8 common mistakes foreigners often make when registering a business in Vietnam

Vietnam is becoming an increasingly attractive destination for foreign investors and entrepreneurs, thanks to its stable economic growth, affordable costs, and promising market. However, many foreigners face difficulties when starting their business journey here due to a lack of understanding of the legal system, business culture, and administrative procedures.

Below are the most common mistakes foreigners make when registering a company in Vietnam and how to avoid them:

1. Choosing the Wrong Business Structure

Mistake: Many foreigners are unfamiliar with the differences between business types such as a single-member LLC, multi-member LLC, or a joint-stock company.

Consequence: Causes issues with management, profit sharing, or attracting future investment.

Solution: Research the legal entity types thoroughly or consult a business lawyer before registering.

2. Failing to Check Industry Restrictions

Mistake: Registering a business in sectors that are restricted or conditional for foreign investment.

Consequence: Application may be rejected or require costly and time-consuming adjustments.

Solution: Check the list of restricted or conditional business sectors for foreign investors according to Vietnam’s Investment Law—especially in areas such as education, logistics, and e-commerce.

3. Incomplete or Invalid Documentation

Mistake: Missing essential documents such as:

• Valid passport
• Proof of financial capacity (e.g., bank statement)
• Parent company license (if applicable)
• Lease agreement that’s not legally valid

Solution: Work with a professional consultant or verify the required document checklist from the Department of Planning and Investment before submission.

4. Underestimating the Importance of a Valid Business Address

Mistake: Using an invalid address (e.g., private residence, restricted zones), or unclear office rental agreements.

Consequence: Company registration may be denied or face issues with the tax office.

Solution: Choose an office in a permitted business zone with a legal lease and land-use certificate (if needed).

5. Confusing the Investment Certificate and Business Registration Certificate

Mistake: Not understanding the difference between:

• IRC (Investment Registration Certificate): Required for foreign-owned companies.
• ERC (Enterprise Registration Certificate): Official document proving company establishment.

Consequence: Causes delays or licensing issues.

Solution: Follow the correct two-step process: (1) Apply for IRC → (2) Apply for ERC.

6. Poor Financial and Tax Planning

Mistake: Failing to account for operational costs, taxes, or periodic tax reporting obligations.

Consequence: Penalties for late or incorrect tax filings and damaged credibility with the tax authority.

Solution: Hire an internal accountant or engage a professional tax & accounting service early on.

7. Not Preparing for Work Permits and Long-Term Residency

Mistake: Overlooking the need to apply for work permits or temporary residence cards for themselves or foreign staff.

Consequence: Limited stay durations and inability to work legally at their own company.

Solution: Integrate work permit and long-term visa planning into your post-registration setup.

8. Lack of Understanding of Vietnamese Business Culture

Mistake: Applying foreign management styles without adapting to Vietnam’s business environment.

Solution: Learn about local business practices, communication styles, negotiation, and leadership expectations. Connect with international business communities in cities like Ho Chi Minh City, Hanoi, and Da Nang.

Read more: What to Know About Vietnam’s Business Culture When Starting a Business

Registering a business in Vietnam is not overly complicated if you're well prepared and avoid common mistakes. Consider this a serious investment, and don’t hesitate to seek support from trusted legal, accounting, or investment consultants. If you're a foreigner planning to establish a business in Vietnam, Zora Consulting can assist you from obtaining your investment and business licenses to post-registration legal and tax guidance.