Things to Note When Establishing a Business

Established businesses is a job for people who want to start a business, want to open a company for themselves to be able to do business and trade in the market to bring profits. To succeed in business, entrepreneurs should understand the process and other important factors to make informed decisions. In this article, we will explore the procedures to prepare and relevant content related to this topic. 

Conditions for Establishing a Business

Notes before Establishing a Business

Choosing the Type of Business Entity

Currently, to establish a company, the business owner needs to choose the type of company they want to establish to conduct business activities. There are four common types of registered companies:

• Single-member Limited Liability Company (LLC): owned by one individual or organization.
• Multi-member Limited Liability Company (LLC): with 2 to not more than 50 members, who can be individuals or organizations.
• Joint Stock Company: with at least 3 individuals or organizations as shareholders, with no restriction on the number of shareholders.
• Sole Proprietorship: owned by one individual, who bears unlimited liability with personal assets.
• Partnership: with at least two partners jointly and severally liable for debts and obligations arising from business activities.

Based on the content in: Article 46, Article 74, Article 111, Article 188 of the 2020 Enterprise Law.

Determining the Business Sector

To determine the business sector that entrepreneurs want to engage in, choosing the business sector is an important decision that can impact the success of the business. Below are some criteria to consider when choosing a business sector:

• Personal interests and experience
• Researching and analyzing market trends and potential
• Evaluating and comparing with other industries
• Assessing financial capabilities and management skills

Based on the four criteria we have suggested, individuals and organizations can choose and determine the sector they want to engage in. Businesses have the right to operate in any sector not prohibited by law. However, businesses must register with the business registration authority before operating. Moreover, for industries classified as conditional business sectors, businesses must ensure compliance with the conditions prescribed by law.

Based on the content in: Article 1, Article 7, Article 8 of the 2020 Enterprise Law.

Names of enterprises

When establishing a company, naming the company is essential as it enhances brand recognition, and customers will know the company name to conduct transactions, thus increasing the credibility of the business. Therefore, naming the company must meet the following criteria:

The company name must include two elements: 

• The type of enterprise

Accordingly, the type of enterprise shall be “công ty trách nhiệm hữu hạn” or “công ty TNHH” for limited liability companies; “công ty cổ phần” or “công ty CP” for joint stock companies; “công ty hợp danh” or “công ty HD” for partnerships; “doanh nghiệp tư nhân”, “DNTN” or “doanh nghiệp TN” for sole proprietorships

• The proper name:

For the proper name, it shall consist of letters in the Vietnamese alphabet, numbers and symbols.

Therefore

The company name must not be identical or confusing with the name of any registered business in the national database.

The business name must be written in Vietnamese, may include numbers and symbols, and must be pronounceable, consisting of two elements: “Type of business entity + Specific name.”

Based on the content in: Article 37, Article 38 of the 2020 Enterprise Law.

Choosing the Company Headquarters Address

The headquarters of the company is the registered business address as well as where the company usually places its office and receives customers. Choosing the company headquarters address needs to consider the following:

• The enterprise’s headquarters shall be located within Vietnam’s territory, is the enterprise’s mailing address.
• The company needs to have a phone number, fax number, and email address (if any).

In case the location of the headquarters does not have a house number or street name, confirmation from the local authority that the address does not have a house number, street name must be submitted along with the business registration documents.

Based on the content in: Article 42 of the 2020 Enterprise Law.

Identifying Members, Shareholders Capital Contribution.

Shareware and capital contributors when establishing the company

Members and shareholders contributing capital are those who can decide the existence, development, or dissolution of a company. Ideally, collaborating with partners or shareholders with the same orientation and significance for the success of the company and vice versa is essential. Additionally, careful consideration should be given before deciding to collaborate on starting a business, which is also an issue in the things to know when establishing a company.

According to legal regulations, Organizations and individuals have the right to contribute capital, buy shares and stakes of joint stock companies, limited liability companies and partnerships in accordance with this Law, except:

• State authorities, People’s armed forces contributing state-owned assets to enterprises to serve their own interests;
• The entities that are not allowed to contribute capital to enterprises prescribed by the Law on Officials, the Law on Public Employees, and Anti-corruption Law.

Based on the content in: Article 3, Article 17 of the 2020 Enterprise Law.

Charter/ Authorized Capital

Charter capital is the amount of capital contributed or committed by members, shareholders within 90 days from the date of issuance of the Certificate of Business Registration. However, according to the Enterprise Law, there is no mandatory provision that when registering a company, it must prove that there is enough charter capital.

