Most of the articles that cover foreign direct investments in Vietnam focus on medium and large size companies. However, if you plan to start a small business in Vietnam there are some additional aspects you need to pay attention to.
What is the Structure of a Small Business in Vietnam?
To begin with, there are two types of Limited Liability Companies in Vietnam:
- Single Member LLC
- Multiple Member LLC
When opening a small business in Vietnam, consider Single Member Limited Liability Company. This means that your company has only 1 founder. As well, the owner of this LLC is only held liable within the enterprise’s charter capital. If you are the owner of a Single Member LLC, you have the ultimate authority on deciding all business operations.
This legal entity type fits several fields of businesses, however you must check if it is fully or partially open to foreign investments. By choosing a business line which is open to 100% foreign ownership you meet the criteria and there are no obstacles in opening a small business in Vietnam as a Single Member LLC. However, in case foreign ownership is restricted – like in tourism sector – you must set up an at least two member LLC.
Note that there is no need for assigning any specific corporate positions. While setting up a small company, appoint 1 director who can also be the founder. If it happens that the founder is not a resident, then remember that you also must have one resident director.
Foreign Company Tax Compliance in Vietnam
You can pay dividends in cash, stock or other properties. A great benefit for you lays when paying taxes. A Single Member LLC’s in Vietnam do not need to pay any tax on dividend payments.
Note that individual investors other income and dividends from different business ventures are taxed separately and on a transaction basis.
Minimum Capital Requirement in Vietnam for Small Businesses
Currently there is no minimum capital requirement set. Yet, if there is no requirement, how high should the investment be? Your planned capital must take the expected costs and revenue into account.
This means if your company’s overhead is low, the capital does not have to be high. For example, if you are planning to open up a small services based company in Vietnam you may even have as low capital as $US 3,000.
Though, setting up a trading or manufacturing company at this range is difficult. The capital is low, however the costs in these industries are high.
Outsourcing Non-core Business Activities
Small business often don’t have the amount of revenue or transactions to justify the expense of hiring a full time person for many of the non-core business processes. Consider outsourcing for:
- Payroll & Invoicing
- Sales & Marketing
- Finance & Accounting
- IT- services
All the above are crucial services when running a business. Being on a lower budget outsourcing will get you through the necessity of hiring all these positions yourself. It is affordable and useful plus will save you the trouble of recruitment and staff training process. Also, no in-house product maintenance and latest upgrades on accounting programs.
Learn about the company registration in Vietnam or fill the form below. Emerhub consultants will advise you further on opening a small business in Vietnam.