Estimating Realistic Costs to Start a Business in Vietnam

Estimating Realistic Costs to Start a Business in Vietnam

How much does it cost to start a business in Vietnam? This is a frequently asked question by international entrepreneurs. Understanding your actual expenses will help you launch easier. In this Article, Nova Law will help you estimate the realistic startup costs in Vietnam.

Disclaimer: Any cost stated in this Article is just our estimation based on the current market prices. The actual costs are subject to vary from case to case.

1. How much does it cost to start a business in Vietnam?

The minimum cost to start a business in Vietnam begins at USD 4,380 through the first year of operation. 

ItemsDescriptionsMinimum Costs
A business address
  • Rent fee per year for a Virtual Office/Office Space/Industrial Property
$970
Company registration service
  • Legal service fee for advising and registering a Vietnam company
$1,500
Initial set-up works
  • Buy a USB token device 
  • Buy a company signboard
  • Buy and register to use VAT e-invoices 
$270
Accounting and Audit
  • Bookkeeping and Filling Tax Reports for 1 year
  • Annual audit
$1,640

TOTAL (minimum cost for the first year of operation)

$4,380

 

 

2. How to calculate the actual cost of starting a business in Vietnam?

Next, Nova Law will work hand-in-hand with you to break down your true minimum costs specific to starting your business in Vietnam.

2.1. Rent a Business Address: begins at $970 per year

To register a company in Vietnam, you need a Vietnam business address. This is one of the basic legal requirements.

If in the early stage, your business doesn’t require an actual physical address yet, you can use a virtual address for the company registration purpose. The average price for a virtual business address package begins at $80 per month, or $970 per year. The business address can change later on.

If your business needs to operate in a physical location (for example: co-working space/office/retail shop/showroom/restaurant/factory/warehouse), you need to find a suitable location, then sign a leasing contract before proceeding with your company registration. 

The table below lists the leasing price of commercial properties as of the Q3, 2022 in major big cities of Vietnam:

Commercial PropertiesHanoiHo Chi Minh cityDa Nang
Office space

(per sqm/month)

Grade AFrom $23 to $47From $39 to $65From $21 to $32
Grade BFrom $16 to $35From $19 to $55From $10 to $17
Grade CFrom $9From $9From $8
Industrial Land

(per sqm/leasing term)

$95 – $280$100 – $250$90 – $95

Learn more: Industrial Properties in Vietnam: Overview and Updated Pricing

An Office Space

2.2. Company registration service fee: begin at $1,500

You will always need a local legal team to assist you while doing business in Vietnam. From the early stage, the lawyers will help you to choose the right business structure, advise the market entry legal conditions, draft contracts or related agreements between the owners (if required). Next, they will handle all paperwork and licensing work in order to incorporate your company. After your business is established, the legal team is still useful for figuring out your legal protections during your business transactions, advising all legal requirements needed to comply, or legal risks that you should be aware of, etc

Choosing a reliable and professional law firm is an important decision when you do business in Vietnam. Nova Law can be your great choice! We have strong legal knowledge, as well as extensive experience with company establishment in Vietnam, which will come with strong relationships with local authorities ensuring a smooth registration process for your business. We can handle nearly every legal challenge your business is likely to encounter. 

Read more: How to open a company in Vietnam?

2.3. Initial Set-Up Works: begin at $270

After your Vietnam company is incorporated, there are some costs relating to the initial set-up works as the below table:

ItemsRelated Costs
Buy a USB token device (used for e-sign the administrative online transactions)$100
Buy a company signboard$20
Buy and register to use VAT electronic invoices$150
Subtotal$270

Learn more: 11 tasks to complete post registration of a company in Vietnam

2.4. Accounting and Audit fees: begin at $1,640

ItemsRelated Costs
Bookkeeping and Tax Report Filling services (*)From $840 per year
Annual audit of the Financial Statement service (**)from $800 per fiscal year
Subtotal$1,640

(*) In Vietnam, all companies must declare and file tax reports on a monthly or quarterly basis, and finalize the end-of-year report. Your business may have an internal accounting team. Outsourcing accounting work may offer you the possibility to hire a professional with a high level of expertise at an affordable price.

(**) According to the current regulations, the annual financial statement of a foreign-owned company shall be audited by an independent auditing firm operating in Vietnam

3. What are some other optional startup fees?

ItemsDescriptions
Market Research
  • Consulting to evaluate the potential of the market and legal barriers when entering to Vietnam market
Hire Employees
  • Recruitment
  • Payroll
  • Contribute compulsory insurances
License or permit 
  • Sublicense for conditional businesses
  • Representative Office or Branch of the company
Visa and work permit
  • Business Visa
  • Work Permit
  • Temporary Resident Card
Others
  • Purchase domain, and host for the company’s website
  • Purchase fixed assets (computer, printer, office furniture, stationery, etc.)
  • Website, marketing materials design
  • Delivery and postal

3.1. Market Research

Moving your business into the Vietnamese market often comes with great opportunities for growth, but also comes with significant challenges and risks. Foreign investors should obtain deep market insight before deciding to launch a business in Vietnam. At this stage, it’s important to seek legal advice from local lawyers to understand all the Vietnamese market entry conditions and barriers before planning to do any kind of business activity in Vietnam. 

3.2. Hire employees

Hiring employees is not compulsory for a new company. However, human resource is a valuable asset of every organization. The cost of hiring employees in Vietnam is different based on the business fields and the requirements of each employer.

  • Recruitment costs: pay for recruitment platforms or use recruitment agency services.
  • The statutory labor minimum wage in urban areas is $200 per month. In fact, the market average monthly salary is $355
  • Total insurance premiums (social insurance, health insurance, unemployment insurance) covered by the employer: 22.5% of the gross monthly salary.

Source: https://baotintuc.vn/xa-hoi/muc-luong-binh-quan-cua-nguoi-lao-dong-nam-2020-la-bao-nhieu-20210203111703305.htm

3.3. Business Visa, Work Permit and TRC

Foreign investors may apply for multiple-entry business visas with terms from 1 month to 12 months. Those who want to stay for a longer duration may apply for a Temporary Resident Card (TRC) with terms of up to 10 years.

Business Visa Vietnam

A work permit is granted to foreigners who come to Vietnam for working purposes. The duration of a work permit is 2 years and can be extended. After that, a working visa or a TRC will be granted correspondingly a maximum of 2 years duration.

In practice, the process and requirements to apply for visas and work permits are complicated and difficult to complete without the support of local service agencies. The average service fee starts from $400 each.

3.4. Sub-licenses, Register the Company Branch or Representative Office fees

There are some conditional business fields that require the company to apply for approval or sub-license before conducting such business. For example, a trading company that wants to involve in the retail business shall apply for a Retail Business License. The cost of obtaining such a license is an average of $1,000.

When your company looks to expand its business to other locations, you are required to register your company with the relevant licensing authority. The cost for registering a branch/RO is, on average $150 per registration.

Conclusion

Starting a business in Vietnam takes a lot of effort. It also takes some cash. Prices can also vary depending on your business size, chosen industry and business location. You might not get a true reflection of the total cost of registering your business until you talk to an expert.

Please contact Nova Law if you need more detailed information or need to use corporate-related services. We are happy to be of service!

Ready to incorporate?

If you are interested in starting a business in Vietnam, Nova Law can help. Request a proposal now to take the next step towards your dream business.

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Jenny Dinh
Jenny Dinh
2 years ago

The information is useful and comprehensive for foreign investor

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