ESSAY TEST:

Option 1. Discuss about business organization and structure of the business in

form: sole proprietorship (liability of members, legal entities status, conditions
for formation). Process for establishing company (sole proprietorship) in
Vietnam

Business organization and structure of sole proprietorship:

Liability of members:
A sole proprietorship is a business owned and carried on by one person called the
proprietor. A sole proprietorship, the simplest and most common form of business

Legal Entity Status of Sole Proprietorship

● Direct Ownership: The proprietor owns all business assets (equipment,

inventory, real estate) as personal property.
● Simple Formation and Operation: No formalities are required by law to start or
operate; the individual simply begins doing business.
● Licensing: Only specific business types require licences, not the business form
itself.
● Personal Responsibility: The proprietor is fully responsible for all business
decisions and liabilities.
● Easy Termination: The proprietor can end the business at any time by ceasing
operations; the business ends with the proprietor's death unless willed to
another.
● No Separate Legal Entity: The business is not a separate legal entity from the
proprietor.

Conditions for Formation a Sole Proprietorship:

1. Choose a Business Name:

○ Pick a unique name.
○ Register the name if not using your own.
2. Get Necessary Licenses and Permits:
○ Obtain a business license if required.
○ Secure any special permits needed for your business type.
3. Register for Taxes:
○ Get an EIN from the IRS if needed.
○ Register for state taxes if applicable.
4. Open a Business Bank Account:
○ Keep your personal and business finances separate.
5. Keep Business Records:
○ Maintain detailed records of income and expenses.
6. Follow Local Regulations:
○ Ensure compliance with zoning laws and home-based business rules.
7. Consider Insurance:
○ Get business insurance for protection.
8. Understand Legal and Tax Responsibilities:
○ You are personally liable for business debts.
○ Report business income on your personal tax return.
9. Seek Professional Advice:
○ Consult a lawyer and accountant as needed.
 PROCEDURES FOR REGISTRATION TO ESTABLISH
A SOLE PROPRIETORSHIP

Step 1: Prepare business information

Essentially, a sole proprietorship is owned by one individual who is fully responsible for
all its activities with their entire assets, so the issues of the business are quite simple
and are solely decided by the owner. Before proceeding with the registration
procedures with the competent state authorities, the owner of a sole proprietorship
must carefully prepare the necessary information about the business as follows:

● Business sectors and fields: The business owner can choose to engage in
sectors not prohibited by law, depending on their actual capabilities, and must
meet the business conditions when participating in conditional business investment
sectors.
● Business address: Must be located in Vietnam, serve as the contact address of
the business, and be determined according to administrative boundaries; must
have a phone number, fax number, and email (if any).
● Business name: Consists of two parts: "Type of business + Proper name". For a
sole proprietorship, the type of business is written as "doanh nghiệp tư nhân",
"DNTN" or "doanh nghiệp TN". The proper name is written using letters, numbers,
and symbols.
● Investment capital: This is the amount that the owner decides to invest in the
business activities and must be accurately registered with the registration
authority.

Step 2: Preparing documents for establishing a Sole Proprietorship

The documents for establishing a sole proprietorship are crucial for the competent
state authority to issue the business registration certificate. The required documents
include:

● Application for Business Registration: The application for business registration

of a sole proprietorship according to Form 1 of Circular 20/2015/TT-BKHĐT.
● Certified Copies of Personal Identification Documents: Certified copies of the
personal identification documents of the business owner: valid Citizen Identity
Card (CIC), Identity Card (ID), or Passport (these copies should not be older than
3 months). Usually, the owner of the sole proprietorship will be the legal
representative of the company. However, in cases where the business owner and
the legal representative are different individuals, certified copies of personal
identification documents of both individuals are required.
● Power of Attorney: A power of attorney in case the owner authorizes another
person to submit and receive the registration results.
● Other Relevant Company Documents:
Documents/certificates confirming the name of the company, the address of the main
office, and the registered business lines.
Certain documents confirming the charter capital from relevant authorities or
organisations in the field of business registration.
Certificates or licences for professional qualifications of the business owner or legal
representative for business lines requiring practice certificates.
A power of attorney from the company authorising an individual to submit the
application in case the person submitting the application is not the legal representative
of the sole proprietorship.

