Company Setup Mistakes to Avoid in Vietnam
Common Mistakes To Avoid When Setting Up a Company in Vietnam
Starting a business in Vietnam is exciting. The country’s fast-growing economy and investor-friendly policies attract entrepreneurs from all over the world (Why Now is the Best Time to Register a Business in Vietnam). But setting up a company in Vietnam can also be confusing, especially if you’re unfamiliar with local rules and procedures.
Many new investors make small mistakes that lead to big delays, extra costs, or even legal issues. In this guide, we’ll look at the most common errors and how you can avoid them to start your business smoothly and confidently.
Table of Contents
Not Choosing the Right Business Structure
One of the first and most important steps when setting up a company in Vietnam is selecting the right business structure. Many investors rush this part and later realise their chosen structure doesn’t match their goals or legal requirements.
In Vietnam, the most common options include:
- Limited Liability Company (LLC): Ideal for small to medium businesses.
- Joint-Stock Company (JSC): Suitable for larger operations with multiple shareholders.
- Representative Office (RO): Best for market research or liaison purposes, not for trading.
Choosing the wrong type can affect your ownership rights, tax obligations, and ability to expand later. If you’re unsure which option fits your plan, check out How to Choose the Best Business Structure in Vietnam for Foreign Investors.
Ignoring Minimum Capital Requirements
When setting up a company in Vietnam, many new investors misunderstand how capital rules work. Vietnam doesn’t set one universal minimum, but certain industries have stricter requirements.
Here’s what to keep in mind
Key points:
- No fixed minimum capital requirements depend on your business type.
- Regulated sectors (e.g. real estate, education, finance) often need higher capital.
- Too little capital may delay approval or cause rejection.
- Too much capital ties up unnecessary funds.
Need to know the minimum capital for your business? Let’s check our Company Registration Guide to find what applies to your sector.
Missing Key Business Licenses and Permits
A frequent mistake when starting a business in Vietnam or registering a company is thinking one license is enough. In fact, most businesses require multiple permits to operate legally and missing just one can delay your launch or lead to penalties.
Here’s what every investor should know
Main licences required for company registration:
- Investment Registration Certificate (IRC): Mandatory for all foreign-owned enterprises.
- Enterprise Registration Certificate (ERC): Confirms your business is officially established.
- Business Licence: Needed for trading, retail, and other commercial activities.
- Industry-specific permits: Required for sectors like education, food, health, and real estate.
Common mistake:
Many entrepreneurs focus on opening their company quickly but forget to apply for secondary permits linked to their industry. This can stop you from signing contracts, hiring staff, or importing goods.
Navigating Vietnam’s legal framework can be complex. That’s why it’s best to work with a company that understands local regulations and procedures.
ATA Services Vietnam provides full support for company registration, legal compliance, and license applications, helping you start your business smoothly and without stress.
Choosing the Wrong Business Location
When setting up a company in Vietnam, location plays a bigger role than most investors expect. Picking the wrong city or province can increase costs, complicate licensing, or limit access to skilled workers and customers.
Here’s what to consider 👇
Key factors to keep in mind:
- Business activity: Some industries can only operate in specific areas for example, manufacturing in industrial zones.
- Costs: Office rent, utilities, and logistics vary greatly between Ho Chi Minh City, Hanoi, and Da Nang.
- Labour costs: Each province sets its own minimum wage level, so salaries differ across regions. For example, wages in major cities are higher than in smaller provinces. Let’s check Vietnam-2025-minimum-wage-update
- Market access: Being close to suppliers, customers, and transport routes helps reduce operational delays.
- Local policies: Some provinces offer tax incentives or simplified registration for foreign investors.
Common mistake:
Choosing a location just for its popularity or low cost without checking local labour laws, wage rates, or licensing conditions.
Before you register your business in Vietnam, evaluate both regional costs and workforce conditions. ATA Services Vietnam can help you identify the most strategic province for your operations balancing budget, labour, and legal compliance
Not Understanding Tax and Accounting Obligations
When registering a company in Vietnam, taxes and accounting can be tricky especially for foreign investors unfamiliar with local systems. Ignoring them is one of the most expensive mistakes you can make.