Enterprises should choose a reasonable level of chartered capital. Note:

• Chartered capital less than or equal to 10 billion VND, the business registration fee must be paid is 2,000,000 VND/year;
• Chartered capital exceeding 10 billion VND, the business registration fee must be paid is 3,000,000 VND/year.

Based on: Article 1 of Decree No. 139/2016/ND-CP, amended and supplemented by Decree No. 22/2020/ND-CP regulating business license fees; Article 47 of the 2020 Enterprise Law.

Decision of Legal Representatives

The enterprise’s legal representative is the person who directly manages all business activities of the enterprise, responsible for the legal compliance of all activities of the enterprise.

A limited liability company or joint stock company may have one or more than one legal representative

An enterprise shall have at least one legal representative residing in Vietnam.

Based on the content in: Article 12 of the 2020 Enterprise Law.

Procedure Sequence for Business Registration

Application Form

The application form required to register the establishment of a business will depend on the type of company that the business owner wants to register for establishment. However, there are certain documents that always belong to each type of business entity. The main documents needed for businesses are as follows:

• The enterprise registration application form.;
• The company’s charter;
• The list of partners;
• Identity papers (certified copies);
• And some other documents depending on specific cases.

Based on the content in: Article 19, Article 20, Article 21, Article 22 of the 2020 Enterprise Law.

Procedure Implementation

To applying for enterprise registration, in addition to the above-mentioned documents, some procedures need to be followed in the following order:

Step 1: Submitting The Application

The enterprise’s founder or the authorized person shall apply for enterprise registration at the business registration authority as follows:

• Direct application at the business registration authority;
• Submission of the application by post;
• Online enterprise registration.

Based on the content in: Article 26 of the 2020 Enterprise Law.

Step 2: Accept and Review of Application

Within 03 working days from the receipt of the application, the business registration authority shall consider the validity of the application and decide whether to issue enterprise registration;

Additionally:

In case the application is invalid, the business registration authority shall inform the applicant of necessary supplementation in writing.

Or the business registration authority shall inform the applicant and provide explanation if the application is rejected.

Based on the content in: Article 26 (Clause 5) of the 2020 Enterprise Law.

Step 3: Publishing of enterprise registration information

After an enterprise is granted the Certificate of Enterprise Registration, it shall announce it on the National Enterprise Registration Portal and pay the fee as prescribed by law

The information mentioned in enterprising registration information shall be announced which published for 30 days

Based on the content in: Article 32 of the 2020 Enterprise Law.

Procedure for Establishing a Business

Authority to Grant Business Licenses

The two authorities empowered to issue business establishment licenses are the Department of Planning and Investment and the Economic Division of the district/commune where the business is located. Specifically:

• Business Registration Certificate: issued by the Department of Planning and Investment after the process of verifying and confirming the validity of the documents.
• Individual Business License: issued by the Economic Division of the district/commune when accepting the application for a license from the individual business.

Based on the content in: Article 14 of Decree No. 01/2021/ND-CP.

Cost of Establishing a Business

When establishing a business, it is essential to note that there are costs associated with establishing a business. Additionally, clients can choose options to use business establishment services to optimize costs and efficiency. Generally, the service fees for business establishment include various fees and state fees as required by law, which businesses must pay. For the business establishment fee at Long Phan, we confidently provide customers with quality services and the most advantageous fee for the client.

Business Establishment Consultation

To support customers during the startup process, Long Phan provides consulting services with the following tasks:

• Drafting business establishment documents, company establishment according to requirements.
• Acting on behalf of customers to submit, withdraw, receive business registration documents at the Business Registration Office.
• Monitoring the processing progress and notifying the results of the submitted documents.
• Acting on behalf of customers to receive the Business Registration Certificate.
• Carrying out procedures to submit documents for seal engraving and contacting seal engraving for the Enterprise at the competent authority.
• Carrying out procedures to register tax code and customs code for enterprises with import-export functions for the enterprise.
• Consulting other procedures after establishing a business.

Therefore, when wanting to establish a business, the business owner must first register the establishment of the business according to the correct legal procedures. If the business is not registered, it may encounter legal issues affecting business activities. In this article, we have provided customers with information about establishing a business. Customers can contact Long Phan via hotline 0906.735.386 for the best support. Thank you.