Question: I am currently selling clothes online, with a monthly revenue of about 150 million VND. I also frequently collaborate with KOLs and sell on e-commerce platforms. Recently, a partner has required me to issue VAT invoices. I am registered as a business household, so it seems I am unable to issue this type of invoice. Therefore, what are the benefits if I convert from a business household to a company? What type of company should I choose, and what is the registration process?
Answer
Based on the information you provided, it can be seen that converting from a household business to a company is a necessary step and aligns with your long-term development goals. The greatest advantage of this conversion is that the company obtains legal entity status, meaning it becomes a legal entity independent from its owner. This helps enhance credibility and professionalism when working with partners, KOLs, or e-commerce platforms. In addition, as a legal entity, the company may register for tax payment under the deduction method, issue value-added tax (VAT) invoices, and apply a corporate income tax rate of 20% on profits, instead of paying a fixed tax based on total revenue as in the case of a household business.
Regarding the type of enterprise, depending on your business scale and capital needs, you may consider choosing the most suitable model. If you are currently operating individually and do not plan to raise additional capital from others, a Single-Member Limited Liability Company (LLC) is the optimal option. This is also the most common model chosen by household business owners when converting to a company.
The procedure for converting a household business into a Single-Member Limited Liability Company (LLC) is carried out as follows:
- The application dossier includes
- A copy of the business household registration certificate;
- An application for enterprise registration;
- The company's charter;
- A copy of the personal legal papers of the individual member and the legal representative. (If you already have a personal identification number and your personal information has been declared in the National Population Database, you are not required to submit this document).
Legal basis: Article 27, Article 24 of Decree No. 168/2025/ND-CP; Article 21 of the Law on Enterprises 2020 (as amended and supplemented in 2022 and 2025).
- Procedures for implementation
After completing the aforementioned dossier, the enterprise must submit the application to the provincial-level Business Registration Authority where your company intends to locate its head office. From the date of receiving a valid dossier, the Business Registration Authority will review and issue the Certificate of Enterprise Registration within 03 working days.
Finally, you must complete the procedure for terminating the operation of the household business within 02 working days from the date the Enterprise Registration Certificate is issued.
Legal basis: Articles 31, 32, 27, and 73 of Decree No. 168/2025/NĐ-CP, and Article 26 of the Law on Enterprises 2020, as amended and supplemented by Law No. 03/2022/QH15.
In summary, the above constitutes the entire consultation regarding the benefits and necessary legal procedures for converting from a business household to a Single-Member Limited Liability Company. We hope this information will be helpful for your upcoming decision.
Consultation: Company services
