From 2014–2016, I ran a business in Thailand. I first went to Thailand with my spouse for our honeymoon. Three years later, we found ourselves living there as a family with a toddler, running a relatively successful beach restaurant in Southern Thailand. We recently sold it for a decent profit as we got a lucrative offer we thought would benefit us.
Contrary to public opinion, Thailand is generally a good environment to do business in. A high influx of foreign visitors per year, spending their foreign currency and vacation time, has created quite the party culture. Couple that with the lower cost of living and beautiful environment it has to offer, and you have a place that is a dream for staying long-term.
- 1 Incorporating a Business
- 2 Procedure of Business Incorporation in Thailand
- 3 Planning
- 4 Setting Up
- 5 Operating
- 6 Selling Your Business
- 7 Final Thoughts
- 8 What to Read Next
When choosing any business in Thailand, make sure you commit yourself. Planning is the key to seeing it off the ground. But before making the dive into business in Thailand, do your homework and make sure you’re ready to commit a few years to living and growing your business in the Land of Smiles.
Nowadays, business registration is growing because Thailand is an attractive country for foreigners who wish to start their business and bring their investments into the country. To register a business in Thailand, it’s important to know the classification of business in Thailand, legal procedures, specific details about an investment of the foreigners, and authority responsible for business registration in Thailand.
We chose to register our business as a Limited Company. But you can register your business in one of the ways below.
But if you aren’t sure what to do next, please feel free to get in touch with us. We can assist you with this based on our experience running a company in Thailand.
Incorporating a Business
The following list of incorporating methods came courtesy of a lawyer, Pongkarn Khunpasee. But since there are many ways to register and incorporate a business, and since each process requires a lot of time and paperwork, I’d recommend hiring a professional to help you out.
The sole proprietorship is a registered business owned by one person, who is also the operator of the business. Even though foreigners can do business as a Sole Proprietorship, it may be hard to incorporate if the business doesn’t meet the requirements.
According to Thai Civil and Commercial Code, there are three types of partnerships in Thailand: Unregistered Ordinary Partnership, Registered Ordinary Partnership, and Limited Partnership.
Unregistered Ordinary Partnership
With this partnership, all partners will be jointly liable for all obligations of the partnership. Also, the Unregistered Ordinary Partnership isn’t considered a legal entity. The partners are still held accountable for any mishaps.
Registered Ordinary Partnership
This kind of partnership requires registration with the authorities. With Registered Ordinary Partnerships, the business has legal rights, duties, and liabilities separate from all partners.
This kind of partnership has two types of partners: Unlimited Liability Partners and Limited Liability Partners. The Limited Liability Partners will be liable only to the amount of capital that the said partners contributed to the partnership. The Unlimited Liability Partners will be liable no matter how much capital the partners contributed to the partnership.
Even though registering partnerships is easier than registering other business structures, the partnerships, whether Unregistered, Registered, or Limited Ordinary Partnerships, can’t give work permits to foreigners. The also can’t open corporate bank accounts under the company’s name.
The Limited Company is the most popular registration method for foreigners who wish to do a business in Thailand. With this business structure, the company’s shareholders will be limited to the amount, if any, of unpaid shares respectively held by them. Also, the directors of the company can apply for work permits.
According to the Thai law, the Limited Company is registered by dividing capital funds into shares. In order to register the Limited Company, the law requires at least three promoters, shareholders which can be the same persons as the promoters. They include at least one director, an auditor, and a register to create the Memorandum of Association.
Every promoter shall subscribe to at least one share, and the first payment on the shares must not be less than twenty-five percent of their nominal amount. Every promoter shall arrange for accounting specified in the Civil and Commercial Code and the Revenue Code of Thailand, and submit balance sheet to the authority once a year.
Even if the Limited Company seems to be suitable for foreigners to register a business in Thailand, Thai law limits foreign ownership to 49% of all shares. Therefore, the maximum share structure for foreigner is 51% of Thai shareholders and 49% of foreign shareholders with, if any, shareholders’ structure strategy for foreigner.
Board of Investment (BOI)
For those who want to own 100% of their business, the Board of Investment is the only choice in 2017. And companies promoted by BOI get more benefits like corporate income tax exemption and visa and work permit support.
Not all companies can be promoted by the BOI. The BOI have their own categories to specify which types of business they promote. And each category has different requirements. You can see the full list on this link.
Applying for the BOI promotion is both complicated and time-consuming. After you apply, you need to go to the BOI several times to present your business. The whole process takes about one to two months.
After the BOI promotes your business, you’re also required to report financial status regularly so the BOI continues to promote your business. Although you can do everything yourself, I would recommend to get in touch with a corporate lawyer or an accounting firm if you choose this route.
