Given the dramatic socio-economic changes expected in 2025, coupled with economic stimulus policies, the private sector is becoming one of the most important drivers of the national economy; a pioneering force in the development of science and technology, innovation, and digital transformation. In this context, the transition from household businesses to corporate models is not only a change in scale but also opens up many new opportunities in terms of legal frameworks, finance, development, and markets.
In particular, the State has introduced many preferential policies and benefits for converting household businesses into enterprises, helping household owners create a solid foundation for long-term development and seize opportunities to expand their scale.
1. Support for management tools
- 完善 legal framework for individual businesses; minimize disparities, and create all favorable conditions in terms of organizational management and financial and accounting systems to encourage household businesses to transform into enterprises.
- Promote digitalization, transparency, simplification, and ease of compliance and implementation in accounting, tax, insurance, and other areas to encourage the conversion of household businesses into corporate-level operations.
- We provide free digital platforms, shared software, legal consulting services, and training in business management, accounting, taxation, human resources, and law for small and micro enterprises, household businesses, and individual entrepreneurs.
2. Support for taxes, fees, and charges.
- The collection and payment of business license fees will cease from January 1, 2026;
- 100% exemption from corporate income tax for small and medium-sized enterprises for the first 03 years from the date of initial issuance of the Business Registration Certificate;
- In addition, for innovative startups:
- Income from innovative startup activities will be exempt from corporate income tax for a period of 02 years and receive a 50% reduction in tax payable for the following 04 years.
- Income from the transfer of shares, capital contributions, capital contribution rights, share purchase rights, and capital contribution purchase rights is exempt from personal income tax and corporate income tax.
- Income from salaries and wages received by experts and scientists from innovative startups, research and development centers, innovation centers, and intermediary organizations supporting innovative startups will be exempt from personal income tax for a period of 02 years and reduced by 50% for the following 04 years.
3. Criteria for identifying small and medium-sized enterprises
According to Article 5 Decree 80/2021/ND-CPThe criteria for defining small and medium-sized enterprises (SMEs) are as follows:
(1) Micro-enterprises in the agriculture, forestry, fisheries, and industrial and construction sectors that employ no more than 10 people participating in social insurance on average per year and have total annual revenue not exceeding 3 billion VND or total capital not exceeding 3 billion VND.
Micro-enterprises in the trade and service sectors that employ no more than 10 people participating in social insurance annually and have total annual revenue not exceeding 10 billion VND or total capital not exceeding 3 billion VND are considered eligible for social insurance benefits.
(2) Small enterprises in the fields of agriculture, forestry, fisheries and industry, construction employing an average of no more than 100 people participating in social insurance and having a total annual revenue of no more than 50 billion VND or a total annual capital of no more than 20 billion VND, but not being micro-enterprises as defined in clause (1).
Small businesses in the trade and service sector employing social insurance workers on average not exceeding 50 people per year and total annual revenue not exceeding 100 billion VND or total annual capital not exceeding 50 billion VND, but not micro-enterprises as defined in clause (1).
(3) Medium-sized enterprises in the fields of agriculture, forestry, fisheries and industry, construction employing an average of no more than 200 people participating in social insurance and with total annual revenue not exceeding 200 billion VND or total annual capital not exceeding 100 billion VND, but not small or micro-enterprises as defined in clauses (1), (2).
Medium-sized enterprises in the trade and service sector employing workers participating in social insurance with an average annual workforce of no more than 100 people and total annual revenue of no more than 300 billion VND or total capital of no more than 100 billion VND, but not micro-enterprises or small enterprises as defined in clauses (1), (2).
⚠️ Note on how to identify small and medium-sized enterprises
In the regulations defining small and medium-sized enterprises, there is one word and one word or, the correct interpretation is as follows:
A business must satisfy both conditions simultaneously for a single entity:
- Condition 1: Average number of employees participating in social insurance per year; and
- Condition 2: Total revenue for the year or Total capital.
