SHOULD A CLINIC BE ESTABLISHED AS A COMPANY OR A SOLE PROPRIETORSHIP?

First of all, it should be noted that both a company and a household business have their own advantages and disadvantages and are suitable for different goals and needs; neither form is inherently superior to the other.

1. Company: The company model typically chosen for operating a clinic includes: limited liability companies (LLC) and joint-stock companies (JSC).

2. Household Business: Regarding household businesses, pursuant to Clause 1, Article 79 of Decree No. 01/2021/ND-CP, this model is established by an individual or household members and they shall be liable with their entire property for the business activities of the household. The structure and tax obligations of household businesses are relatively simple, which is why this model is often the first choice for doctors starting a business for the first time and wishing to begin with a small-scale clinic without many personnel, departments, or hierarchical levels. However, the household business model also gives rise to certain limitations in cases where multiple investors contribute capital to the clinic or when carrying out subsequent amendment procedures.

CONCLUSION

Accordingly, it can be seen that whether a household business or a company is chosen, each form will be suitable for certain expectations of the investor.

In the case where the investor is also the doctor whose name is used for the clinic license, is engaging in business for the first time, and wishes to conduct small-scale business without requiring a clear managerial or organizational structure, the household business model may be selected due to its simplicity and compactness. However, it should also be noted that if, at a later stage, the clinic has a need to change the person responsible for its professional and technical expertise, the clinic must close and remove its current signboard and establish a new clinic under the name of the new responsible person.

Conversely, the company model will be more suitable for investors who wish to establish a system of medical examination and treatment facilities, who understand the structure and organizational apparatus of a company, and, in particular, who have an accounting department to fulfill tax declaration and financial reporting obligations in a timely manner.

In the case where the clinic owner is a doctor who also directly contributes capital and whose name is used for the clinic license, operating a small-scale, stand-alone business and wishing to pay taxes in the simplest manner possible, the household business model should be selected.

Conversely, the company model will be more suitable for investors who may not necessarily be doctors, who wish to establish a systematic model or a chain of clinics, with multiple capital contributors and, in particular, an accounting department to perform tax declaration, tax filing, and financial reporting obligations in a timely manner.