Are you interested to set up your own business in Vietnam? Let’s find out what are the real costs of setting up a business in Vietnam and the operation costs of a business!
In this article, we will explain the different costs of setting up a business in Vietnam. Furthermore we will also cover the operation costs of your business in Vietnam. Of course, some of these costs will be more relevant to your business then others, and some costs will no-doubt vary. For some items, such as marketing, you are free to spend as much (or as little … ) as you want.
1) Market research costs (~$200) (optional)
Before starting a new business venture, we always recommend our Clients to spend some time and money on market research. From our experience this often greatly contributes to the success of a business. Market research involves gathering information about your industry and market environment. It helps to understand factors external to your business. To see whether there is real potential in the market. Who is your target audience? And how can you reach them?
2) Legal advice (~$200) (optional)
Obtaining legal advice before starting your venture is also important. This will give you a good idea about the legal feasibility, the requirements and the procedures of your business plans. It will also give you a clear insight in all the potential costs of setting up your business in Vietnam, so that there are no surprises.
3) Investment certificate & enterprise certificate costs (from ~$1,000 – … )
Foreign-invested companies need to apply for an investment registration certificate (IRC) and an enterprises registration certificate (ERC). You could try to obtain these certificates by yourself, but this will likely cost you a lot of time (and money) for research, planning, translating, going to the Vietnamese authorities, and waiting. Technically, you could try to obtain these certificates by yourself. But we would only recommend doing so if you either already know the procedures, or if you have a lot of time on your hands. Because the Department of Planning and Investment would normally not sit down with you and explain the procedures to you in detail. So prepare for a lot of going back and forth to the Authorities. If you let a service provider help you, then expect to pay around USD 1,000 and USD 2,000. The exact amount would depend on your specific business, and on the level and scope of service. If you want to read more about start up procedures: have a look at our previous article on how to open a restaurant or café in Vietnam.
4) Additional license costs for your business (~$60 – 400 / license)
Depending on your business, you may need additional licenses. Examples include a food safety and hygiene certificate for restaurants and cafes, or a fire prevention and fighting certificate for a hotel. Sometimes, a website registration certificate, an alcohol selling license, and/or a retail license are also required: USD 60 – 400 / license. For any application, you will need to prepare the relevant documents. Consularization, legalization, notarization and/or translation cost ~ USD 5 (notary) – 50 (Embassy) per document.
5) Charter capital (~$21,500 or more)
When you start up a business in Vietnam, you will need to commit charter capital / investment capital. The Vietnamese law normally does not stipulate a minimum required amount. Instead, the Authorities will evaluate whether your proposed amount is feasible for your business plans. In the past, a charter capital of as low as USD 5,000 was possible. But nowadays, the Departments of Planning and Investment in Da Nang and Quang Nam (Hoi An) often recommend at least USD 21,500 and preferably even higher. Have a talk with our Bizlen™ Team for some tips on how to limit your amount of charter capital. In any case, you will need to provide that you have the capital before applying. And then it will need to be contributed to your company within 90 days upon obtaining the enterprise registration certificate. The amount can be shared between the members / shareholders of your company. If it is the charter capital that is holding you back: don’t hesitate to contact the Bizlen™ team, we will be happy to consult on this matter and we will provide you with some options.
6) Post – certification procedures (less than ~$150)
After obtaining your registration certificates, you will need to complete a few more steps. These include opening a corporate bank account, and registering with the Vietnamese tax Authorities. You also need to make and register your company seal, and buy a company name sign. And you must list your business on the National enterprise database of Vietnam. These items all together cost less than USD 150, and can normally be completed within a week.
7) Investment visa and temporary residence card (~$250 – 500 / person)
Obtaining a work permit exemption, an investment visa, and/or a temporary residence card is not too complicated when you have completed your business registration. You do not need any degree or a minimum number of years of management experience if you are an investor in a business. If you are an employee, on the other hand, the rules are different. You will usually need a degree and / or a minimum of 5 years in a management position. Depending on the business, you may need a stamped and signed letter from your previous employer as proof. Please note that the visa and residence rules are currently changing in Vietnam. Contact our Bizlen™ Team for the latest news.
1) Rental fees (~$11 – 18 / office / m2 / month)
Once you have set up your business in Vietnam, there are various operational costs for running a business in Vietnam. Probably the biggest one of those will be your rental fees for your office or business. The exact amount will depend on factors such as size, location, facilities, and negotiation skills. A modern and clean office will cost around $10 – $15 per m2. Offices are usually not furnished. For land, buildings, shop houses and other properties for lease it really depends on the above variables. Don’t hesitate to contact our property leasing department on Facebook or via email or visit our new property lease website if you have any questions, or if you are looking for a property in Da Nang. Alternatively, we can help you to register a so-called “virtual office” for around VND 1,25 – 2 million / month.
2) Internet, electricity and water fees (~$75 – 125 / month)
You can get a standard internet connection in Vietnam for less than USD 20 / month. Electricity and water cost around USD 0,10 – 0,15 / kWh and USD 0,40 / m3, respectively. All these items together add up to USD 50 – 100 / month. These will come on top of your rental fees. Of course, this varies on how big your office is and the amount of electricity you use. Air-conditioning is usually the biggest electricity cost in Vietnam.
3) Labor costs & accounting
Internal and external accounting, taxation and reporting services, which are very important for smooth business operations in Vietnam: ~$75- 200 / month, mostly depending on the scale, business sector, and the number of invoices per month. Foreign – owned companies are also subject to a compulsory annual financial audit. The fees depend again on your specific business, but it ranges from $ 200 – 500 / year.
Some labor costs include:
- In – house administration staff: $300 / month,
- Waiters and waitresses: $150 – 300 / month (depending on working hours and skills needed), and
- Full time accountant: $250 – 350 / month.
Please note that these labor costs may vary depending on many factors. However, the above is a good bench mark in Da Nang. Something else that we always recommend to our Clients is to set aside a budget for marketing. As a general rule, you can think of spending around 10 – 20% of your gross revenue on marketing. Especially at the beginning.
The variable operational costs of setting up a business in Vietnam are very specific to the actual operations of your business. It is therefore difficult to put a price tag on them. However, you can think of the following cost items: sales commissions, direct labor costs, cost of raw materials used in production, electricity and water (also covered above), and tax. In Vietnam, corporate income tax is normally rated at 20% of your company profits. Value added tax is normally 10%. And personal income tax ranges from 5 – 35%.
Contact us for more information
We hope that this article will have given you a better insight into the various costs of setting up and running your own business in Vietnam.
Don’t forget to contact us if you have any questions! We can also schedule a consultation meeting.
At Bizlen™, we can advise you about the possibilities and restrictions of your business plans. And we can guide you through each step of the process to realizing them.
Our Bizlen™ Team is specialized in company set up and development in Vietnam. This means that we can assist you with all the items that are mentioned in this article and more.
Send us an e-mail with your plans and inquiries, or give us a call to make an appointment at our office in Da Nang!
CONTACT US for a quotation. We can support you anywhere in Vietnam!
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