Consistent economic stability in Thailand has prompted investors from all corners of the world are interested in setting up a business in Thailand. The business registration has also started because of this. Due to the availability of a strong infrastructure, lucrative government incentives and support, a cost-effective and skillful workforce, a large number of foreign investors are eyeing Thailand as their next place for expansion.
Business opportunities in Thailand are huge. Doing business in Thailand is well supported by a set of proper framework and policies outfitted towards progression and facilitated commerce, social and political security along with the strategic location of the country. However, it is important for newcomers to determine their niche market. This is because Thailand is a business hub and you will find varieties of startups here. Failing to choose a niche market will have a huge impact on your profit. Not every business is suitable for everyone. Therefore, you have to choose that effectively.
Are you planning to start your business in Thailand? Before you do that, make sure that you do your research work and you should be ready to devote a few years to grow your business in Thailand. Maybe a FREE consultation with the start specialists of Startup in Thailand may help.
You have the choice of selecting the business that you wish to do here. You can register the type of business you wish to do. Here are the various options mentioned below.
- The most appealing business type is Thai Limited Company. This is because it provides a lot of flexibility and is one of the best choices among foreigners.
- Partnership businesses can be limited or ordinary type. In the case of the ordinary type, the joint partners have infinite accountability for all their responsibilities whereas, in the limited type, there are two kinds of partners- one who shares unlimited liability and the other one who shares limited liability.
- Thai representative office allows the trading of goods by international companies. You need to contact a corporate lawyer to understand its terms and conditions.
- The branch office is not limited to only non-trading activities.
- The regional office is essential to set up for performing 7 particular activities and is different from a branch office.
The private Limited company is one that is usually used by international investors unless they need someone to represent in Thailand, without registering any company. In this article, you will get you to know in detail the registration process of your business. If you are setting up a business in Thailand, here are a few ways by which you need to register your company.
Step 1 – Register the name of your company
The first thing that you have to do is to register your company’s name. Make sure that the name of your company shouldn’t be the same as any other already existing partnership or company. There are certain terms which you cannot use for your company. For example, the term capital is allowed in your company but the term investment is not allowed. Also, the name of the company should end with the word limited.
Decide three names for your company for maximizing your success level. Your company name will be registered in the Thai language and not in English. Do not choose a name that is too lengthy or that is hard for the Non-English speakers. Your clients will need to write the name and therefore you should keep it simple. Do not go for complicated names because your clients might make a mistake while drafting checks or other important documents. You can have the same name for several companies but make sure that you use a different figurative word. For example, XYZ Company Limited, XYZ Holding Limited, etc. If the name is approved, it will be valid for 30 days only. This means that the second process of your registration has to be completed within 30 days. This is the first step for setting up a business in Thailand
Step 2 – Memorandum of Association has to be filled
Memorandum of Association is a legal document and an important agreement made by the promoters of the company to explain the relationship with the shareholders. This agreement consists of the followings- name of the proposed company, name of the province where the registered office will be located, company goals and objectives, a declaration that the shareholders will have a limited liability, amount of the share capital which the company wants to register, the name, address, signature and occupations of at least three individual promoters and not corporate entities, and finally, it should contain the number of shares that have been promised to each of the promoters. The promoters have to sign the original copies of the memorandum and there have to be two witnesses for certifying it.
Step 3 – The statutory meeting
The statutory meeting can be summoned once you finish filling up of the Memorandum of Association. A statutory meeting is called for various purposes. The very first purpose of summoning a statutory meeting is to decide on the rules and regulations of the company. This is the first point. There are various other purposes which can be mentioned as follows:
- to sanction all the agreements entered into by the promoters or any expenditure made by them for company promotion
- To decide on the amount to be paid to the promoters
- If there are preference shares to be issued, then it has to be fixed. Fixing the degree and nature of the special rights given to them.
- Appointment of first auditors and directors and to decide on their individual powers.
Step 4 – Registering the company
The next step for setting up a business in Thailand is to lodge the application at the Ministry of Commerce. This has to be done on the same date on which the Memorandum of Association is registered, provided that the statutory meeting has been summoned. The registration application has to be lodged not more than 3 months from the date of the statutory meeting. Failure to do so will make you answerable for the delay. The following details have to be mentioned in the application:
- It should include the allotted or subscribed number of shares and it is important to differentiate between the ordinary and the preference shares.
- To fix the number of ordinary or preference shares that is to be distributed partly or completely in cash, and the sum to which they will be considered as paid up.
- The money that has already been paid in cash on each of the shares and the total amount of received money in shares
- The name, address, and occupation of the directors along with their individual powers need to be mentioned. The names and numbers of the directors whose signatures are binding on the company have to be mentioned.
- The time period for which the company has been registered.
- Address of the main office as well as of all the branch offices
At this stage of the process, the shareholders have to disclose how they will be investing. If it plans to buy land then there will be an extra inspection of the stakeholders of the Land. The company director has to put signatures on the statement that every shareholder has paid his or her subscription. The director needs to sign the receipts and has to mention the followings:
- Name of the shareholder
- Paid amount
- Amount of the shares purchased
- Value of each of the shares
Step 5 – Registering for VAT and corporate income tax
Once the registration of the company is done, the final step for setting up a business in Thailand is to obtain a corporate tax ID card. You can get this from the revenue department. You can complete the process online. This tax ID is essential to know to open a corporate bank account. If a company’s foreign director does not have a work permit, then the bank will request a co-signature of a Thai director on the documents for starting a business in Thailand. If you are willing to get a work permit then you should immediately register your company for VAT. You need to apply for other licenses as well but it will depend on the nature of business you are doing. Corporate income taxes have to be paid twice a year. The rate of corporate tax as of 2019 was 10%. But normally it is between 15 to 20%.
Once your registration process has been done, you need to look for office spaces. The office spaces are of two types- traditional and serviced offices. You also have to apply for a business visa. You have to hire an accounting firm to handle the paper works. You will need certain important documents to apply for a non-immigrant B Visa.
- A photocopy of your company registration
- A letter from the Thai partners of your company and from the local labor ministry
Once all the registration process is done, you need to find the right employees for your job. Make sure you mention all the qualifications that a person should have to get employed in your company. Starting up a business in Thailand is extremely rewarding if you choose your niche market. Once you decide on that, you should hire a professional team to help you set up your company. Alternately, you can also outsource all your back end administrative operations to any professional company like Startup in Thailand.
Interesting Reads :
- Why Thailand is a good business destination
- How to do business in Asia when you are not based in Asia
- 6 Crucial points to ponder while setting up a branch overseas
- 10 Key Steps to endure your Startup success in Asia
- How to tackle initial Business Startup Challenges
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