To start a business, you don't necessarily need to establish a company. However, the benefits of establishing a company are irreplaceable compared to other forms of individual business.
Among the popular forms of business investment today are:
- A household business, owned by an individual who is a Vietnamese citizen, a group of people, or a family, can only register its business at one location, employ no more than ten workers, does not have a seal, and is liable for its business activities with all of its assets. Household businesses that regularly employ 10 or more workers must register as a company operating in accordance with the provisions of the law on enterprises.
- Household businesses are only suitable for small-scale business models with few employees. The requirement to be liable for business operations with all assets increases investment risk. Furthermore, the fixed tax rate on revenue (regardless of profit or loss) is a major drawback of this model.
- The business was established under the Enterprise Law.
- Contributing capital or purchasing shares in an operating business.
Of the above options, establishing a business to conduct investment and business activities has six major advantages, as listed below:
1. Limited liability
Business owners are only liable to the extent of their capital contribution or commitment to contribute to the company.
2. Legal status
A business is an independent entity, separate from the individual investors; any disputes or claims with partners (if any) only affect the business, not its owner.
3. Brand building
Brand building is a top priority when starting a business because it's not just a name, but also embodies the meaning and message that the business aims to convey to customers. Businesses with strong brands will achieve their business goals much faster and more effectively.
In today's business environment, establishing a business and building a brand early on is the path to achieving business success.
If you run a business without a brand associated with it, even if you do well, you'll develop a personal brand. A personal brand is tied to you personally, making it difficult for it to grow strong and gain consumer trust. On the other hand, it's also very easy for it to fade away due to your personal influence.
4. Raising capital for business
The law provides businesses with a highly flexible capital raising system and a solid legal framework for this activity. You can invite individuals and other organizations to contribute capital to your business in various forms to expand its scale, increase its competitiveness, and strengthen its financial position against competitors. Conversely, if you no longer wish to continue the business, you can transfer your capital contribution or sell the entire business to someone else and easily withdraw.
5. The long-term viability of the business over time.
A business is completely separate from its owner. If the business owner ceases to exist or transfers their capital to someone else, the business continues to exist and remains unaffected. In fact, it is not uncommon to find businesses with hundreds of years of history that have been passed down through many generations.
6. Better management
Building a business with a clear scale and system helps to manage production and business more effectively, and enhances credibility with partners and customers.
You will find that the majority of your partners and clients will be businesses. These entities need to collaborate with businesses that have a professional and transparent organizational structure and provide complete invoices and documentation in accordance with legal regulations.
Given the advantages mentioned above, if you are a business person, establishing your own business as soon as possible to leverage these advantages and build it into an asset is something you should consider right now.