For small and medium-sized enterprises (SMEs), innovative startups are those established to implement ideas based on the exploitation of intellectual property, technology, new business models, and with the potential for rapid growth.
4. Professional Financial and Accounting Management
Transitioning to a corporate model helps streamline financial and accounting management with a clear system of finance, accounting, human resources, and operational procedures. This not only helps with effective management but also enhances competitiveness, meeting the stringent requirements of the market.
With a clear and complete system of documentation, records, compliance, and transparency, businesses can easily make decisions at any time. This is also a strength that enhances the reputation and confidence of the business, attracts investors, and brings about opportunities for mergers and capital increases in the future.
Through a business model combined with a professional financial and accounting system, accessing capital from banks, investment funds, or financial support programs becomes easier thanks to clear legal documentation and the ability to demonstrate financial capacity. Major partners often prioritize collaborating with smaller businesses to ensure transparency and security in transactions.
Through this, businesses have the opportunity to participate in large-scale supply chains and bid on high-value projects and contracts. In addition, businesses... Confidently export goods, access international markets, and meet the requirements of foreign partners smoothly.
5. Legal personality – separate property liability
Based on the regulations in the 2015 Civil Code, Decree 168/2025/ND-CP, and the 2020 Enterprise Law, it can be seen that household businesses differ from enterprises through the following criteria: legal status, founding entity, number of employees, business conditions, and liability regime.
|
Criteria |
Household business |
Business & Investment |
|
Legal grounds |
Civil Code 2015 Decree 168/2025/ND-CP, Enterprise Law 2020. |
Civil Code 2015 Enterprise Law 2020. |
|
Legal personality |
It lacks legal personality because it does not meet the requirements for legal entities as stipulated in Article 74 of the 2015 Civil Code. |
The following types of businesses have legal personality:
|
|
Establishing entity |
In Clause 1, Article 82 Decree 168/2025/ND-CP There are regulations stipulating that the entities entitled to establish a household business are: individuals, household members Being a Vietnamese citizen with full legal capacity as stipulated in the 2015 Civil Code, except for the cases specified in points a and b of Clause 2 of this Article. |
In Clause 1, Article 17 Enterprise Law 2020 There are regulations specifying the entities entitled to establish businesses. organizations, individuals except as provided in Clause 2, Article 17 of this Law. |
|
Number of workers |
Currently, the law no longer limits the number of employees that a household business is allowed to employ. Members of a household business include: the business owner and other household members who register the household business. |
There are no regulations regarding the maximum number of employees. However, there are regulations regarding the number of contributing members, founding shareholders, and specific owners:
|
|
Business conditions |
According to Article 82 Decree 168/225/ND-CP Household businesses are granted a business registration certificate when they meet all the conditions stipulated in Clause 2, Article 82 of Decree 168/225/ND-CP. |
According to Article 8 Enterprise Law 2020 Meeting the investment and business conditions when engaging in conditional investment and business sectors. Fully and promptly fulfill obligations regarding business registration, registration of changes to business registration details, and public disclosure of information about the establishment and operation of the business as prescribed by business law. |
|
Accountability system |
According to Article 84 Decree 168/2025/ND-CP The business owner or household members are liable without limit, using all of their assets. |
Limited Liability Companies with one member, Limited Liability Companies with two members, and Joint Stock Companies: liable only for the amount of capital contributed to the company (Articles 46, 77, 111). Enterprise Law 2020). Partners in a partnership company are liable without limit, using all of their assets. (Article 177) Enterprise Law 2020). |
The key to operating as a business entity is that owners can separate their personal assets from business assets. This helps reduce financial risk and protects personal interests in case of disputes or outstanding debts. In addition, having legal status enhances image and reputation, creating trust when working with partners, customers, or regulatory agencies.
Converting a household business into a company not only provides legal status, access to capital, market expansion, and professional management, but also offers numerous incentives and benefits from government support policies. Whether to convert or maintain the current model depends on several factors specific to the household business; however, if conversion is chosen, it presents a good opportunity that should be seized for growth and development.