When must a business household convert into an enterprise?

According to the Tax Department, there are currently no regulations on conditions and revenue thresholds for business households and individual businesses to convert to private enterprises.

However, the tax authority recommends that business households with large revenues convert to enterprises to develop business activities and enjoy tax incentives for newly established enterprises such as exemption of corporate income tax for small and medium enterprises in the first 3 years of establishment.

On the other hand, according to the Law on Tax Management of Business Households, business individuals whose scale of revenue and labor meets the highest level of criteria of a micro-enterprise or higher, specifically: business households and business individuals in the fields of agriculture , forestry, fishery and industry and construction with an average number of employees participating in social insurance of 10 or more people per year or total revenue of the previous year of 3 billion VND or more; business households and business individuals in the fields of trade and services with an average number of employees participating in social insurance of 10 or more people per year or total revenue of the previous year of 10 billion VND or more must implement the accounting regime and pay taxes according to the declaration method.

Many business households wonder when they should convert to enterprises. (Illustration photo).

In reality, many business households do not want to become enterprises because of many problems. For example, the issue of duplicate names. When operating as a business household, the name is only checked within the district, so there is rarely a problem of duplicate names.

On the contrary, if you become a business, the risk of duplicate names is inevitable because it is registered nationwide. A business household that has been operating for many years with a registered brand name, if it now has a duplicate name, must change to another brand name, which will greatly affect business operations.

In particular, according to the guidance of the Department of Planning and Investment, business households must carry out procedures to temporarily lock their tax codes and temporarily suspend their business operations to carry out procedures to convert to enterprises.

However, the tax authority does not approve this procedure but requires the household to dissolve and stop business before being confirmed.

Not to mention business households in conditional business sectors, which are granted certificates of eligibility within the district, if they convert to enterprises, they are forced to convert the certificates of eligibility issued by the city's departments and branches, the procedures are more difficult and take time to travel.

According to experts, whether a business household wants to "upgrade" to an enterprise or not depends on their needs and economic motivations.

When a business household wants to expand and develop, the tax authority should encourage and support them to become an enterprise. If they just want to be a business household, they should be given the right to choose.

Ngoc Vy

Source: https://vtcnews.vn/khi-nao-ho-kinh-doanh-phai-chuyen-thanh-doanh-nghiep-ar950271.html