Small businesses urged to open a separate bank account to prevent accusations of hiding revenue

Household businesses (HKD) in Ho Chi Minh City are advised to open a separate bank account for production and business activities, rather than using a shared account with personal funds. Tax experts said the separation helps clarify cash flows, shows amounts received and paid on behalf of others, and reduces the risk of being accused of hiding revenue.

Requirement to open a bank account and register it with tax authorities

At the forum “Hands-on Guide for Household Businesses to Comply with Tax Laws,” co-organized by Phap Luat Ho Chi Minh City and the Ho Chi Minh City Tax Department on April 10, Ms. Mai Thi Nghia Le, Head of the Personal Tax, Household Businesses and Other Taxes Division, said HKD must open a bank account to serve production and business activities.

The account may be opened in the name of the HKD or in the name of the head of the household, but it must be registered and officially notified to the tax authority.

Accounting obligations for HKD under 500 million VND

Ms. Le noted that HKD with revenue under 500 million VND only need to open a simple accounting book using Form S1 (Circular 132) to record revenue and keep records at the unit.

She also pointed out that HKD applying the current income-based taxation method must file personal income tax finalization at year-end, which may result in excess tax payable and a potential refund.

Penalties for late or incorrect account notifications

Ms. Le warned that penalties apply if HKD do not comply with account notification requirements. If the notification is late by five days or more, fines range from 2 million to 6 million VND under Decree 125/2020. If the information provided is incorrect, the fine increases to 6 million to 10 million VND.

More seriously, if HKD deliberately fails to provide information to the tax authority, penalties could exceed 10 million VND.

Key legal risks highlighted by a legal expert

Mr. Le Kien Luong, director of Thien Huong Law Firm, said taxes are now paid based on actual figures rather than imposed assumptions. He outlined four major legal risks that HKD can easily encounter.

Risk 1: Invoices and document compliance

Mr. Luong said the most common risk involves invoices and documents. HKD often purchase goods from informal sources without input invoices. If tax authorities conduct post-inspections and the origin cannot be proven, HKD may have those costs disallowed and be taxed with penalties of 1 to 3 times the amount of the tax violation.

Risk 2: Revenue declaration

He said many HKD mistakenly assume that revenue below the 500 million VND threshold automatically exempts them from all procedures. In reality, if revenue exceeds the threshold and HKD does not voluntarily file a tax declaration, authorities may use bank cash-flow data or electronic invoices to determine tax due and impose late-payment penalties.

Risk 3: Social insurance registration for workers

Another risk relates to social insurance rules. HKD should review their list of workers with contracts of one month or longer to ensure timely registration, avoiding violations that may be identified during labor inspections.

Risk 4: Asset confusion and unlimited liability

Finally, Mr. Luong warned about asset confusion. Because the household head faces unlimited liability, if tax debt arises, personal assets can be seized by authorities.

Tax authorities emphasize transparency and digital-era compliance

Experts said the practical solution is for HKD to open a separate bank account and not share it with personal accounts. This separation clarifies cash flows and helps prove the amounts received and paid on behalf of others, preventing accusations of hiding revenue.

Mr. Nguyen Van Thanh, Deputy Head of the Ho Chi Minh City Tax Department, affirmed that moving from lump-sum taxation to declared taxation is an inevitable trend. He said the shift supports financial transparency and provides a safer legal basis for HKD to grow in the digital age.

Leaders of the Ho Chi Minh City Tax Authority also acknowledged that small, informal practices have made many HKD wary of costs and new technology. To address this, the tax sector said it will take a hands-on approach, directly guiding how to maintain ledgers and issue invoices.

There was also a reminder from Ho Chi Minh City regarding declaration and payment: people should pay attention.