Here’s a quick breakdown
Key obligations include:
- Corporate Income Tax (CIT): Standard rate is 20%, but incentives apply in some industries or regions.
- Value Added Tax (VAT): Typically 10%, but reduced rates or exemptions exist for specific goods and services.
- Personal Income Tax (PIT): Applies to both local and foreign employees.
- Accounting standards: Vietnam follows VAS (Vietnamese Accounting Standards), which differ from IFRS.
Common mistake:
Failing to register for tax on time or submitting reports late can lead to penalties. Some businesses also overlook the need for a local accountant familiar with VAS and Vietnamese tax laws.
Partner with a trusted local provider who can handle tax registration, monthly declarations, and accounting compliance.
Overlooking Labour Law and HR Compliance
When starting a business in Vietnam, many foreign investors underestimate how detailed the country’s labour regulations can be. Ignoring them, even unintentionally, can lead to fines, disputes, or problems with work permits and employee contracts.
Here’s what to watch out for
Key HR and labour compliance points:
- Employment contracts: Every employee must have a written contract in Vietnamese (or bilingual for foreigners).
- Work permits: Foreign staff must obtain a valid work permit and residence card before employment begins.(New Work Permit Decree)
- Probation and termination: Both are regulated by Vietnam’s Labour Code probation can’t exceed 60 days for most roles.
- Social insurance: Employers must contribute to social, health, and unemployment insurance funds.
- Working hours and leave: Typically capped at 48 hours per week with regulated overtime and public holidays.
Stay compliant with local law by teaming up with an HR/payroll partner who understands Vietnam’s regulation changes.
Note: labour laws in Vietnam have recently changed for the latest updates, check Vietnam Labour Law Changes in 2025.
ATA Services Vietnam can support you with contracts, work permits, payroll and ensure you’re up to date with legal changes.
Neglecting Post-Registration Procedures
Many entrepreneurs think that once their company is registered in Vietnam, the hard part is over but that’s far from true. After receiving your Enterprise Registration Certificate (ERC), several post-registration steps must be completed before your business can legally operate. Missing these can cause delays, fines, or even licence suspension.
Here’s what to do after registration
Key post-registration steps:
- Company seal and tax registration: Register your company seal and obtain a tax code from the local tax office.
- Bank account opening: Required for transactions, paying taxes, and capital contribution.
- Capital contribution: Must be fully paid within 90 days of receiving the ERC.
- Labour and insurance registration: Register employees for social and health insurance.
- Initial tax declaration: Submit initial tax returns and register for electronic invoicing (e-invoices).
Common mistake:
Many foreign investors forget the 90-day deadline to inject charter capital or assume tax reporting starts only after business operations. Both assumptions can result in penalties.
Ensure all post-registration steps are handled on time.ATA Services Vietnam can manage the entire process from bank setup and tax registration to compliance filings so your business starts smoothly and legally
Bonus Tip: Understand Vietnam’s Business Culture
Beyond legal steps, succeeding in Vietnam also means adapting to local business culture. Relationships, hierarchy, and indirect communication play a big role in negotiations and daily management.
If you’re new to the market, partnering with a local expert like ATA Services Vietnam can help you navigate cultural nuances while building strong, long-term connections.
Starting a business in Vietnam offers huge potential, a growing economy, strategic location, and skilled workforce. But as you’ve seen, even small mistakes during company registration can lead to serious delays, compliance issues, or unexpected costs.
Still wondering if Vietnam is the right place to start your business? Discover why it’s a leading destination for expansion in Southeast Asia here
FAQs
How long does it take to register a company in Vietnam?
What is the minimum capital required to start a business in Vietnam?
Can foreigners own 100% of a company in Vietnam?
What are the main licences needed for business registration?
Do I need a local partner to register a company in Vietnam?
Not necessarily. Many sectors allow 100% foreign ownership, but for joint ventures or restricted fields, a local partner may be required
What taxes will my company need to pay?
Businesses are subject to Corporate Income Tax (20%), Value Added Tax (10%), and Personal Income Tax for employees
