Things to Avoid When Establishing a Company

In addition to the regulations on procedures before establishing a company, after receiving the business registration certificate and seal. The enterprise must ensure compliance with regulations on taxes, fees, etc. However, due to lack of experience and subjectivity, many enterprises have missed them, leading to unnecessary violations.

Mistakes when completing procedures and documents to establishing a company

capital

Firstly, Charter capital that is too high or too low affects the reputation, business license tax and other issues related to the dissolution. Obligations to employees, partners, etc. of the enterprise.

Therefore, charter capital, when determined, should be appropriate to the company’s scale and the characteristics of each business sector when establishing a company.

02. How to name, address the head office and choose the appropriate type of enterprise

Secondly, The way to name an enterprise must comply with the provisions of Articles 38, 39 and 40 of the 2014 Enterprise Law. The full name of the enterprise must include the type of enterprise. Therefore, first, you need to determine the appropriate type of enterprise, because each different type will have different procedures and documents.

For example: Enterprise name X, type LLC, full name is X LLC.

Note: To avoid duplicate or confusing business names, you can check the name of the enterprise registered on the National Business Registration Information Portal.

Also, The address of the head office must have full information such as: House number, alley, street, ward, district, city, province… In case the head office is located in an office building, there must be a decision from the investor proving that the building has the function of business, trade or office rental when establishing a company.

Read more: Social Insurance Registration and Procedures for New Employees

03. Registered business lines

• Thirdly, Enterprises register incorrectly or lack business lines, leading to difficulties in issuing invoices later (because the company is only allowed to issue invoices within the scope of the registered business lines);
• Then, Some business lines have conditions when operating, they must complete the registration procedure for a sub-license. Therefore, if the company registers with an incorrect business code or lists incorrect business lines, the enterprise will not be able to apply for a sub-license;
• Even, Business lines are not consistent with the general planning and economic development plan of each locality, region… Where the enterprise has its headquarters;
• Further, Some business lines require corresponding practice certificates or general requirements on environmental protection, fire prevention and fighting…; Some business lines affect the legal capital and deposit capital, causing difficulties for enterprises in raising capital and proving capital.
• Furthermore, Some conditional industries must apply for a sub-license when operating, so in the process of establishing a company. If the business registration is incorrect or the wording is incorrect, the sub-license will not be obtained.

04. Example

Fourthly, Enterprises operating in the karaoke industry – a conditional business, can refer to the following suggestions:

• Specially, The State does not regulate capital limits, so businesses only need to register a capital level appropriate to their scale;
• Industry code: 9329 – Other entertainment activities;

However, if the karaoke venue serves alcoholic beverages and tobacco. It must register an additional industry code as follows: Alcohol retail industry (4723), tobacco retail industry (4724) when establishing a company.

• Generally, The business location must be 200m or more away from schools, hospitals, areas related to religion, culture, politics, society, etc.;
• Especially, Must comply with regulations on construction, design, especially applying for fire prevention and fighting, security and order permits;
• If the business location is in a residential area, it must have the written consent of the adjacent households.

Read more: Important Notes When Choosing a Business Location

Mistakes after establishing a company and administrative penalties

After receiving the seal and business registration certificate, most businesses are subjective. Ignoring extremely important procedures, leading to unnecessary administrative penalties:

• Not hanging a signboard: 10,000,000 – 15,000,000 VND
• Delayed submission of business license fee declaration: 01 – 10 days: 700,000 VND; After the next 10 days: 700,000 VND; Highest level: 3,500,000 VND
• Late payment of business license tax: Fine = Late tax amount x 0.03% x Number of days late
• Lastly, Failure to notify bank account: 01 – 10 days: With mitigating circumstances: Warning, No mitigating circumstances: 700,000 VND; 10 – 30 days: 700,000 VND; Over 30 days: 1,400,000 VND

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In conclusion, the above are mistakes as well as things to avoid when establishing a company to make your business easier.

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