Start A Business On A Budget In Vietnam
Starting a business in Vietnam can be daunting, especially for foreign investors who are unfamiliar with the process. However, it is possible to start a business on a budget, even if you are just starting out.
According to Iris International’s experts, many micro-businesses can be launched for as little as $3,000 or even less. These are typically sole proprietorships that operate online, have few physical assets, and rely mostly on human resources.
In this article, we will discuss how to have low-cost business incorporation in Vietnam and how an investor can start a business on a budget.
The Cost Of Setting Up A Business In Vietnam
Before we get into how to set up an offshore company in Vietnam for the lowest possible cost, we must first understand the cost structure of the business registration process. Understanding what and where you will have to spend money will allow you to see how to cut costs on the unnecessary or how to have a cheaper alternative.
To incorporate an offshore company in Vietnam, there are several costs involved, including:
- Capital investment: This is the initial investment in the business that must be funded before it can be self-sustaining. The amount of capital investment required will vary depending on the type of business and the scale of operations.
- Business address: One of the basic requirements for incorporating an offshore company in Vietnam is to have a business address. This is not the same as a residential address. It can be met by providing a lease agreement that specifies the purpose of business registration.
- Resident director: During the incorporation process, a company must appoint a resident director. If the investor is not in the country at the time of incorporation, they must delegate or hire someone to fill this role.
- Registration administration costs: These include the costs of preparing documents (such as notarization and legalization), government fees, and the service fee paid to a facilitator or agency that will help you complete the incorporation process.
- Service fee from a professional consultant or law firm: If you are not familiar with the incorporation process, you may want to hire a professional consultant or law firm to help you. The cost of their services will vary depending on the complexity of your case.
How To Set Up A Business In Vietnam At Minimal Cost
If you have a business idea, but you’re wondering how to incorporate it on a shoestring budget, here are some tips to keep in mind.
Choosing a Simple Business Structure
In Vietnam, there are several ways to structure an offshore company. You can choose to have the company owned by a single shareholder or a group of shareholders. You can also choose between a limited liability company (LLC) or a joint-stock company. Each entity form has its own set of registration procedures and deadlines. Single shareholder ownership can be formed more quickly and easily, resulting in fewer administrative tasks and costs.
As a result, budget-minded business owners are advised to keep their business structure as simple as possible. An LLC is always easier to set up than a joint-stock company. Individual-owned businesses can be incorporated faster and spend less money on document preparation than corporate-owned businesses.
When incorporating an offshore company in Vietnam, it is important to consult with a lawyer or other qualified professional to ensure that you are choosing the right structure for your needs.
Read more: 10 steps to get your company fully opened and ready to run in Vietnam
Register For The Unconditional Business Line
In Vietnam, businesses are classified into two types: unconditional and conditional. Unconditional businesses are those that do not require any additional requirements beyond the two basic/minimum conditions of having a business address and a resident director. Some examples of unconditional businesses include consulting, IT, simple trading companies, real estate, and e-commerce.
Conditional businesses, on the other hand, require you to meet a list of additional requirements in order to register your company. For example, if you want to open a restaurant, you will need to secure a location and obtain a leasing contract. If you want to start a headhunting agency, you will need to pay a $15,000 escrow deposit. And if you want to open a training center, you will need to invest at least $900 per student.
The simpler the business conditions, the less work that needs to be prepared and the lower the cost. An experienced consultant can advise you on which business lines are appropriate for your company to register. They can also recommend appropriate alternatives for converting your initial conditional business into an unconditional one. This can simplify the process and reduce the cost of incorporation.
Use The Virtual Office As A Business Address
A virtual office can be used as a business address for most unconditional businesses for offshore company registration in Vietnam. This is far less expensive than leasing a physical office space. For online-based businesses, using a virtual office is the best option as it allows you to save money on unnecessary expenses.
Arrange Your Resident Director Via Your Relationships
According to the law, a company incorporated offshore in Vietnam must have at least one resident director. If you are a foreign investor who does not reside in Vietnam, you can appoint a resident director to represent your company. You can find a resident director through your relationships or hire a professional service provider.
A resident director is responsible for managing the company’s operations in Vietnam. They must be a Vietnamese citizen and have a valid residency permit. The resident director must also be available to attend company meetings and sign official documents.
If you are a foreign investor, you may be concerned about appointing a resident director. However, Iris International experts can help you explain the role of the resident director to your friend or trusted contact. This can help them understand the responsibilities and requirements of the role and make them more likely to accept your request.
Decide A Viable Capital Number To Start With
As mentioned, capital investment is the most expensive part of setting up an offshore company in Vietnam. It is the fund that will be used to cover the company’s expenses until it generates enough revenue to be self-sustaining and profitable.
Many businesses in Vietnam do not require any initial capital. This gives you the freedom to choose how much money you want to start with.
For consulting, IT, or other online-based businesses, you do not need to start with a large amount of cash. You can start with a small amount and then increase your capital as needed. However, it is important to note that any changes to the capital investment must be approved by the authorities before they can be implemented. This will require some paperwork, so it is advisable to plan ahead. Additionally, if you apply for an investor visa in Vietnam with insufficient capital, the immigration officer may be suspicious. This could result in additional documentation, explanations, and a shorter visa validity period.
Minimize Admin Costs
The cheapest way to set up an offshore company in Vietnam is to do it yourself. In theory, you can handle the paperwork to register your company on your own. In this case, the only costs you will incur are the government fees for incorporation and a few other minor costs, such as translation and notarization fees, etc.
However, in order to do this, you must be able to:
- Write legal documents in Vietnamese. English is not yet available in Vietnamese public services.
- Be prepared to answer questions from Vietnamese authorities about your investment proposal at any time (Vietnamese speaking required).
If you do not speak Vietnamese or are not familiar with the Vietnamese business environment, it is advisable to hire a professional to help you set up your offshore company in Vietnam. They can help you navigate the legal and regulatory requirements and ensure that your company is set up correctly.
Get Yourself A Reliable And Affordable Consultant (Or Lawyer)
Even for a native Vietnamese, incorporating an offshore company in Vietnam can be difficult. The documents required for business registration are complex and require a thorough understanding of legal jargon and business regulations. The investment proposal or business plan that serves as the basis for the application for company registration would need to contain different language and explanations depending on the nature of the business. Unless you are a trained business consultant or attorney, this task can be time-consuming and challenging.
Our recommendation is to seek professional assistance. A consulting firm or attorney will charge you a fee to handle this matter on your behalf and ensure that your company is registered correctly. It is important to get quotes from multiple service providers and compare prices. However, the least expensive option is not always the best. You need to find a balance between price, quality, and reputation, and most importantly, the firm that gives you the most assurance of success.
Iris International: Affordable Business Incorporation Services Package
Iris International understands the financial challenges that many small business owners face when incorporating an offshore company in Vietnam. That’s why we offer one of the most competitive service packages in the market. Our package includes a full business registration process, virtual office setup, and the opening of a corporate bank account. We are willing to show you where you can save money without sacrificing the quality of the results. Our clients’ benefits are always our top priority.
Our consultants are available to answer any questions and provide free consultation on the matter. Fill out the form or book a call with us today to get started.
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