We registered our company in Thailand in 2006 and have been running our business ever since. It’s undeniable that our accounting person is a key part in our operation, especially when it comes to dealing with accounting and taxation in Thailand, which works differently from Western counties.
If you are looking to start your own company in Thailand, one of the first people you should talk to is an accountant. They will take care of all the legal matters from registering your company, handling the day-to-day accounting operations, and shutting down your company–if or when that day comes.
In this article, you’ll find out what you’ll get when using an accounting service, how much it costs each month, and how to choose the right firm.
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- 1 Why Do You Need It?
- 2 What’s Included in Accounting Services?
- 3 Rates
- 4 Find an Accounting Firm
- 5 Your Part When Using Accounting Services
- 6 Final Thoughts
- 7 What to Read Next
Why Do You Need It?
Using an accounting service is important when you run a business in Thailand. If you don’t use one, your company can still run. But this option only works if:
- you have an accounting degree in Thailand.
- you know Thai taxation rules and regulations and other corporate legalities.
- you are willing to handle accounting operation matters yourself, from making financial statements to tax filing and preparing tax documents for incorporation purposes.
- you can find an auditing company who’s willing to audit your company’s financial statements.
Not everyone can do the accounting for your company. Based on Thai regulations, they need to have a degree in accounting from Thailand and they need to be listed as an accountant at the Department of Business Development.
Every year you also need to find an auditor to review your financial statements. And the auditor will not do it if the statements haven’t been prepared by a qualified accountant.
What’s Included in Accounting Services?
There are many kinds of services provided by accounting firms. They don’t just help your company stay compliant with corporate issues in Thailand, but they can help make the many legal procedures easier, both in the company and in your personal life. Let’s take a look.
In addition to a corporate lawyer, you can get in touch with an accounting firm when you want to register a company in Thailand. Most accounting firms perform company registration services. You only need to give them the necessary information, and they will do all the paperwork for you.
In addition, accounting firms can give certain general advice on corporate laws. For more complicated issues, it’s still recommended to get in touch with a lawyer.
You can use an accounting firm for company registration and hire another firm to handle your accounting operation. However, it’s usually easier to use the same firm for the whole process.
Tax filing is the main task of accountants. Based on Thai revenue codes, all companies in Thailand need to file taxes periodically at specific times depending on tax types. For example, PP 30 and PP 36 need to be filed every month, whereas you only need to file PND 50 once in the middle of the year and PND 51 at the beginning of every year.
Taxes are complicated. You need to calculate them correctly. You need to file at a specific time. Depending on your business, you may need to file additional tax types. Failing to do so easily results in a heavy fine or even imprisonment.
To file taxes, you can ask an accounting firm to handle the process. You only need to give them invoices and receipts, and they will do the rest. Or you’ll need to prepare basic accounting reports and let the accounting firm file taxes on your behalf.
Corporate Tax Advisor
Taxes in Thailand are complicated like the rest of the world. They have their own rules and regulations that you may have never heard of before.
For example, VAT registered companies in Thailand are required to issue a Withholding Tax, or WHT, Certificate when paying for services inside the country. And WHT needs to be submitted and paid to the Revenue Department every month.
To make the issue even more complicated, the withholding tax rate is different based of different kinds of services. It can be 2%. Sometimes it’s 3%. And sometimes it’s 5%.
This doesn’t include various kinds of PND and PP tax forms, invoicing, payroll, and other accounting operations you’ll need to deal with depending on the type and service of your business.
Failing to comply with these rules and regulations results in many forms of penalties, from paying large fines to asset seizure and imprisonment. And claiming that you aren’t aware of these rules and regulations won’t help.
Accounting firms do not only give you advice on how to pay taxes correctly but also how to legally decrease taxes or even ask for a tax refund from the Revenue Department. The service also includes shows you how to plan for corporate tax without having to pay more than what’s necessary.
