Tax, accounting, and compliance are often the most disregarded areas of expertise in a company especially startups. For instance, most incubators will totally ignore the accounting side and compliance but rather focus on sales, gathering seed capital and processes. We believe at PCA that is a grave mistake when navigating in a market such as Vietnam. It is necessary to plan, especially once traction has been observed, it is crucial to gather the right skills and set of competences at the right time. Read our article about choosing professional services instead of local and personal free-lancers and responsibilities of the parties here. Organizing a proper accounting team will mostly depends on the type of business and the nature of the transactions your business is conducting. 

Each type of transaction (international commercial transaction, foreign contractors, simple air ticket expense or paying a rent) will demand a certain number of skills and compliance knowledge. It is not only about booking the debit or the credit like it would be in other countries. To ensure for instance full deductibility (i.e., the expense can be considered legit and deducted from you turnover to lower the CIT base), an office rent must satisfy the following (as of 2023):

1. 1. a properly signed contract under the company name

1. 1. a legit registrable and location

1. 1. the address on the business license must correspond to the one in the contract

1. 1. a valid reason for the exploitation of this location/venue

1. 1. the rent payment must be by bank transfer (cash will not be accepted)

1. 1. the rent tax is declared and paid (PIT 5% + VAT 5%) for rent over 8.000.000VND per month

1. 1. an acceptable rent that is in line with the market

1. 1. properly redacted and issued VAT invoices (only if the landlord is a company)

One can notice the need for rigor, knowledge, and discipline in this process. Missing one support documents may put at stake the deductibility of an expense and have serious consequences in the future mainly penalties, late payment interest, unpaid tax.

Now that we have talked about the need for compliance and professionalism in accounting, let’s take three common cases to illustrate 3 typical business models:

• • The Consulting Companies (low volume of invoices)

These companies typically have a limited number of invoices/transactions per month. Each of these invoices (income or expense) must comply with the Vietnam Accounting Standards (VAS) to be booked properly. We advised our Clients active in this industry to take 2 packages with us 1/ the usual accounting package and 2/ the legal and compliance package.

• • The F&B Companies (average volume of invoices)

These companies typically have an average number of invoices/transactions per month that must be reported. It is due to the nature of the business. It is advised to issue one VAT invoice per day to cover the sales of the day. Furthermore, stock management comes into place as ingredients and merchandises are purchased and stored. Each of these invoices (income or expense) must comply with the Vietnam Accounting Standards (VAS) in order to be booked properly. In the case of F&B businesses, we advise our Clients to hire one or more cash accountant(s) per location to help take care of the internal work and reporting. PCA will create, implement, and supervise the whole tax operations and accounting model for the establishment. The work of tax optimization, template creations, KPI setup, and sales channels aggregation is also a service that PCA will offer when requested. Using that model, the business owner ensures that internal matters such as sales are handled internally and PCA will take care of the official accounting i.e. the revenue that will be declared to the government. Internal staffs such as internal accountants, cash accountants, admin, etc.) are guided and trained by PCA to provide support for PCA work. For F&B businesses, PCA will prepare an all-in-one offer including tax accounting, legal & compliance, and payroll. 

• • The Trading or Internet/App Companies (high volume of invoices)

These companies typically have a large number of invoices per month. Each of these invoices (income or expense) must comply with the Vietnam Accounting Standards (VAS) in order to be booked properly. When the number of invoices is over 100 per month, the accounting workload becomes huge simply because there are no economies of scales in this situation. If each transaction is to be verified, if there are 10 invoices, we must perform 10 times the tasks related to each transaction. Some Clients running e-commerce businesses account for thousands of invoices per week with multiple channels of sales, multiple bank accounts, multiple currencies, multiple locations, multiple payment methods (wallets, credit card, cash, etc.), and multiple suppliers. The workload is therefore not the same as the cases described above. With these business models, PCA typically advise our Clients to have internal staffs taking care of tasks that will be prepared and planned by PCA upfront during the setup phase such as invoicing when the latter is not an automatic process, accounts payable (A/P), accounts receivables (A/R), debt reports, debt management, stock management, etc. In order to ensure the coherence and the consistency of the work, processes and templates must be put in place to reduce the processing time and to mitigate the risk oof human errors. Internal staffs such as internal accountants, cash accountants, admin, etc.) are guided and trained by PCA to provide support for PCA work. Before preparing a quotation, our teams will assess the amount of work, the risk of the project, and our Clients will receive a quote for the setup phase and the daily management.

PCA is advising Clients from all types of industries from manufacturing to advisory, all type of sizes from micro-enterprises to multinationals. Each Clients has particular needs and processes requiring a special care, especially during the setup phase. If you wish to understand accounting better or wish to share your thoughts with our teams, please contact PCA Company Services. A choice you will not regret. 

Contact PCA Company Services today. We will help you info@pcacompanyservices.com