Businesses with revenue from 3–50 billion VND: Which model should you choose?

1. Introduction

When a household business surpasses 3 billion VND in annual revenue, it no longer sits in the “safe zone” of small-scale operations. At this point, it officially enters Group 3—a group required to declare taxes, keep accounting records, and use e-invoices almost equivalent to a formal enterprise.

And from here, a series of very practical concerns typically arise:

• If I keep the household business model, how high will future tax and legal risks be?
• If I convert to an enterprise, will it lead to extra costs, complicated procedures, or heavier management burdens?
• Does the conversion truly help optimize taxes, protect assets, and create long-term advantages?

This is not merely a matter of “changing the label” of your business model; it is a strategic decision directly tied to your assets, cash flow, scalability, and legal safety in the next 3–5 years.

To avoid making decisions based on gut feeling, what matters most now is clearly understanding the differences between a Group 3 Household Business and an Enterprise with revenue from 3–50 billion—across taxes, invoices, accounting, legal responsibilities, operating costs, and access to capital.

The comparison table below retains the original content, helping you view the realities head-on so you can make the most suitable decision for your business model.

2. Detailed comparison table: Group 3 household business vs. enterprise

Criteria	Group 3 Household Business (Revenue > 3 billion VND)	Enterprise (Revenue 3–50 billion VND)	Assessment
VAT	Mandatory application of the credit methodVAT payable = Output VAT – deductible Input VAT	Mandatory application of the credit methodVAT payable = Output VAT – deductible Input VAT	Same
Personal Income Tax (PIT)	Calculated as taxable income × 17% (Taxable income = Revenue – legitimate deductible expenses)	Enterprises only withhold and pay Personal Income Tax on behalf of employees	Calculated similarly to corporate taxable income
Corporate Income Tax (CIT)	Not required to pay	Calculated as taxable income × 17% (Taxable income = Revenue – legitimate deductible expenses) Important: Eligible for 2–3 years of tax incentives under conversion policies	Similar to the Personal Income Tax calculation for household businesses, but with tax incentives
Revenue Declaration Responsibility	Monthly declaration (if annual revenue exceeds 50 billion VND) or quarterly declaration, plus annual finalization	Monthly declaration (if annual revenue exceeds 50 billion VND) or quarterly declaration, plus annual finalization	Same
Invoices	Mandatory use of e-invoices with tax authority codes or e-invoices generated from POS systems	Mandatory use of e-invoices with tax authority codes or e-invoices generated from POS systems	Same
Bookkeeping	Mandatory compliance with the accounting regime applicable to micro-enterprises or small enterprises	Mandatory compliance with the accounting regime applicable to micro-enterprises or small enterprises	Same
Legal Status	No legal person status; the owner bears unlimited liability	Has legal person status; liability is limited to the capital contribution	Household business carries a higher level of liability
Legal Risks	High, as the owner is liable with all personal assets	Lower, due to limited liability	Household business bears a higher level of liability
Operating Cost	Lower than enterprises but will increase significantly from 2026 due to full requirements on declarations, accounting, and e-invoices	Higher: accounting, mandatory social insurance (when employing staff), and broader compliance obligations	Will converge over time
Loans / Access to Credit	Difficult to access; low credit limits; secured by personal assets	Easier access to loans; higher credit limits; secured by enterprise assets
Penalties	Equal to 50% of enterprise penalties	Penalties applied according to regulations	Household businesses are subject to lighter penalties compared to enterprises

3. In-depth analysis by criterion

3.1 VAT: Almost no difference

Both Group 3 household businesses and enterprises with revenue from 3–50 billion VND must apply the credit method.

This means household businesses are no longer “simple” as before; they must:

• Issue valid output invoices
• Collect input invoices
• Calculate deductions to determine VAT payable

→ VAT obligations are 100% identical for both models.

3.2 PIT vs CIT: Major differences in responsibility and tax incentives

Household businesses must pay 17% Personal Income Tax on taxable income.

Enterprises, meanwhile, pay 17% Corporate Income Tax, but they:

• Receive 2–3 years of tax incentives when converting from a household business
• Only withhold and pay PIT on behalf of employees
• Have higher transparency regarding deductible expenses

→ For long-term tax optimization, enterprises hold a significant advantage.

3.3 Invoices and accounting books: Household businesses are no longer “lightweight”

Starting in 2026, Group 3 household businesses must fully comply with:

• E-invoices with verification codes
• Accounting regimes for micro/small enterprises
• Monthly or quarterly tax declarations like an enterprise

→ This marks a crucial shift: household businesses must operate like a real enterprise but without enjoying enterprise-level incentives.

3.4 Legal status & liability: The most critical difference

Household businesses:

• No legal person status
• Unlimited liability with all personal assets

Enterprises:

• Have legal person status
• Liability limited to contributed capital

→ For any activity involving risk, the enterprise structure protects the owner far better.

3.5 Operating costs: Expected to converge soon

Household businesses now face rising costs due to:

• Mandatory accounting
• E-invoices
• Periodic declarations and reporting

Enterprises incur additional:

• Social insurance
• Compliance costs

But in return, they:

• Deduct more legitimate expenses
• Maximize input invoices

→ Actual operating costs between the two models will become increasingly similar, especially from 2026 onward.

4. When should you keep the household business model?

Keep the household business model if:

• The business is small, low-risk, and revenue is stable
• No need for major loans
• No high-level contracting or bidding
• The owner accepts unlimited liability

Best suited for: small spas, small restaurants, family-run shops.

5. When should you convert to an enterprise?

Conversion is the right choice when:

• Revenue has exceeded or will soon exceed 3 billion
• The business carries legal or financial risks
• You plan to scale, hire employees, or open branches
• You need large loans or investment
• You want financial transparency & tax incentives

Especially for fast-growing businesses, an enterprise model brings safety, credibility, and scalability.

6. Conclusion & recommendations for household business owners

In reality, Group 3 household businesses today have come very close to enterprises in terms of tax, accounting, invoicing, and declaration obligations. However, the “fundamental” differences remain:

• Household businesses do not have legal person status
• Owners bear unlimited liability with personal assets
• No tax incentives when establishing or converting

Meanwhile, enterprises offer three major advantages that household businesses cannot fully obtain:

• Stronger legal protection through limited liability
• Better long-term tax optimization through deductible expenses, credits, and incentives
• Easier scalability—loans, hiring, major contracts

Therefore, if your goal is growth in the next 3–5 years, converting to an enterprise is not just an administrative step—it is a strategic move to protect assets, optimize cash flow, and expand your development potential.

However, it is also important to recognize the reality:
Converting too quickly or without careful planning regarding taxes, costs, and legal obligations can easily lead to cost “shocks,” documentation errors, or risks of retroactive tax assessments.

This is why many owners choose to work with a professional firm that understands accounting, tax, and legal requirements from the start, instead of navigating this sensitive phase alone.

For household businesses considering conversion, the 1ketoan team typically begins with:

• Analyzing current tax, books, and invoice status
• Simulating tax obligations and costs after conversion
• Comparing the household vs enterprise options based on real cash flow
• Advising on a safe conversion roadmap with no unexpected tax liabilities or cost overruns

If you’re still uncertain about staying as a household business or converting to an enterprise, consulting with a professional firm beforehand can help you save significant costs and avoid future risks—even if you don’t convert immediately.

Overview of Tax Obligations for Household Businesses 2025

Approval of the Scheme on Transforming the Tax Administration Model for Household Businesses Following the Abolishment of Presumptive Tax

Draft Accounting Circular 2026 – Key Updates Sole Proprietorships Must Pay Attention To