[Q&A] Should You Establish a Company or a Household Business?

Should You establish a company or household business? is a question that causes many individuals difficulties in making a decision. Because each type of business has its own advantages and disadvantages suitable for different subjects wanting to establish a company. So, to get an accurate answer, you can learn about the benefits that these two types of business bring.

Company

A company is simply understood as an organization with a distinct name, a business headquarters, assets, and is registered according to legal regulations. A company has legal personality from the date of receiving the business registration certificate. The founding entity can be an individual or an organization with legal personality.

Currently, companies can be established in the following common types of enterprise:

• One-member limited liability company
• Multi-member limited liability company
• Joint-stock company
• Partnership company
• Private enterprise
• Foreign-invested company.

• Advantages of establishing a company

Generally, the different types of companies offer various benefits. When establishing a company, you will:

• Limited liability for owners, only liable with their assets, not their entire assets. Therefore, companies can call for capital contributions to operate business.
• Receive VAT invoices, which helps easily expand the customer base.
• Facilitates capital mobilization, especially for joint-stock companies.
• Suitable for large-scale business with numerous members.

• Disadvantages of establishing a company

• Procedures for establishing a company are quite complicated, requiring compliance with legal and enterprise law regulations.
• Management and supervision mechanisms can pose difficulties for large-scale companies.
• Dissolution procedures are more complicated.

Household Business

A household business is established and operated by individuals or family members, and they are responsible for the activities of the household with all assets of their own.

If family members register a household business, they will authorize a member to represent the household business. Individuals registering a household business or authorized to be the representative are called the owner of the household business.

• Advantages of household business

• Simple procedures for establishing a household business.
• Manage fewer than 10 employees, who are usually close to each other, making management and business expansion easier.
• Lower capital requirements and no risk limitations, suitable for small-scale entrepreneurs.
• Can declare fixed monthly tax payments as prescribed by authorities.
• Business license fees depend on annual revenue.
• Dissolution process is much simpler than that of a company.

• Disadvantages of household business

• Must be responsible with all assets. Only permits one household business per person.
• Small scale makes it difficult to raise capital and expand.
• Cannot issue VAT invoices, making customer base expansion challenging.

Should You Establish a Company or Household Business?

It can be seen that each type of company or household business has its own advantages and disadvantages. Depending on the pros and cons of each type, customers can consider and decide whether to establish a company or household business.

For companies, it is very suitable for groups who need to establish a business, want to expand, and easily mobilize capital.

Meanwhile, household businesses are very suitable for those who prefer family-based entrepreneurship. This form is ideal for individuals with small capital but with available labor within the family. Family business can be seen as a way to connect family members’ ideas.

Therefore, whether to establish a company or a household business depends heavily on individual perception and business needs. Those who want to scale up, raise capital, or reach more customers will choose establishing a company. Conversely, others may opt for a household business.

Thus, what has been shared above will help you quickly find the answer whether to establish a company or household business more easily. But for a detailed understanding of the pros and cons of each business form, contact Apecdoc.org for support.