Selecting an appropriate enterprise form for household businesses transitioning into enterprises

Household businesses constitute an important component of Vietnam’s private economic sector and have considerable potential to contribute to the country’s enterprise development targets. In the context of Vietnam’s objective of having two million operating enterprises by 2030, promoting the conversion of household businesses into enterprises is essential. This study analyzes the legal characteristics of household businesses and different enterprise forms under Vietnamese law in order to identify suitable models for different categories of household businesses. The analysis indicates that household businesses owned by a single individual may choose either a single-member limited liability company or a private enterprise, while those owned by a group of individuals may consider a partnership. The selection of an enterprise form should ensure continuity in resources, management, operations, and decision-making autonomy. On this basis, the study proposes strengthening legal dissemination, simplifying conversion procedures, and improving communication on policies supporting the private sector in order to facilitate the transformation and development of household businesses into enterprises.