Household business is one of the increasingly popular business types in Vietnam nowadays. Here are 12 important notes when setting up a household business in 2021 that everyone should know.
Article table of contents
1. Entities eligible to register for household business
Pursuant to Clause 1 Article 79 of the Decree No. 01/2021/NĐ-CP of the Vietnam Government (effective from January 04, 2021), a household business is:
- Established by an individual;
- Established by family household members that shall take responsibility for business operations of the household business with all of their property. If a household business is established by members of a family household, one of them shall be authorized to act as the representative of the household business.
The individual applying for registration of household business or the person authorized by the family household members to act as the representative of the household business shall be the owner of the household business.
Thus, from 2021, a household family can not be the owner of the household business. Instead, one of the members of a family household shall be authorized to act as the representative of the household business. Concurrently, the provision of household business registered by a group of individuals is abolished.
2. The owner of a household business may hire another person to manage and direct business operations
Pursuant to Article 81 of the Decree No. 01/2021/NĐ-CP of the Vietnam Government, the owner of a household business may hire another person to manage and direct business operations of the household business.
Note: In this case, the owner and other family household members applying for household business registration remain liable for debts and other asset-related liabilities arising from business operations.
This is a completely new provision compared to the previous regulations.
3. Conditions for the issuance of the Certificate of household business registration
Pursuant to Article 82 of the Decree No. 01/2021/NĐ-CP of the Vietnam Government, a household business shall be issued with the certificate of household business registration if all of the following conditions are satisfied:
- The registered business lines are not banned;
- The name of the household business is conformable with regulations of Article 88 hereof, specifically as following:
+ Each household business has its own name. The name of a household business shall consist of two elements as follows:
-The phrase “Hộ kinh doanh”;
-The proper name.
The proper name consists of letters in the Vietnamese alphabet, the letters F, J, Z, W, digits, and symbols.
+ It is prohibited to use words or symbols that contradict Vietnam’s tradition, history, culture, and ethics in the proper name of the household business.
+ The name of a household business must not consist of the phrase “công ty” or “doanh nghiệp”.
+ The proper name of the household business must not coincide with the name of another household business which has been registered within the same district.
- The application for household business registration is valid;
- Fees for household business registration are fully paid.
4. Business location of a household business
Pursuant to Article 86 of the Decree No. 01/2021/NĐ-CP of the Vietnam Government, the business location of a household business is the place where specific business operations are carried out.
Specially, a household business may carry out business operations at multiple locations but must select a location as its headquarters and notify it to tax authorities and market surveillance authorities at places of other business locations.
5. Charter capital of a household business
According to current law of Vietnam, there is no minimum charter capital for business households. Therefore, the minimum charter capital of a business household will depend on the ability of that business household.
Note: Business households must be responsible with all their assets. Therefore, members of household businesses need to consider this issue.
6. No limit on the maximum number of employees of household business
According to the current law of Vietnam, there is no limit on the maximum number of employees that individual business households are allowed to use compared to the previous Decree No. 78/2015/ND-CP.
Thus, from 2021, business households can hire workers without being limited (under 9 employees) as before.
7. Application for household business registration
Pursuant to Clause 2 Article 87 of the Decree No. 01/2021/NĐ-CP of the Vietnam Government, an application for household business registration includes:
- The application form for household business registration;
- Legal documents of the owner of the household business or family household members applying for household business registration;
- The copy of the minutes of meeting of family household members on establishment of household business in case the household business is established by family household members;
- The copy of the letter of authorization made by the family household members to authorize a person to act as the owner of the household business in case the household business is established by family household members.
8. Naming household business
Pursuant to Article 88 of the Decree No. 01/2021/NĐ-CP of the Vietnam Government, each household business has its own name. The name of a household business shall consist of two elements as follows:
- The phrase “Hộ kinh doanh”;
- The proper name.
The proper name consists of letters in the Vietnamese alphabet, the letters F, J, Z, W, digits, and symbols.
Note: It is prohibited to use words or symbols that contradict Vietnam’s tradition, history, culture, and ethics in the proper name of the household business. The name of a household business must not consist of the phrase “công ty” or “doanh nghiệp”. The proper name of the household business must not coincide with the name of another household business which has been registered within the same district.
9. Business lines of a household business
Pursuant to Article 89 of the Decree No. 01/2021/NĐ-CP of the Vietnam Government, when applying for registration of a new household business, the household business shall write the business lines on the application form for household business registration or notification of changes to household business registration information. The district-level business registration authority shall write the business lines on the certificate of household business registration.
A household business is entitled to engage in conditional business lines from the day on which all business conditions are fulfilled and must maintain the fulfillment of such conditions throughout its operation.
10. Timeline of registration of changes to household business registration information
Pursuant to Article 90 of the Decree No. 01/2021/NĐ-CP of the Vietnam Government, the owner of the household business shall apply for registration of changes to the certificate of household business registration with the business registration authority within 10 days from the occurrence of such changes.
Thus, from 2021, within 10 days since there is a change in business household registration, the business household must carry out procedures for registration of changes to the information of the business household registration certificate at the district-level People's Committee where the business household is registered with its head office.
11. Suspended from business indefinitely
Pursuant to Article 91 of the Decree No. 01/2021/NĐ-CP of the Vietnam Government, if the suspension period is 30 days or longer, the household business must send a notification to the business registration authority of the district where it was registered and its supervisory tax authority.
If the household business suspends business or resumes its business ahead of the notified schedule, the household business shall send a written notification to the business registration authority of the district where it was registered at least 03 working days before the planned date of business suspension or resumption of business ahead of the notified schedule.
It can be seen that in the Decree No. 01/2021/NĐ-CP, the regulation on business suspension period has been abolished. Thus, from 2021, business households can suspend their business indefinitely.
12. Cases of revocation of certificate of household business registration
Pursuant to Article 93 of the Decree No. 01/2021/NĐ-CP of the Vietnam Government, a household business shall have its certificate of household business registration revoked in the following cases:
- Information provided in the application for household business registration is fraudulent;
- The business is suspended for more than 06 consecutive months without notifying the district-level business registration authority where the business household was registered and the tax authority;
- The household business engages in banned business lines;
- The household business is established by person(s) banned from establishing the household business;
- The household business fails to send reports as prescribed in Clause 6 Article 16 hereof to the district-level business registration authority within 03 months from the prescribed deadline or the receipt of written request;
- It is revoked under a Court’s decision or at the request of a competent authority as prescribed by law.