They can also help you to avoid overpaying taxes. Of course, you can get it back later. But it take years to do so.
In addition, from time to time the Revenue Department might want to talk to you and ask certain questions. Sometimes they may come and inspect your office. This is included in the accounting service’s responsibility. They can help you in this situation and prevent you from answering anything that might result in unexpected problems.
All of your company’s spending and income need to have financial proof. You cannot just simply pay for or receive money in cash without having any evidence. On the other hand, you need to be able to clearly show the Revenue Department where you got that money from and how you spent it.
And it needs to be reasonable. You cannot just transfer company funds to other people.
With this, everything related to your income and expenses need to have accounting transactions. And there are many ways to do this and each of them have specific details that are required by the Revenue Department.
Depending on your agreement with an accounting service, you may still need to issue these accounting transactions yourself. But the accounting service can give you advice, show you examples, and confirm that your transactions are correct.
Running a company involves numbers of income and expenses, preventing you from seeing how much profit your company has made so far, and how much you have left in budget for future projects. Without having a good accounting system, your hard-earn revenue can be easily leak out.
In addition, accounting firms can provide you with a monthly financial statement showing the cost of running a business and your income in detail. However, this is an optional service and might not be included in normal accounting rates. So be sure to ask up front what’s included in your accounting fees.
Payroll systems do not only refer to paying your employees every month but also about calculating and filing personal income tax, paying for Social Security, issuing payslips and tax certificates, and more. Some accounting firms are also able to pay directly to your employees after your approval.
Social Security System
All employees in Thailand need to be under the Social Security System. It comes with many benefits, including health insurance, pension, and unemployment benefits. As of 2018, all employees with a minimum salary of 15,000 baht need to pay 750 baht every month for Social Security, and the company pays the same amount to Social Security.
Every time you hire a new employee, you are required to submit their information to Social Security. And it goes the same when they leave the company.
Everything related to Social Security is also usually part of accounting services
Every year, you need to find a licensed auditor to check your financial statements before submitting them to various government organizations. If you prepare them yourself, it’s going to be extremely difficult to find an auditor. They do not want to check and audit a financial statement that wasn’t prepared by an accountant.
Usually accounting firms and auditing companies in Thailand work together. Once your accountant is done preparing your company’s yearly financial statements, they will send it to an auditing company. You don’t need to do anything on your end.
Some accounting firms also provide both accounting and auditing services at the same time. However, an auditing fee is usually not included in accounting service fees.
For certain types of businesses, you are required to make a license before you can operate legally. Common types of businesses that require additional licenses are restaurants, bars, hotels, construction companies, food, recruitment, travel agencies, importers, exporters, and those working in finance. Using an accounting service can help you obtaining it.
Visa and Work Permit
This may sound strange. But yes, accounting services can help on issuing visa and work permits. They might not know as much as immigrant lawyers, but they should be able to help you obtain business visas and work permits, both for yourself and employees.
Personal Tax Consultant
Another perk from using an accounting service is for your own personal tax consultation. They already do it for your company and know your income at certain points, so they are willing to do the same for your personal life by charging a little bit extra.
But if you have a good relationship with an accountant, they might not charge you.
Rates for accounting services are mainly based on three factors:
- the average accounting transactions per month
- the complication of your business
- what services you need
The average rate starts at 4,000 to 5,000 baht a month for a start-up company that doesn’t have many transactions or require much from an accounting service. Accounting firms can charge more based on the complication of your business, such as BOI registered companies. They require more accounting procedures than normal companies in Thailand.
Find an Accounting Firm
There are a number of accounting firms in Thailand, both big and small. With a Google search, you should see a number of them appear in the search results.
If you want to go with a safe route with international standards, Big 4 is an option. They are the four biggest accounting firms in the world, and all of them have offices in Thailand. But of course, they don’t come cheap.
If you are not sure which accounting firm you should use, please feel free to get in touch with us.
For local companies, there are certain points you should always keep in mind. Let’s take a look.
