Why do many business households not want to convert into enterprises?

Currently, Hai Phong City has nearly 150,000 individual business households, many of which have annual revenue of billions of VND. However, most of these business households are still hesitant to convert to an enterprise model.

With annual revenue of up to billions of VND, Mr. Phung Van Quang, owner of an aluminum and glass manufacturing and processing facility in Phu Thai commune, is still hesitant to convert to a business model.

Fear of procedures and additional costs

Mr. Phung Van Quang, owner of an aluminum and glass manufacturing and processing facility in Phu Thai commune, said he has been in business for nearly 10 years, with 5 regular employees and an average annual revenue of a billion VND. However, he still has no intention of converting it into a business.

“If I convert, I have to set up a management board, hire an accountant, sign labor contracts, pay social insurance, health insurance for employees… That will incur many additional costs,” Mr. Quang shared.

Similarly, Ms. Nguyen Thi Kim Ngan, owner of a grocery store on Nguyen Khac Chung Street, Thanh Dong Ward, is doing business under the lump-sum tax payment method. With the family business model, she directly manages the import of goods, records the books, and directly sells and delivers goods in the area. When asked whether she plans to convert to a business model, she frankly said: "I have no intention of converting because the procedures for a family business are simpler and easier to manage than for a business."

Mr. Nguyen Van Thanh, owner of an electronics and refrigeration equipment business in An Duong ward, shares the same opinion. He believes that the current family-run operation model is familiar, and if converted to a business, the management model will be completely different. The business owner does not have knowledge of taxes, accounting, business administration, etc., so he does not dare to consider changing the operating model.

Currently, there are many large-scale business households operating, playing an important role in the economy . However, most of them are not ready to convert to a business model due to fear of cumbersome administrative procedures, unfamiliarity with working with authorities and lack of understanding of the process of establishing a business, managing accounting books, financial reports and tax-related obligations.

Many households believe that the conversion means more transparency in business operations, more tax payments, and closer supervision from authorities...

Currently, Hai Phong has nearly 150,000 individual business households (over 30,000 households in the old Hai Duong province, over 100,000 households in the old Hai Phong). On average, each year only about 5 - 7% of these households convert to business models.

Many opportunities

Ms. Nguyen Thi Kim Ngan, owner of a grocery store in Thanh Dong ward, has no intention of changing her operating model because she believes that household business procedures are simpler and easier to manage than those of enterprises.

Mr. Pham Xuan Bien's individual business in Binh Giang commune has just officially transformed into Tan Viet Long Bien Company Limited. Immediately after the establishment of the enterprise, the company implemented a project to produce and trade stone tiles with a total investment of 32 billion VND.

Mr. Bien said that businesses are exempt from corporate income tax for the first 3 years, exempt from land tax, and can easily access credit loans with higher limits than when they were business households.

Also starting from a household business, Ms. Vu Thi Thu in Le Thanh Nghi ward, Director of Tien Nam One Member Co., Ltd. said that compared to the individual business model, operating under the enterprise model is much more professional. From serving customers to expanding the business model, everything is very convenient and systematic. Becoming an enterprise also helps the company have the opportunity to approach new business partners.

Currently, when converting to an enterprise, business households will be granted a tax code, can issue invoices, expand their scale, access formal credit sources, participate in the supply chain, bid and export. These are opportunities that business households cannot have if they only operate informally.

Resolution 68 of the Politburo has also proposed many solutions to support newly established enterprises such as exemption of corporate income tax for 3 years, exemption of business license fees, exemption of personal income tax when transferring capital contribution from business households to companies. In addition, enterprises can enjoy preferential tax rates of 15 - 17% if they meet the conditions.

With nearly 150,000 individual production and business households, Hai Phong City has identified promoting the conversion of business households into enterprises as a key task. To encourage the conversion of business households into enterprises, in the coming time, the city will continue to promote propaganda and popularize support policies in an easy-to-understand, easy-to-access and easy-to-apply manner. Free documents and procedures for establishing a business; first-time business registration fees at the business registration office, free publication of first-time business registration contents at the National Business Registration Information Portal.

The city also promotes digitalization, simplification of accounting, tax, and insurance processes; free support for accounting software, legal advice, training in management, accounting, and human resources skills, etc. to create the most favorable conditions for business households.

At the same time, allocate resources, socialize support services and regularly organize dialogues to promptly grasp difficulties and obstacles, thereby having appropriate support policies, promoting the transformation process to take place in a practical and effective manner.

HA VY

Source: https://baohaiphongplus.vn/vi-sao-nhieu-ho-kinh-doanh-khong-muon-chuyen-doi-thanh-doanh-nghiep-415981.html