you meet all legal requirements, saving you time and avoiding potential errors.
Comprehensive service
From registering your company name to obtaining the necessary licenses and tax registrations, Informly offers a full range of services. This all-in-one approach simplifies the setup process and ensures everything is handled efficiently.
Tailored solutions
Informly understands that each business is unique. Their services are customized to suit your specific needs, whether you’re starting a small business or planning to expand in Vietnam. This personalized approach ensures you get the right advice for your situation.
Local knowledge
Informly’s team has deep insights into the local market and legal requirements in Vietnam. Their understanding of the cultural and regulatory landscape helps foreign investors navigate the complexities of company formation and ensures compliance with Vietnamese laws.
Cost-Effective
By using Informly’s services, you reduce the risk of costly mistakes during the formation process. Their transparent pricing and efficient service can save you money in the long run.
Ongoing Support
Informly provides ongoing support after your company is formed. Whether it’s handling your tax filings, advising on business operations, or ensuring compliance with local regulations, their services go beyond just company registration.
In conclusion, using professional services at Informly when setting up a business can provide peace of mind, reduce risks, and help ensure long-term success. With their expertise and support, you can navigate the complexities of business formation and legal compliance smoothly, allowing you to focus on building and growing your business.
Ready to start your business in Vietnam? Let Informly guide you through the entire company formation process. Contact us through hotline: 0907392969 or our website Informly today to get expert support and ensure a smooth, hassle-free setup!
