What is an individual household business? What is a household business? What is a family household business?

According to Article 79 of Decree 01/2021/ND-CP, an individual household business is established and registered by one individual or members of a household. They are fully responsible with all their assets for the business activities of the household. In cases where household members register the household business, they must authorize one member to represent the household business. The individual registering the household business or the authorized representative of the household members is the head of the household business.

Who has the right to register a household business? How many household businesses can one person register? Can the owner of a household business establish an enterprise?

Individuals and family members who are Vietnamese citizens with full civil act capacity as stipulated in the Civil Code have the right to establish a household business according to the provisions of Chapter VIII of Decree 01/2021/ND-CP, except in the following cases:

• Minors, individuals with restricted civil act capacity, individuals who have lost their civil act capacity, and individuals with difficulties in cognition and behavior control.
• Individuals who are under criminal prosecution, detention, serving prison sentences, undergoing administrative handling measures at compulsory rehabilitation centers, compulsory education centers, or are prohibited by the court from holding certain positions, practicing certain professions, or doing certain jobs.
• Other cases as stipulated by relevant laws.

Individuals and household members stipulated in Clause 1 of this Article are only allowed to register one household business nationwide and have the right to contribute capital, buy shares, and purchase capital contributions in enterprises as individuals.

Individuals or household members who register a household business are not allowed to simultaneously be the owner of a private enterprise or a general partner of a partnership company, except with the unanimous consent of the remaining general partners.

Types of taxes to be paid when registering a household business? The amount of tax to be paid for a household business?

The VAT amount to be paid: Sales revenue from goods and services provided * VAT rate

The PIT (Personal Income Tax) amount to be paid: Sales revenue from goods, provision of services * PIT rate

For example: A household business trading in construction materials with a monthly revenue of 100 million dong. (VAT rate: 1%, Personal income tax rate: 0.5%)
The amount of tax to be paid monthly: 100 million VND * 1.5% = 1.5 million VND per month

• Revenue from over 100 million to 300 million VND: 300,000 VND (Three hundred thousand dong)
• Revenue from 300 to 500 million VND: 500,000 VND (Five hundred thousand dong)
• Revenue over 500 million VND: 1,000,000 VND (One million dong)

Restrictions - Scale - How does a household business operate?

A household business is not considered a legal entity and does not have legal person status. The head of the household business is fully responsible for its assets without limitation.

A household business does not have the right to independently carry out import-export activities like a company.

A household business does not have a seal, cannot open branches or representative offices, and cannot exercise rights that companies have, such as import-export activities or applying bankruptcy law when facing losses.