Discussions can be quite energetic regarding the merits of outsourcing, and in our case in particular, the merits of outsourcing of tax, accounting and payroll services in Vietnam.
The discussions often start “It is much cheaper if I do my accounting, tax and payroll internally in my company”. However, for smaller operations, this is not usually the case. Let me explain.
The Chief Accountant
In Vietnam, every company must have a “Chief Accountant”. This is a person who holds a Chief Accountant’s Certificate, and must sign accounting and tax related documentation on behalf of their company. (Note: a Chief Accountant can only be appointed to a single company, so businesses with multiple companies in their group will need multiple Chief Accountants, unless they use an authorised accounting services company like Domicile Corporate Services). Chief accountants themselves can range in salary expectations, based upon their experience, with many companies believing they can find a commensurate individual within their budget cheaper than the costs of outsourcing.
For a small company in Vietnam, this is where things start to get a little more complicated. When hiring, and assuming you are negotiating on a Gross salary basis and not a Net salary basis (which will cost you more again), then the company needs to factor in around 20% on-costs for insurances and trade union fees. Then there is the computer cost, desks, software, training, outings, etc. All which add up and result in a not-so-insignificant increase on the gross salary.
However, who is reviewing the Chief Accountants work? How do you know that the data entered into the General Ledger (you do have a compliant general ledger system, and not just excel, don’t you?) is correct? That tax lodgements have been calculated correctly and submitted on time? That numbers have not been missed?
The old issue of self-review – the downfall of any system.
Additional Staff Needs
What usually happens, to ensure that work is being done properly by the accounting team and subject to appropriate review, is that a junior general accountant is generally employed and the Chief Accountant reviews their work. As a team, they are much better than a single staff can ever be.
However, the junior general accountant will not generally have practical payroll experience, training or knowledge, so there is often the need for a junior payroll staff member to process payroll, insurances, and to ensure compliance with the raft of payroll related matters.
So, the small company now has a Chief Accountant, junior general accountant and junior payroll accountant. And their associated payroll on-costs. And their office costs. And what about their supervision – as the General Director will also be signing off on many of the documents, as the final responsibility sits with them, and will therefore be charged with overseeing the entire accounting/payroll team?
Our Outsourcing Approach
With this in context, the outsourcing model used by Domicile Corporate Services starts to look far more attractive. And much more cost effective too.
The model is for each client to have a dedicated Manager, senior and junior staff, allowing for professional training and review through robust internal processes and customised planning calendars. With partner signoff, and monthly formal reports to the General Director, things are far less likely to fall through the gaps.
Basically, it is a risk management strategy, for a substantially reduced cost than trying to do it yourself.
If you would like to discuss any aspect of outsourcing your Vietnamese accounting, tax or payroll compliance – please contact: