Legal02/15/2026
Sole Proprietorship or LLC?
You don't always need to form a company
>80% F&B as Sole Prop.VND 100K Registration Fee4.5% of revenue Lump-sum Tax (F&B)<VND 200 million Tax-free if Revenue/Year
Many people assume opening a restaurant or coffee shop requires forming a company. In reality, the vast majority of small F&B businesses in Vietnam operate as sole proprietorships (Ho Kinh Doanh) — simpler paperwork, lower costs, no need for professional accounting. Only form a company when there's a genuine need.
Comparison: Sole Proprietorship vs. LLC
Registration ProcessSole Prop.: 3 daysLLC: 3-5 days + e-invoicing setup, digital signature, accounting
Initial CostSole Prop.: ~VND 1.5-3MLLC: ~VND 4-8M + VND 6-16M/year for accounting
Legal Entity StatusSole Prop.: NoLLC: Yes — easier to borrow, sign large contracts
Asset LiabilitySole Prop.: UnlimitedLLC: Limited (within charter capital)
TaxationSole Prop.: Lump-sum 4.5% of revenueLLC: CIT 15-20% on profit + VAT 8-10%
AccountingSole Prop.: Not requiredLLC: Required — outsource at VND 500K-1.3M/month
InvoicingSole Prop.: Tax authority issuesLLC: Self-issue VAT invoices, input tax deductions
Opening BranchesSole Prop.: Possible, separate processLLC: Straightforward, no limit
F&B Sole Proprietorship Taxes (Lump-sum)
3%
VAT
On total revenue — food & beverage service category
1.5%
Personal Income Tax
On total revenue — personal income tax
4.5%
Total Lump-sum Tax
Revenue of VND 500M/year → tax ~VND 22.5M (VND 1.9M/month)
<VND 200M
Tax Exemption
Revenue under VND 200M/year → no tax obligation (effective 07/2025)
Tax Example: Coffee Shop with VND 800M/Year Revenue
Monthly Revenue~VND 67 millionAverage: VND 800M ÷ 12 months
VAT (3%)VND 2M/month= VND 24M/year
Personal Income Tax (1.5%)VND 1M/month= VND 12M/year
Total Tax/MonthVND 3M/month= VND 36M/year (4.5% × VND 800M)
Business License FeeVND 1M/yearRevenue > VND 500M. To be abolished from 2026
When SHOULD You Switch to an LLC?
Revenue exceeds VND 1B/year
From 06/2025, revenue ≥ VND 1B/year mandates e-invoicing + POS connected to tax authorities. Consider converting.
Planning a chain of 2-3+ locations
Sole proprietorships can open multiple locations, but management gets complex. An LLC is more convenient for chains.
Need bank loans exceeding VND 500M
Banks prefer lending to entities with legal status. Sole proprietorships find it hard to borrow large amounts.
Partners require deductible VAT invoices
Large businesses need input invoices for tax deductions. Sole proprietorships cannot self-issue these.
Significant deductible input costs
LLCs can deduct input VAT — beneficial if you purchase many ingredients and equipment with proper invoices.
Actual Costs of Registering a Sole Proprietorship (A to Z)
- >Business registration fee at the district office: VND 100,000 (3 days).
- >Business seal (optional): VND 200,000-500,000.
- >Food Safety Certificate (ATTP): VND 500,000-1,000,000 (15-20 days).
- >Health check-ups for owner + staff: VND 200,000-400,000 per person.
- >Food safety knowledge training: VND 500,000 per group (typically online).
- >Signage: VND 500,000-1,500,000.
- >Total: approximately VND 1.5-3 million — completed within 3-4 weeks.
Risks of Not Registering
Operating without a business license
Fine of VND 5-10 million. Operating a food business without ATTP: fine of VND 15-30 million + suspension.
Operating as a business without registration
Fine of VND 50-100 million. Example: running a multi-location chain but only registered as a single sole proprietorship.
Not paying taxes
Back taxes + late payment penalty of 0.03%/day. Plus administrative fine of 1-3x the evaded tax amount.
Our advice: If you're just starting out with a single location and projected revenue under VND 1B/year → register as a sole proprietorship. Once stable and ready to expand, you can convert to an LLC — with 2 years of CIT exemption (policy effective from 10/2025). Sources: Decree 01/2021, Decree 168/2025, Amended Personal Income Tax Law 2025.
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