Currently, many directors and business owners still habitually use their own personal bank accounts or those of company employees to receive payments for goods and services sold, pay expenses, and settle payments with suppliers of raw materials. While convenient, this method carries many risks regarding taxes and legal liability for both individuals and businesses, as well as negatively impacting the company's financial management.
I. Legal Basis
Although current Vietnamese law does not specifically mandate that businesses open corporate bank accounts, using personal accounts for business operations will undoubtedly present many challenges. Specifically, Clause 3 Article 77 Enterprise Law 2020 regulations:
" The assets of the company owner must be identified and separated from the assets of the company. If the company owner is an individual, their personal and family expenses must be separated from the expenses of the company chairman, director, or general manager. "
In practice, when using a single bank account for both personal and business purposes, business owners find it difficult to clearly separate the income and expenses of different types of assets. This can easily lead to errors in tax declarations and make it difficult to prove the validity and reasonableness of business expenses to the tax authorities.
II. Risks of using personal accounts in business operations
1. It can easily lead to unwanted personal income tax obligations.
➤ If revenue from the sale of goods or provision of services by a business is transferred to the personal account of the business owner, the tax authorities have grounds to consider this as personal income of that person. In this case, the business owner will have to declare and pay personal income tax on this revenue.
➤ In addition, according to the regulations at Clause 25 Article 5 VAT Law 2024 if annual sales reach from 200,000,000 VND or moreIndividuals also have to pay additional VAT.
2. Risk of violating tax obligations.
➤ Using the same bank account for both personal and business purposes makes it difficult to separate cash flows, which can easily lead to problems:
- Deficiencies or inaccuracies in revenue reporting;
- Receipts and expenditures without or with insufficient valid invoices or supporting documents.
This affects the company's ability to fulfill its tax obligations, and the company may be penalized. Tax collection and penalties for late payment. or administrative penalties for tax violations.
➤ As stipulated in Article 17 Decree 125/2020/ND-CP, businesses may be Fines ranging from 1 to 3 times the amount of tax evaded. Depending on the severity and nature of the violation, there may even be a risk of being penalized. criminal prosecution in cases of serious tax evasion.
3. Difficulties in settling tax deductions
According to regulations on value-added tax and corporate income tax, for an expense to be deductible for input VAT and included in deductible expenses when settling corporate income tax, the enterprise must simultaneously meet the following conditions:
- Actual expenses incurred in connection with business operations;
- There are valid invoices and documents;
- Non-cash payment documents are required for purchases of goods, services, and other individual payments of a certain value. 05 million or more (VAT included).
➤ As stipulated in Point i, Clause 2, Article 26 Decree 181/2025/ND-CP , and Point c2, Clause 1, Article 9 Decree 320/2025/ND-CPIf the payment exceeds 05 million VND without non-cash payment documentation and the company's financial regulations or internal regulations do not clearly stipulate the authorization of non-cash payments to employees, then this payment will be forfeited. Not considered a deductible expense. when determining taxable corporate income and also Input VAT is not deductible..
Furthermore, when a business uses a personal account for payments, the invoice is in the name and tax identification number of the business, but the money is transferred from the personal account of the director or employee. This will raise suspicions among tax authorities regarding the nature of the transaction and will classify the business as high-risk for tax purposes.
4. Negative impact on financial health
➤ When income and expenses are scattered across different accounts, the company's cash flow becomes fragmented and unsystematic. This creates gaps in the cash flow, increasing the risk of losses and misappropriation of company funds.
➤ When business cash flows through personal accounts, financial data lacks transparency. Contributing members and shareholders easily become suspicious of the honesty of financial reports and profit distribution methods, leading to internal disputes and affecting the stability of the business's operations.
➤ Banks assess financial capacity based on a company's financial statements, account statements, and transaction history. If the majority of business cash flow goes through personal accounts, the bank will not have enough data to assess the company's size and financial capacity. This limits the company's creditworthiness, forcing it to borrow at high interest rates and weakening its ability to raise long-term capital.
While using personal accounts for business transactions may offer temporary convenience, it creates significant risks regarding tax compliance, increasing the likelihood of violations and weakening the company's financial health. In this spirit... "Understand correctly - Do correctly"Therefore, businesses should channel all their cash flow through corporate accounts. If transactions must be conducted through individuals, a clear authorization agreement must be in place. This is a minimum but fundamental step in improving the company's creditworthiness in the eyes of regulators, banks, and partners.
📑 Excerpt from the law:
- Enterprise Law
- Article 77. Obligations of the company owner.
- Value Added Tax Law
- Article 5. Subjects not subject to tax.
- Decree 125/2020/ND-CP
- Article 17. Penalties for tax evasion.
- Decree 181/2025/ND-CP
- Article 26. Non-cash payment documents.
- Decree 320/2025/ND-CP
- Article 9. Deductible expenses when determining taxable income.