Investment capital of the sole proprietorship’s owner

A sole proprietorship means an enterprise owned by an individual whose liability for its entire operation is equal to his/her total assets. Each individual can only establish one sole proprietorship. The owner of a sole proprietorship shall neither concurrently own a household business nor hold the position of general partner of a partnership.

Before establishing a sole proprietorship, it is essential for individuals to understand the regulations on the capital of the sole proprietorship’s owner to consider and choose this form of business for their business activities.

Pursuant to the Law on Enterprises 2020, the capital of the owner has the following characteristics:

1. The investment capital of the owner shall be registered by themselves. The sole proprietorship’s owner shall register accurately the total amount of the investment capital in which such capital amount is specified in Vietnamese Dong, convertible currencies, gold and other assets; for capital contributed in other assets, the type of asset, quantity and residual value of each type of asset are required to be clearly stated.
2. All capital and assets contributed, including loans and leased assets serving the sole proprietorship’s operation, shall be fully recorded in its accounting books and financial statements according to the law
3. Assets used in business activities of a sole proprietorship’s owner are not required to carry out procedures for transferring ownership to the enterprise. This is one of the differences between the sole proprietorship and other current forms of business.
4. During its operation, the owner of the sole proprietorship is entitled to increase or decrease their capital. Such increase or decrease in capital shall be fully recorded in accounting books. In case the capital is decreased under the registered capital, such decrease may only be made after it has been registered with the Business Registration Authority.
5. A sole proprietorship shall not contribute capital upon establishment or purchase shares or stakes of partnerships, limited liability companies or joint stock companies.

Thus, with the above characteristics of the investment capital of the sole proprietorship’s owner, individuals will better understand this form of business to consider the appropriate business investment plan.

For more information, please refer to our Article on:

1. What is a sole proprietorship?
2. Procedures for the establishment of sole proprietorships in Vietnam.

Disclaimer: This article is solely for informational purposes. Its contents shall neither constitute legal advice nor be regarded as a detailed written legal advice for individual cases. Should you have inquiries on such matter, please contact us for more information.