Starting a new company is always thrilling and it does come with its fair share of benefits too. You never really know what to expect and what results can be there, it all comes down to having the right commitment and actively figuring out the right steps to create a new business. With that in mind, we created a list that helps you identify the right steps to create a business, so here you have some of the major ones.
Understand the type of business that you are not allowed to create in Thailand
The law that governs business creation in Thailand is the Foreign Business Act of 1999. This law has its restrictions, and you will have a fine of 100000 to 1000000 Baht. As a foreigner you need to know this law or have someone work with you that knows the local laws like this.
Thankfully foreigners are not prohibited against the idea of creating a business in Thailand, but they have to know the local rules and more specifically what kind of business is not ok to create in Thailand to begin with.
Some industries are off-limits, more specifically rearing livestock, trading in land, manufacturing Buddha images, trading antiques from Thailand, extracting medicinal herbs, forestry, fishery, rice farming, orchard and arable farming as well as TV broadcasting or Newspaper publishing. These are rather local activities and industries, and you are limited to them which is a very important aspect to keep in mind.
Types of companies to start in Thailand
You can start a registered ordinary or limited partnership, branch office, regional office or representative office and a limited company. The limited partnership means that a partner has limited liability and the other partner has full liability. The representative office will source goods and services in the country, inspect the quantity and controls or goods that are purchased here, introduce information about new products, report on the business movement and offering advice.
The regional office can do all of those as well as marketing control, financial management, creating products, services in development and research, communicating on behalf of the main office and many others. The foreign business needs to have at least an active office in Asia.
Branch offices are allowed to earn income. They are limited in various ways, which is an extremely important aspect to consider and keep in mind. Lastly you have limited companies which are either public companies that need to have 15 promoters or private companies that just have a certain amount of shareholders. Getting a legal advisor to help you with this as you figure out what option works for you is pretty much a necessity. You want to be up to date with the law without having to worry about certain issues.
Create a business plan
Before you start gathering any documents you want to be fully sure that you are creating a good business plan that works for you very well. We recommend you to choose the right business plan that suits your needs and adapt it to your own requirements. Consider the Thai mentality and culture, as that will do wonders as you try to expand your business ideas. A business plan shows investors that you are indeed committed to your business and in it you are also showing your marketing ideas and how you want to tackle any of the challenges that come your way. It’s definitely important to have a business plan, just make sure it’s the right one to suit your company and not just a random one without great results.
What documents are needed to start your business in Thailand?
There are multiple documents required here. You need a Memorandum of Association, Articles of Association, Application form and the shareholder list, the new director form that’s signed by every director, company name reservation, a declaration of Business Operation form, and details of the branches and offices that your company might have.
Another thing to note is that before you are registering the company you must pay at least 25% of the initial investment capital. You can add that in a corporate account. You will also need a company chomp that will be your signature certify company documents, that usually costs around 400-800 Baht or around those lines. These documents are pretty much mandatory and you need to have them to avoid any issues.
After you share the documents you will have to wait a little while until your business license will be ready. That’s not very time-consuming, but it is something to keep in mind and you really need to take into consideration everything related to something of this caliber.
Understanding what are nominee shareholders and majority shareholders
The nominee shareholders don’t have any financial interest related to your business. However, the majority shareholders are owning 51% or more of the shares and that’s the way a person from another country can be involved in a business in Thailand. It really is the best way for you to start generating more and more profits, and it works in a seamless way without having to worry about any problems or challenges that can or might arise.
What stakes can you have in your business
Thailand has a very interesting approach when it comes to the way you establish a business here. You can be a foreigner that starts a business, but 51% of the shareholders have to be from the country. You could go with nominee shareholders that are not interested in the company financially and they just represent a way for you to establish your business in here normally. It’s actually a system that makes a lot of sense to try out and use, and you will appreciate the resounding experience and value that you receive from something like this all the time. That being said, you need to understand that your business will be audited and you have to submit company info to the authorities.
