Many entrepreneurs decide to go through the procedures for registering a limited liability company their own. The flexibility of a limited liability company owned by an individual or organization makes this type of company very suitable for the practical needs of an entrepreneur. Although the process for forming an LLC is essentially the same as any other form of company, there are some legal differences specific to a single-owner LLC. In this article, Viet My advises businesses on some legal issues in establishing a limited liability company!

1. What type of limited liability company is it?

Organizations and individuals need to know exactly what type of business they are before proceeding with the procedures to establish a limited liability company.

According to Article 4 of the Company Law 2020, there are two types of Limited Liability Companies:

LLC with 1 member and LLC with 2 or more members. According to the Enterprise Law 2020, a limited liability company has the following characteristics:

Regardless of whether a limited liability company has one member or two or more members, it has legal status from the date of issuance of the registration certificate and the date of adjustment to increase or decrease the registered capital. There will be no board of directors and no shares will be issued unless converted into a public limited company.

2. Advantages and disadvantages when establishing a limited company

2.1. Advantages of limited liability company

• Bear limited liability for debts payable and other financial obligations within the scope of contributed capital.
• Because the number of members is small, members who want to transfer their capital contribution to non-members must first offer it to other members. If the remaining members do not agree to buy, they can buy and transfer to another member.
• Transferable so it’s easy to use and avoids involving strangers. The name of the general partner of the limited liability company must be on the business registration certificate.
• The simple organizational structure of a LLC is well suited for startups, family businesses or companies with specific business and technical know-how.
• In case a shareholder wishes to transfer capital even though the company is not yet profitable, the personal income tax declaration for capital transfer activities will not apply a fixed tax rate to the transfer activity as in the case of a company. The masses just did it. . Limited liability companies can issue bonds to raise capital.

2.2. Disadvantages of limited company

• Limited liability companies can only issue bonds to raise debt capital, but cannot issue shares and cannot participate in the stock market, so their ability to mobilize capital is lower than that of joint stock companies.
• In a single-member LLC, the owner’s salary is not included in the company’s operating expenses.
• LLCs are subject to stricter regulations than sole proprietorships and partnerships.

3. Procedures for registering to establish a limited company in 2024

The following are the steps to carry out the procedures for registering to establish a limited company. Basically, the registration procedure for establishing a limited liability company will also have to ensure the same elements as the procedure for a newly established company.

3.1 Procedures for registering to establish a one-member LLC in 2024

Step 1: Prepare documents and submit them

The business registration application is submitted to the local business registration agency. The business registration agency is responsible for confirming the validity of the business registration application within three working days from the date of submission and issuing the Business Registration Certificate within three days. from the date of receipt of the application. If you refuse to issue a Business Registration Certificate, you must send a written notice to the business founder. The notice must clearly state the reason and request for amendments and supplements to the dossier.

Step 2: Announce business registration information

According to this procedure and decree, after being granted a company registration certificate, the company must post a statement on the national company registration portal and pay the prescribed fee. The published content includes information such as business registration content and business lines of the limited liability company.

Note: According to the law, a one-member limited liability company must disclose business registration information within 30 days from the date of issuance of the Business Registration Certificate.

Step 3: Engrave the one-member limited liability company seal

3.2 Procedures for registering to establish a 2-member LLC

a. Register in person or by mail

According to regulation No. 01/2021/ND-CP, the person registering to establish a company must submit documents at the Registration Office where the company’s headquarters is located. The Ministry of Trade issues a business registration application to the applicant after receiving the application receipt. The commercial registration authority issues the commercial registration certificate within three working days after receiving the corresponding application. In case the registration documents are incorrect or the business name is not registered according to regulations, the registration agency shall notify in writing the business or business founder requesting to change or complete the content.

b. Register online with a digital signature

Registrants follow the steps on the National Information Portal to submit information, upload electronic documents, authenticate business registration documents via the electronic information network and pay business registration fees and charges. After completing the company registration application, the applicant receives a notification confirming receipt of the business registration application via the electronic information network. If the records correspond to the company’s registration, the registrar notifies the company that registration has been granted. In case the document is not consistent with the business registration content, the business registration agency will send a notice via the electronic information network to the enterprise requesting to change and complete the document content.

c. Register online using your business registration account

The applicant must use the company’s registration account to transmit information through the electronic information network, download electronic documents, check the company’s registration documents, and pay the company’s registration fees and charges. ty. When authorized to carry out company registration activities through the electronic information network through a commercial registration account, there must be a power of attorney, including contact details of the person authorized to control the registration. Document transfer, registration, electronic information, network.

After completing the registration dossier, the applicant will receive notice of receipt of the company’s registration dossier via the electronic information network. The registrar accepts the company’s registration if the documents are acceptable and notifies the company of the acceptance of the registration. If the request is not accepted, the commercial registration department will send a message to the company via the electronic information network requesting changes or completion of the document. Notification of company registration contents: The request for notice of company registration contents must be submitted when submitting the company registration application. The submitted content includes business registration content and industry information.

4. Procedures after establishing a limited liability company in 2024

a. Open a company bank account

According to Circular 01/2021/TT-BKHDT on Company Registration, effective from May 1, 2021, companies are not required to take steps to register a bank account with the business registration office. – Department of Planning and investment.

b. Register for electronic tax payment online and electronic signature on tax declaration

Register to pay taxes electronically at the bank where the business registered and opened an account.

c. Submit license tax declaration and pay license tax

Pursuant to the provisions of Decree 22/2020/ND-CP amending and supplementing a number of articles of Decree 139/2016/ND-CP effective from February 25, 2020: Limited liability companies established in 2021 will be exempt from license (tax) fees, but must still declare and submit a license tax declaration.

d. Make and hang company signs at the headquarters

The company must hang a company sign near the headquarters with the following content: management agency (agency issuing company registration certificate, i.e. Department of Planning and Investment), company name, headquarters address , phone number or email address (if available).

e. Buy electronic digital signatures and pay taxes electronically

f. Propose electronic invoices

g. Register for electronic invoices

Notice of registration to use electronic invoices/change of information according to form 01;

Individuals/organizations can register to use electronic invoices with the tax department’s code on the website of the General Department of Taxation.

5. Frequently asked questions about procedures for registering to establish a limited company

5.1 What are the conditions for establishing a limited liability company?

When establishing a joint stock company, a founding member only needs a notarized copy of ID card/citizen identification card/passport and data such as company name, head office address, field of operation…, capital level. …

5.2 What is the difference between a limited liability company and a joint stock company?

The main difference between a joint stock company and a joint stock company is that a joint stock company can participate in the stock market by listing as a joint stock company. The organizational structure of a joint stock company is stricter, but more flexible in capital transfer relationships.

5.3 Does establishing a limited liability company require proof of capital?

When a member of a joint stock company is established, the company must commit to paying the entire declared capital in cash or transfer (required for capital investors) without the obligation to prove capital in soonest.

5.4 After establishing a limited liability company, can it be changed to a joint stock company?

After establishing a limited liability company, if you want to convert it into a joint stock company, you must go through company conversion procedures.

5.5 Can civil servants contribute capital to a limited liability company?

In cases where civil servants are allowed to buy shares of a joint stock company as securities, they are not allowed to invest capital or transfer invested capital to become a member of the joint stock company.

Above is a summary of VIETNAMESE LAW AND ACCOUNTING on procedures for registering a limited liability company. It is the most popular form of business today because it has many advantages that other forms of business do not have, so readers can consider choosing this type for their business.