Legal06/28/2026
Sole Proprietor vs Limited Company: Which for Your F&B?
>80% small F&B runs as sole proprietor — but when should you incorporate?
>80% F&B as sole proprietor4.5%/revenue Sole proprietor tax3 days Setup time<200M/year Tax-free threshold
TL;DR
- •>80% small F&B operates as sole proprietor (not incorporated); 3-day setup, 100K registration, 4.5% tax rate on revenue
- •Incorporate as Limited Company only if: revenue >500M/year (or >1B from 2026), planning chain 2+, seeking large bank loans, or need tax deductible invoicing
- •Sole proprietor tax 4.5% is major advantage; company must pay corporate tax 15-20% + VAT 8-10% = >20% total
- •Sole proprietor tax-free if revenue <200M/year; company must hire accounting 500K-1.3M/month minimum
Full comparison: Sole Proprietor vs Limited Company
Setup processSole: 3 daysCompany: 3-5 days + invoice setup, digital signature, accounting. Sole is quick & simple: submit to district office, 100K fee, done in 1-2 days.
Initial costsSole: ~1.5-3MCompany: ~4-8M + 6-16M/year accounting. Sole: 100K fee + 1-2M stamp + 1M ATTP + health check.
Legal entity statusSole: NoCompany: Yes — easier to get bank loans, sign major contracts. Sole proprietors struggle to borrow >300M.
Personal liabilitySole: UnlimitedCompany: Limited (capped at capital). Sole: business debt = your personal debt; creditors can pursue personal assets.
TaxesSole: 4.5%/revenueCompany: Corp tax 15-20% + VAT 8-10% = 20-30% total. Sole: 600M revenue → 27M tax/year = 2.25M/month. Company: 100M profit → 20M tax.
AccountingSole: Not mandatoryCompany: Mandatory — hire 500K-1.3M/month. Sole: you self-file or hire part-time cheap.
InvoicesSole: Tax office suppliesCompany: Self-issued tax invoices, input VAT deductible. Sole: can't deduct input, but sell retail (no need to).
Multiple locationsSole: Allowed, separate registrationCompany: Easy, unlimited branches. Sole: each branch 100K fee.
Sole proprietor tax breakdown (revenue-based)
3%
VAT
On total revenue — dining services category. Fixed regardless of profit.
1.5%
Personal income tax
On total revenue — from self-employment in dining.
4.5%
Total tax rate
600M/year revenue → 27M tax = 2.25M/month. Simple, predictable.
<200M/year
Tax-free threshold
From July 2025: sole proprietor F&B under 200M revenue pays zero tax. Huge benefit.
Tax calculation example: Coffee shop 800M/year revenue
Monthly revenue~67M= 800M ÷ 12 months average
VAT (3%)2M/month= 3% × 67M = 24M/year
Income tax (1.5%)1M/month= 1.5% × 67M = 12M/year
Total tax/month3M/month= 36M/year (4.5% × 800M)
License fee1M/yearIf revenue >500M. Scheduled to be removed in 2026.
When SHOULD you incorporate as Limited Company?
trending-up
Revenue exceeds 1B/year (from 06/2025)
From June 2025, revenue ≥1B/year requires e-invoicing + POS integration with tax office. Consider incorporating for easier compliance.
Planning 2-3+ locations (chain)
Sole proprietor still possible for multiple locations, but management gets complex + fees accumulate. Limited Company cleaner for chains.
Need large bank loan >500M
Banks prioritize lending to incorporated entities. Sole proprietors struggle to secure >300M loans.
B2B clients need deductible invoices
Major chains, corporate caterers need tax invoices for input deduction. Sole proprietor cannot issue tax invoices.
Significant equipment & material purchases
Company can deduct VAT on inputs (machinery, ingredients with invoices). Sole proprietor cannot, but as retailer doesn't need input deduction anyway.
Actual costs to register as sole proprietor (complete)
- >Business registration fee: 100,000 dong (3 days processing)
- >Stamp engraving (optional): 200,000-500,000 dong
- >Food Safety Certificate: 500,000-1,000,000 dong (15-20 days)
- >Health check (owner + staff): 200,000-400,000 dong/person (required before ATTP approval)
- >Food Safety training: 500,000 dong/group (usually online, 4-8 hours)
- >Signboard/storefront (if needed): 500,000-1,500,000 dong
- >Total: ~1.5-3M dong, completed in 3-4 weeks
Recommendation: 99% of new small F&B should start as sole proprietor. Low cost, quick, tax-advantaged. Only incorporate when you truly need it — revenue scale (>500M), chain expansion, or major financing. When in doubt, ask your local tax office or accounting consultant for free advice.
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