Converting an individual business model into an enterprise

With the aim of promoting more transparent business activities, the government encourages eligible business households to undergo conversion into enterprises. This conversion brings numerous benefits to business households, including improved credit, expanded production and business premises, support from industry associations, legal personality in civil transactions, and the ability to hire labor. In response to the development-promoting policies initiated by the government, 4N Business Households, trading in incense products on the e-commerce platform (Tiktok Marketplace), boldly transitioned to the form of 4N Co., Ltd in August 2023 to expand its business model.

However, during the transition to the Company model, 4N encountered issues related to legal and accounting aspects, such as:

- Company establishment procedures: In the process of transitioning from the business households model ("HKD") to a Company, one of the concerns for business owners is how to transfer inventory and fixed assets ("TSCD") from HKD to the Company to sustain ongoing business operations.

- Company operation procedures: Operating as an e-commerce business, the company faces challenges related to system operation and administrative procedures that must comply with regulations, including accounting bookkeeping, invoicing, tax rates, fulfilling tax obligations, labor, and social insurance.

- Participation in social insurance procedures: With a workforce exceeding 10 people, businesses often have many inquiries regarding the procedures for participating in Social Insurance (BHXH) and policies related to labor.

Business owners always want to ensure full compliance with legal, tax declaration, and labor-social insurance regulations to guarantee and maintain business operations in a professional and sustainable manner.

TPM's solutions

Facing the challenges of the conversion process, TPM Tax Agency has been a strategic partner alongside 4N to address the mentioned issues.

Regarding the conversion of inventory and fixed assets to the new business model, TPM deployed specialists to conduct a detailed survey of inventory items and their corresponding values. This enabled the presentation of feasible solutions for conversion while ensuring compliance with the current Business Law and tax policies.

In addition, with a deep understanding of the operational procedures of e-commerce businesses and legal regulations on invoices and documents, TPM provided guidance to 4N's internal accounting department on crucial issues. This included proper invoice issuance procedures, determining tax rates for traded and discounted goods, aiming to avoid errors related to invoicing that could lead to incorrect tax obligations.

For the sales department, considering the workforce of over 10 employees at 4N, TPM conducted a survey on contract formats, job scopes, and salary allowances to provide solutions related to salary, income tax, and social insurance for employees. The ultimate goal is to ensure the rights and benefits of both employees and employers, avoiding administrative violations.

TPM is committed to accuracy and full compliance with legal regulations. Therefore, TPM is not only a financial partner but also a reliable companion, providing peace of mind and adherence to tax and social insurance policies for 4N.

RESULTS

We understand that at every step, the success of the business is our success. With the advisory support from TPM experts, 4N has adeptly navigated and resolved all queries, gaining a profound understanding of the regulations related to e-commerce business. This has significantly contributed to establishing a robust foundation, enabling 4N to confidently expand its scale and operate more efficiently in its business development journey.

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