After completing all required documents, submit them to the Department of Planning
and Investment where you plan to establish the sole proprietorship. The result could be
a Business Registration Certificate for the business or a notification requesting
additional or modified documents. Generally, preparing these documents is not overly
complicated. However, if you have any questions, you can contact us for detailed
advice to achieve the best possible outcome.

Step 3: Submit the dossier and receive the business registration

certificate

After preparing all the necessary documents, the business owner can directly or
authorize an organization/individual to submit the application in two ways:

● Submit the dossier directly at the Business Registration Office under the
Department of Planning and Investment of the province/city where the business's
 headquarters is expected to be located.
● Submit the electronic dossier on the National Business Registration Portal
(https://dangkykinhdoanh.gov.vn). Once the dossier submitted online is valid, the
hard copy (paper version) that was scanned and submitted online must be
submitted in person at the One-Stop-Shop.

The Business Registration Office is responsible for checking the validity of the dossier
and processing it. The office is open from Monday to Friday: Morning from 7:30 AM to
11:30 AM; Afternoon from 1:00 PM to 5:00 PM. Saturday: Morning from 7:30 AM to
11:30 AM. Applicants must take a number and wait for their turn according to the
assigned number.

● Based on the appointment date on the receipt, the business owner goes to the
Business Registration Office to receive the processing results or registers to
receive the results via postal services.
● If the dossier is valid: The state authority will issue a Business Registration
Certificate and notify the tax authority.
● If the dossier is not valid: The Business Registration Office will reject it in writing
and guide on how to amend the dossier to comply with legal regulations. The
process must be restarted from the preparation step, supplementing the dossier
according to the written guidance of the state authority.

To register the establishment of a Sole Proprietorship, you need to prepare the

following documents:

● Business Registration Application Form. This is the latest version of the Application
Form, effective from October 15, 2020;
● A valid copy of one of the personal identification documents as stipulated in Article
11 of Decree 01/2021/ND-CP of the company owner;
● Commitment to Social and Environmental Goals (for social enterprises);
● Decision from the competent authority permitting the conversion of a social support
facility, social fund, or charity fund into a Social Enterprise (applicable in cases of
converting a social support facility, social fund, or charity fund into a Social
Enterprise);
● In the case where the owner of the business does not directly submit the
application, the authorized person must submit the following documents:

Form of authorization Document

Authorization for an individual

● Authorization document (notarization
or certification not required);
● Copy of legal identification of the
authorized individual:
○ For Vietnamese citizens:
Valid Citizen Identification
Card, Identity Card, or
Vietnamese Passport;
○ For foreigners: Valid foreign
passport or equivalent
substitute documents.
● Copy of the service contract with the
organization providing the service to
carry out the procedures;
● Introduction letter from that
organization for the individual
directly performing the procedures;
● Copy of legal identification of the
individual being introduced..

Authorization for an organization ● Copy of the service contract with the

organization providing the service to
carry out the procedures;
● Introduction letter from that
organization for the individual
directly performing the procedures;
● Copy of legal identification of the
Step 4: Engraving the Private Enterprise’s Seal

Although sole proprietorship does not have legal entity status, it still has a corporate
seal and is authorized to print and issue invoices and perform standard accounting
procedures as per regulations.

Therefore, after receiving the business registration certificate, the sole proprietorship
must engrave its corporate seal. The owner of the sole proprietorship has the
discretion to decide the type, quantity, form, and content of the seal for the enterprise,
branches, representative offices, and affiliated units. Notably, according to the latest
provisions of the Enterprise Law 2020, from January 1, 2021, enterprises are no longer
required to notify the seal sample.

Step 5: Disclosure of sole proprietorship Information

After completing the procedures for establishing a sole proprietorship and being
granted the business registration certificate, the business owner is required to disclose
the enterprise information on the National Business Registration Portal. The content of
the disclosure includes the information on the Business Registration Certificate and the
company's business activities.

