- Factors that enterprises have an advantage over Business households
- Cases in which enterprises must be set up, Business households do not respond
- Comparison of tax payment and accounting systems of Enterprise and Household Business
- Cases in which Household businesses are more dominant than Enterprises
- Online counseling
Should establishing a business or registering an individual business household is a question many people wonder about when choosing a business registration form. Each type has its respective advantages and disadvantages, in order to choose correctly, it is necessary to understand the advantages and disadvantages of these two types.
The following are expertis guide specifics on the following aspects: Regulatory, real-world operations, and hands-on business experience.
Household business (Underperformance)
Enterprise (More advantage)
Business size (both legal and social perspective)
Small-scale, owned by an individual or a household (There is a regulation of one group of people but it is still the type of household).
From small to very like 1 member limited liability companies, two or more TV limited companies, joint stock companies.
Responsibility of the owner
Responsible with all of its assets for the business.
Except for private, private liability is unlimited, but it is rare nowadays. Characteristics of limited liability is a great advantage of limited liability companies as well as joint stock companies. The members who contribute capital to the company are only responsible within the amount of capital contributed, separating personal property to ensure certain safety for people involved in business.
Registered for the business at the district authority and has no stamp. Has no legal status.
Register a business at the provincial level to be granted a business registration certificate with a stamp. Have legal status.
Cases in which enterprises must be set up, Business households do not respond #
These are the elements that the Household Business does not have, only the enterprise has, so if needed, the business must be established.
Household business (None)
Only one business can be registered. Therefore, if the business needs to open many business locations, it is imperative to set up a business.
Unlimited, can register more business locations, branches, subsidiaries ...
Number of employees used
Employing less than 10 employees. Business households that regularly employ 10 or more employees must register for enterprise establishment.
Unlimited. Therefore, in case of using more than 10 employees, an enterprise must be established.
Judicial status received
Has no legal status. In cases where legal status is required, an enterprise must be established.
Have legal status.
Right to business registration
One person can only register 1 business household. So if you need more business units to set up businesses.
Can open many businesses depending on the capital.
There is import and export activities
Although Business households have the right to import and export, however, due to the application of VAT calculation according to the direct method, it is very disadvantageous in import and export business.
To import and export and apply deductible VAT, so if needing import and export, an enterprise must be established
In fact, the owner of a business household is not allowed to borrow a loan as an individual.
To borrow from the bank according to the regulations of the bank.
Pay flat tax on turnover, no need for settlement.
Pay taxes according to the declaration of taxes such as VAT, PIT, CIT, Environmental Protection, Special Consumption ...
Tax finalization must be declared and re-settled with the tax office.
Simple household-style recording system.
Maintaining a full accounting system.
No financial statements required.
Must prepare financial statements.
Use direct invoices without VAT
Use VAT invoices
Must ensure legal origin of goods.
Must have full input invoices in accordance with the law. Invoices of 20 million or more must be paid through banks.
There is import and export activities
Although Business households have the right to import and export, however, due to the application of VAT calculation according to the direct method, it is very disadvantageous in doing import-export business (Loss of VAT deducted from import stage, loss of input VAT purchased for export).
To import and export and apply deductible VAT, so if it is necessary to export and import, an enterprise should be established.
Cases in which Household businesses are more dominant than Enterprises #
These are specific business cases that, according to Expertis's experience, using Business Households will be more advantageous than Enterprises. However, depending on the size and specific characteristics of the business to consider in many aspects.
Due to the fact that the goods purchased from the restaurant do not have full input invoices, or are purchased from farmers, or purchased from other business households, there is no input VAT; If it is a business, when selling goods, it must calculate 10% VAT, which increases the selling price and reduces competition; This can be a disadvantage.
For large, well-managed restaurants, especially foreigners, it is also appropriate to set up a business. However, it is necessary to carefully calculate the source of purchase to have an input invoice. Today, except for the market, the supermarkets provide a very complete input bill.
Trading in scrap, sand and gravel soil
Most purchases are not fully tabulated, so it may be more beneficial to pay flat tax
If making a complete purchasing list, having sufficient inputs, then 20% corporate income tax x Profits will be reasonable. In case of incomplete statement making insufficient inputs, profits increase due to lack of legal documents> leading to higher CIT payment.
Trading in agricultural, forestry, and aquatic products
Most of them buy from the fishermen, but they do not make a complete list, so it may be more beneficial to pay flat tax
In case of incomplete statement making insufficient inputs, profits increase due to lack of legal documents> leading to higher corporate income tax payment. Except for large enterprises that buy at fishing sources, other companies mostly buy from "heads" so they are not eligible to make a purchasing list, so they do not have enough inputs.
The above are specific analyzes on the advantages and disadvantages of business registration in the form of an enterprise or business household in terms of legal regulations, practical experience and actual operation of these two types of business. Expertis.
If you still have questions, are unclear or need assistance, please contact us for assistance.