Studying the legal aspects of having a business even if you are from another country is very important. It will give you insight into the process and eliminate any of the possible issues that can and might arise. And once you do that wisely, the payoff will be among some of the best every time. It’s certainly not ideal to have your own business, but have inly 49% ownership, however with help from nominee shareholders you get to eliminate that issue and handle it the right way.
Is it possible to be overruled even if it’s your business?
Normally you will not have to worry about anything like that. You will have to remember that once you name a nominee shareholder, those persons are on your side and they will not vote against you. That means whenever you will be able to run your business the way you want. And you can do all of that while still adhering to the normal rules of the country. That’s definitely something to consider and keep in mind, and it will help you achieve the results you expect in no time.
What is the minimum capital to create a business in Thailand?
That all depends on the type of business you want to create. For example, if you want to create a Thai majority company, it costs you 1 million Baht. However, if you aren’t married to someone in Thailand, then you will have to pay 2 million and that will give you one work permit. If you operate under the FBL that costs 3 million Baht for every work permit. As always, you will need to offer 25% of the share capital upfront, which is a very important aspect to take into consideration.
Is it possible for you to buy or own assets via your business?
Until 1997 that was not the case. But nowadays you are allowed to do that. The laws are less strict and you will be able to acquire even a piece of land if you want, although you can do that via a 30-year lease. It’s obviously not the best option, but it does tend to work really well and you will find it incredibly powerful and rewarding all the time because of that.
As for assets, you can easily own them without any concern, but as we mentioned buying properties is a bit more difficult. Still, you will be able to do that but it’s important to have a legal representative that will help you solve these issues naturally and with the utmost success. You do want to avoid any issues or rush that might arise from a situation like this, so make sure that you understand the process and tackle it the right way and you will be more than fine in this situation.
Ways to have 100% ownership in your Thailand-based business
There are some methods you can use to access that 100% ownership. A good one is to acquire a FBL, which is a work permit for business, you can access it only for certain professions but it’s still a really nice option and one that you do want to pursue.
Then there’s also the option to go with a board of investment promotion. This is a Thai government division and it will take a little bit of time to show that you receive that 100% ownership. Not every applicant will get that, but it’s still worth it if you are working on your business and want to pursue the best possible results if you do it right.
If you are an US citizen, there’s an agreement between the US and Thai governments that allows people from the US to have majority shareholding. That’s great, but then again it’s only limited to the US citizens so if you are not from there it will be useless. Still, it can be an option to start your business here, and you should keep it in mind.
Is there any visa required to operate your business?
If you are from another country then you will need a Non Immigrant B or business visa. Apply for this visa at the Thai embassy, remember that it will cost you 2000 Baht for a single entry or 5000 for a full year multi-entry visa. It’s great that there are no limitations, and it does make sense to have a business visa if you are indeed serious about having a business in the country as you can imagine.
A lot of people also ask whether it’s ok to employ other people from your country in Thailand. Yes you can do that, but as we mentioned earlier, the capital you have will limit you to a certain number of work permits. Those work permits are limited based on the company income. However the government allows you to acquire another work permit for every 5 million Baht you pay in tax. Still, the number of work permits you can have is rather limited.
Can you get loans as a foreigner?
When you come to Thailand and want to open up your business, you are required by the bank to open an account and they will do that for you, as long as you have a permit. But you will just receive an ATM card, they are not offering you a cheque book, yet you can withdraw amounts over the counter which is still a good option. However banks in Thailand will not grant you a loan as a foreigner most of the time. You can create your business and maybe that way you can get a loan, but personal loans for foreigners are a risk for them.
As you can see, the process of starting your own business in Thailand can be rather tedious and challenging. But it also comes with its fair share of benefits. The primary benefit is that you get to have lots of growth and value for your company and you can expand to the Asian market. And while there are limitations, the process itself is fair and if you hire a good lawyer to help you, company registration in Thailand will be done in no time!