Regulations on the minimum amount of capital when establishing a business household

1. What is charter capital?

🔰 Charter capital is the total value of assets contributed or pledged to contribute by members of the company and the company owner when establishing a limited liability company or partnership; is the total par value of shares sold or registered for purchase upon the establishment of a joint-stock company.

🔰 The Enterprise Law 2020 also specifically stipulates the types of assets used to contribute capital to companies and enterprises. Accordingly, assets contributed as capital can be Vietnam dong, freely convertible foreign currency, gold, land use rights, intellectual property rights, technology, technical know-how, and other valuable assets in Vietnamese Dong.

2. Regulations on charter capital of business households:

✨ A business household is registered and established by an individual or members of a household and is responsible for all his/her assets for the household's business activities. In case household members register as business households, they shall authorize one member to act as the business household representative. For individuals registering business households, the person authorized by household members to act as the business household representative is the owner of the business household.

✨ Households engaged in agricultural, forestry, fishery, salt production, and those selling street food, snacks, traveling, mobile business, seasonal business, and low-income service providers do not have to register for household business except in the case of business lines with conditional business investment. The People's Committees of the provinces and centrally-run cities shall stipulate the low-income levels applicable in the locality.

➥ The charter capital of a business household is the investment capital for production and business activities by an individual or a group of individuals contributing capital to carry out production and business activities as prescribed by law.

3. Minimum capital to establish a business household:

⏩ Currently, the law does not stipulate the minimum or maximum amount of charter capital when establishing an individual business household. The minimum amount of capital to register a household business depends on the financial capacity and size of the business, and the lines of business that the Business Household will operate in the future.

⏩  Pursuant to Appendix III-1 of Circular 01/2021/TT-BKHDT of the Ministry of Planning and Investment, the application for business household registration must contain information about the charter capital upon establishment. However, before deciding to register the charter capital with the Business Registration Office, the business household owner needs to understand the following issues:

 ✔ The amount of charter capital of the business household does not affect the rights and obligations of the business household. All business households, whether high or low charter capital, have equal rights and responsibilities.

✔ The charter capital of the business household needs to be registered in accordance with the industry, business line, scale, and business strategy of the business household owner.

✔ After the business household is dissolved, but the registered capital is not enough to pay the debts, the owner of the business household must take responsibility and use his own property for payment.

➥ The minimum amount of capital to set up a household business is appropriate depending on the experience and background of the business household owner. If individuals are just starting a business for the first time, they can register a moderate amount of capital. When the business has been operating for a while, it is necessary to expand the supply scale as the business strategy can be adjusted to increase the charter capital to a higher level.

4. Notes when registering the charter capital:

✅ When registering the charter capital when establishing a business household, it is recommended to register with low capital, not with a high amount of capital because the business agency may require registration of the establishment of the company and the tax authority. The management will base on the following conditions to impose a monthly flat tax rate for business households:

▪️ High or low level of registered charter capital of business households;

▪️ Location of operation This business household is located in a busy, developed area with a favorable location, frontage, or in alleys;

▪️ The products of this household business capable of being sold to the market?

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