The disclosure must be made within 30 days from the date of issuance of the Business
Registration Certificate. If this deadline is exceeded without completing the disclosure
procedure, the competent authority may impose administrative penalties.
Step 6: Necessary Procedures After Establishing a Private Enterprise
After establishing a sole proprietorship, the business must promptly carry out the
necessary procedures to commence actual business operations:

Initial Tax Declaration Procedures

Tax obligations are mandatory for all types of enterprises, including sole proprietorship.
The business owner must complete these obligations within the prescribed timeframe
to avoid complications regarding tax liabilities—within 30 days from the date of
issuance of the Business Registration Certificate.

The enterprise must prepare two sets of initial tax declaration documents for
submission: one set for the tax authority to retain, and one set for the enterprise to
keep internally after the tax authority has stamped it as received and complete.

Once all necessary documents are in order, the enterprise must submit the documents
at the District Tax Department where the enterprise’s headquarters is located. If the
enterprise is managed by the Provincial/City Tax Department, the documents should
be submitted at the Provincial/City Tax Department where the enterprise’s
headquarters is located.

The enterprise can verify its tax managing authority through the General Department of
Taxation's website at: http://tracuunnt.gdt.gov.vn/tcnnt/mstdn.jsp.

Depending on the specific District Tax Department, the enterprise’s documents will be
processed either on the same business day or within 2-3 business days thereafter.

Opening a Bank Account and Notifying the Bank Account Number

After opening the bank account, the business owner must notify the Department of
Planning and Investment within 10 days so that the competent authority can manage
and control transactions.

Invoice Issuance Procedures

Printing and issuing invoices is a right of sole proprietorship. After selecting the form of
invoice, the enterprise must report to the directly managing tax authority.
The enterprise may submit the notification dossier for the issuance of electronic
invoices to the managing tax authority in two ways: by submitting the physical
documents directly at the One-Stop-Shop of the tax authority, or by sending the
prepared documents online through the electronic portal at
https://thuedientu.gdt.gov.vn.

Electronic Invoice Template:

The electronic invoice is one of the three templates that must be submitted to the Tax
Authority (CQT) when notifying the issuance of electronic invoices. The content of the
invoice template is stipulated in Article 10 of Decree 123/2020/ND-CP. Specifically, as
follows:

STT Nội dung

1 Tên hóa đơn, ký hiệu hóa đơn, ký hiệu mẫu số hóa đơn.
2 Tên liên hóa đơn áp dụng đối với hóa đơn do cơ quan thuế đặt in thực hiện theo
hướng dẫn của Bộ Tài chính.
3 Số hóa đơn.
4 Tên, địa chỉ, mã số thuế của người bán.
5 Tên, địa chỉ, mã số thuế của người mua.
6 Tên, đơn vị tính, số lượng, đơn giá hàng hóa, dịch vụ; thành tiền chưa có thuế giá trị
gia tăng, thuế suất thuế giá trị gia tăng, tổng số tiền thuế giá trị gia tăng theo từng loại
thuế suất, tổng cộng tiền thuế giá trị gia tăng, tổng tiền thanh toán đã có thuế giá trị gia
tăng.
7 Chữ ký của người bán, chữ ký của người mua.
8 Thời điểm lập hóa đơn thực hiện theo hướng dẫn tại Điều 9 Nghị định này và được
hiển thị theo định dạng ngày, tháng, năm của năm dương lịch.
9 Thời điểm ký số trên hóa đơn điện tử là thời điểm người bán, người mua sử dụng chữ
ký số để ký trên hóa đơn điện tử được hiển thị theo định dạng ngày, tháng, năm của
năm dương lịch. Trường hợp hóa đơn điện tử đã lập có thời điểm ký số trên hóa đơn
khác thời điểm lập hóa đơn thì thời điểm khai thuế là thời điểm lập hóa đơn.
10
Mã của cơ quan thuế đối với hóa đơn điện tử có mã của cơ quan thuế theo quy định tại
khoản 2 Điều 3 Nghị định này.