By Jeremy Smith, Founder @ Jeremy's Kitchen
I get asked this question somewhat regularly. It’s an open ended and quite difficult question to answer, and to be honest one I usually try to avoid. Every business is different, and there is no one size fits all solution for how to legally build your dream. One thing is certain though, more and more foreigners are moving to and living in Danang with entrepreneurial ambitions. Unfortunately as I’ve witnessed here sadly often, some walk blindly into owning a business and end up losing a lot of money. It sucks.
I’m no expert, I run a really small business in the grand scheme of things. That being said, I’ve opened my own business in my own name on a really tight budget and tried my best to do everything the right way. Below are some basic lessons I have learned along the way, maybe others who have done more and have had different experiences can chip in their two cents. I might become a little longwinded, but I wish I had read something like this a few years ago.
* Always, always, always, always put the business in your name. Stop listening to someone as soon as they suggest putting it in a VN person’s name. Anyone who says it’s hard to open a small business in a foreigner’s name is either ignorant or lying to you.
* You can get the answer to almost any question about opening a business by walking into the lobby of the main government tower on Tran Phu, going over to the FDI (foreign direct investment) window and asking one of the extremely helpful english speaking staff there your questions. You don’t need to rely on third person rumors or advice gleaned from facebook groups.
* That being said, i am not an advocate of the “do everything yourself” mentality. Some people don’t want to pay a lawyer or business consultant to help them open a business. I get it, you want to save money and you think they are ripping you off… trust me, i get it.
* You can theoretically open a business all by yourself by simply following everything the kind people at the FDI window tell you to do. In reality that is usually a recipe for headaches and mistakes. Vietnamese government offices do not want a bunch of underdressed, ignorant and stinky foreigners who don’t speak Vietnamese mucking around in their workplace. They actually have a system to avoid this called “uỷ quyền” where you designate a Vietnamese person to represent you in government offices, just so you don’t need to be there… its nice. I suggest at minimum you need a close and trusted Vietnamese friend to help guide you and translate stuff, or better some sort of consultant to help guide you through what can feel like a scary and unfamiliar process.
If you want to save money on a lawyer or business consultant, I suggest cutting a deal with them where your Vietnamese friend or employee will do all the legwork of sitting in offices, waiting in line, collecting stamps, and all the lawyer has to do is tell them where to go and what to say. The lawyer or consultant can make money doing almost nothing.
As soon as you have your registration papers being processed, it’s time to find a good tax accountant. Seriously, don’t do anything else until you get this sorted. Your tax accountant is your attorney when talking to the police, your compliance officer who makes sure you have all the right certificates, visas, labor contracts, and your tax wizard who sorts out your red bills and gets you ready for your required yearly audit… oh yeah all foreign owned businesses need to be audited by a third party auditor once a year. It isn’t cheap, and if you don’t, you are begging for big fines to come your way. You pay tax accountants a monthly retainer, somewhere around 2-5 million or more. You need to be nice to your accountant, they will save your ass when you need it most.
As soon as you have your registration paperwork completed and you have your legit tax accountant giving you good advice about what certificates and compliance measures you need to follow, you’re pretty much 90% there.
Ahh, startup capital. In Vietnam, in order for a foreigner to open a business, they must invest a certain amount of money. This is not a fixed number, and the government will inform you of your needed startup capital after reviewing your business plan, which is part of the registration process. In reality though, its usually 200,000,000 VND or about $9500 for small cafes, restaurants and other non-threatening businesses, and up to $50-100k USD for major restaurants on main streets. Anything bigger than that and i hope you’re not getting your legal advice from a 29yo baker. The great thing about this though is you become legally classified as an investor, which just sounds cool when you’re a chump like me.
All in all, surround yourself with Vietnamese people who like you and want to see you succeed, have a business consultant or lawyer at the very least review your registration papers before you submit them, and get a smart accountant and pay them well. If you do these three things, your chances of failure will decrease slightly.