When establishing a business in Vietnam,Correctly determining between Joint Stock Company, Limited Liability Company or Private Enterprise not only affects the structure and operation but also determines the legal responsibility and development potential of the business in the future. Choosing the right type of business depends on many factors such as size, business sector, number of members, ability to raise capital and level of liability. You are wondering which type of business is suitable for your plan. GT Law sends you a summary of information on types of businesses for your reference:

1. Types of businesses 

• Joint Stock Company: Is a type of enterprise with legal status, in which the charter capital is divided into many equal parts called shares. Shareholders are individuals or organizations that own shares. There must be at least 03 shareholders and there is no limit on the maximum number. Shareholders are only responsible for the debts and other financial obligations of the enterprise within the scope of the capital contributed to the enterprise. 

• Single-member LLC: Established and owned by a single individual or organization. The owner of the LLC has the right to decide on all activities of the company and is only responsible for the company's debts and financial obligations within the scope of the capital contributed to the company.

• Limited liability company with 2 or more members: Established by at least two individuals (maximum 50) or organizations contributing capital. Members share profits and participate in company management according to their capital contribution ratio or agreement. Each member is only responsible for the debts and financial obligations of the company corresponding to the capital contributed to the company.

• Private enterprise: Owned by one individual who is personally responsible for all activities of the enterprise with all of his/her assets.

2. Compare the advantages and disadvantages of different types of businesses

3. Criteria for choosing business type

*Scale

• Small/retail: Should choose Private Enterprise or Single Member LLC for proactive management and control, simple procedures, flexible operation.
• Small and medium: A limited liability company with two or more members is suitable for a group of partners to cooperate, with a scale of 2 to 50 members, making it easy to mobilize capital from members while protecting personal assets.
• Medium and large, with expansion/listing orientation: Joint stock company is the optimal choice because there is no limit on shareholders, easy to mobilize large capital, suitable for models that need strong development and professional management.

*Number of members

• An individual: Private enterprise or Single Member LLC.
• Small group (2–50 people): LLC with two or more members, convenient for cooperation and sharing of benefits.
• Large group/diversified members: Joint stock company, optimal for many investors to participate, shareholders can easily transfer.

*Business objectives

• Small business, low risk, need absolute control: Private enterprise or one-member LLC.
• Want to share benefits, raise capital within a limited group: LLC with two or more members.
• Large capital mobilization, scale expansion, information transparency, aiming for listing/attracting socialized capital: Joint stock company.

4. Notes when choosing business type

=> Clearly define the scale and development goals of your company. 

=> Consider the number of founding members and long-term development direction. 

=> Choose the type based on desired control, ability to raise capital, and acceptable level of risk.

=> It is advisable to consult a corporate law expert to ensure that the right model is chosen.

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