Ask Specific Questions About Your Business
The very first questions you should ask when choosing any accounting service for your company should be based on the specifics of your business. If you are planning to open a software company in Thailand, ask them specific rules and regulations you about this industry. If you are going to register a company with BOI, ask BOI related question.
This is to check that they really know the details of your business. Not all accountants know all tax rules in Thailand. You definitely wouldn’t want to find out later that the accounting firm you are using doesn’t know much about regulations for your business and unknowingly causes you problems.
You can still ask general questions like how to register a company or what to do about VAT licenses. But note that this information is common knowledge for any accounting firm in Thailand.
Negotiate What Services Are Included in the Rates
One mistake that commonly happens between a company and an accounting firm comes from the miscommunication that happens since the very first day of an agreement. A company may expect an accounting firm to issue an invoice, but the accounting company may not do it since it’s not included in their rates.
In addition to the rate per month, you should discuss whether or not the services below are included or not:
- Do they include auditing fees or not, since most of the time you need to pay for it once a year?
- Does it include a monthly financial statement or not?
- Do you need to prepare and issue invoices yourself, or does the accounting firm do it for you?
- What do you need to do to prepare documents for filing taxes? Is it only about sending invoices, statements, and receipts? Or do you need to prepare accounting files as well?
- Are there any other fees you need to pay in addition to the accounting service fees?
After discussing these questions, there should be a written mutual agreement between both parties about what’s included and what’s not with the accounting service.
Sometimes it doesn’t need to be a written contract signed by both sides. It can even be an email.
When Getting Advice That Doesn’t Seem Right, Recheck Information
When getting advice from an accounting service, do not always trust that it’s 100% correct. Mistakes and misunderstandings can happen. Following incorrect advice can result in your company facing unexpected legal issues.
There are both good and bad accounting firms. Some firms may suggest to you illegal advice under certain conditions. This includes issuing fake invoices in order to increase your company’s expenses so you can decrease your corporate income tax.
Also, many times problems happen because of language and communication issues. You may understand one thing but the accounting firm understands otherwise. And this leads to incorrect information.
Therefore, if any advice doesn’t seem to be legal, it’s important to recheck it. This can be checked on the Revenue Department’s website or by asking other accounting experts.
Your Part When Using Accounting Services
You can’t just use an accounting service and let them handle all the steps for you. There are some parts that you still need to do yourself.
Learn Basic Accounting
As a business owner, it’s important to learn how accounting in Thailand works. Although an accounting service will handle everything, you should have a basic idea on how things work, how many taxes your company needs to pay, how to handle accounting transactions, and what you should and shouldn’t do.
Learning these things will significantly prevent any accounting mistakes. It’s your business and investment. You need to make sure everything is right.
Give Details Clearly
Accounting is sensitive and complicated with many rules and regulations. To let your accountant assist you correctly and prevent any mistakes, give them clear details. You need to make sure they understand your issues. You may need to speak slower and use simpler English. Or you may need to learn some Thai.
Otherwise, you may understand one thing and your accountant may understand another thing, which can easily lead to unexpected problems.
Accounting firms are busy, especially during the end and beginning of every month and tax filing period. They might forget to issue invoices, pay social security, or even file tax in certain months. If anytime it seems they are taking too long to respond, it’s possible that they forgot.
So, from time to time you still need to follow up with them. And this is also another reason why you need to know basic accounting.
Hire an Admin
When your company grows at certain point, it’s a good idea to hire admin and let them help you on accounting, especially on basic matters such as issuing invoices, keeping accounting documents in place, and preparing accounting transactions for your accountant. In addition, an admin also helps you handle all the small details the company needs to deal with, including finding an office space, and allows you to fully focus on doing what you do best–run your business.
Although hiring an accounting service in Bangkok is an added business expense, it’s not a major one. And for the time saved and the legal repercussions avoided, it is well worth the investment.