Procedure of Business Incorporation in Thailand
According to Pongkarn Khunpasee, every business structure mentioned above is established and registered with the Department of Business Development, Ministry of Commerce in Thailand. The applicant shall prepare all documents required by the DBD and meet all specified qualifications.
The Department of Business Development has offices for applicants in Bangkok or upcountry, making it convenient for foreigners looking to register a business outside of the city. The applicant can submit the documents for business registration to any office, no matter where the business is. However, after registration, any modification and/or further registration of the business shall be done at the Department of Business Development’s office in the area of business’s location.
For Sole Proprietorship and Partnerships, the registration’s procedures and lists of documents are simple. But for the Limited Company, an attractive and appealing business structure among foreigners, the procedure and documents needed for registration of a Limited Company has more steps.
In order to incorporate and register the Limited Company, the applicant shall reserve the company name according to the guidelines of the Department of Business Development. Afterwards, the applicant shall arrange a statutory meeting for company incorporation, then prepare all documents for submitting and registering a Memorandum of Association and Company Registration. This must be done on the same day, within the specified period under the regulation of the Department of Business Development.
A lot goes into starting a business in Thailand. And planning should be the first step. Below is a description of how we researched our company, found a Thai partner, and define our business goals.
Researching and Finding Your Niche
Most people’s business fail in Thailand because they choose to take shortcuts or “go with the flow” when opening their business. The first and arguably most important step in starting a business in Thailand is doing your market research and finding your niche.
When it came to market research, we spent a year learning Thai, so we had time to check out who we’d compete with and immerse ourselves in the community. We saw the lack of live Western music and rose to fill that need. We also realized the local restaurant scene lacked anything like the poetry house feel and theme we aimed for. We also talked to other business owners and got their opinions on the local market.
If your marketing plan involve an online channel. You can talk to a local digital marketing agency such as Enabler Space and let them executed strategies that increase your business income.
Our marketing strategy was to fill the need of tourists looking for live Western music. We planned to give a free shot to anyone with their first drink order and would give away free shots throughout the night. We also wanted our theme to be a little more chic and upscale. Remember that there are many commercial risks a company could face. Make sure to do your research well before starting a business.
Our niche was organic, as both my husband and I are musicians and could do live shows to draw in customers. We knew this would set us apart. We also had a few friends who owned businesses in the area, and we relied on them for help. They also were the locals who supported our restaurant. We became a local watering hole, which got us through the slower periods when less tourists were visiting.
We lived in Ao Nang, a small beach town with a decent tourist culture in the Southern province of Krabi. When we first moved to Krabi in 2013, the town was small but was growing fast. We identified that and capitalized on that growth.
Finding A Thai Partner
If you’re considering staying in Thailand long-term and starting a business, find a genuine Thai partner. Someone who knows the landscape, speaks the language and can handle administrative and staffing procedures, will be a huge asset. Thais can handle the local authorities and staff much better than you can, and they will likely know people and that helps lower costs.
This is because, in Thailand, local services are generally offered at a higher rate to foreigners. Thais will quotes locals a cheaper price for cleaning services, a taxi services, or general contracting services. We found that when we got our Thai partner to get us quotes, they would be as much as 50–75% cheaper.
If you don’t know anyone but want a local people to help you on these issues. Please contact us. We can put you in touch with an assistant on this matter.
This is key, even though it is possible to own and run on your own business. Having a Thai national as a partner makes things much easier. Some people opt to have a “paper partner,” someone who technically owns 51% but has no say or genuine ownership of the company.
Though this practice is common with farang, or foreign, owned businesses, it could pose problems down the road. People use other tricks to get past this rule.
I recommend that you speak to a lawyer or an accountant, as they stay up to date with laws. In Thailand, the laws change all the time, and only someone who follows those changes can tell you what’s best.
We made friends with a local Thai cook, who later became our partner. In our case, our Thai partner owned 25% of the company and we used another Thai friend who owed 26%, however, agreed to not help run the business and who would sell those shares to us if asked. In Thailand, a foreigner can only own 49% of a company, but having a trusted friend own shares is a common practice by those looking to keep control of their business.
Defining Clear Goals
The next step is to set clear goals between all the people involved. We made clear goals, defined the salaries we needed to make, and thought about a budget for staff and rent.
In our case, our total budget for staff, rent, and other costs was 188,000 baht, or $5500, a month. Below is a list of our costs. They aren’t exact but will give you an idea of what to expect.
|7 Staff Salaries||80,000 baht|
|3 Partner Salaries||75,000 baht|
We made sure we had enough to cover these costs for the first eight months. We figured if we couldn’t make it work in that time, we would close down.
Setting up a business is probably the most challenging part of starting a business. This is where all the legal hassles come into play. And if you encounter any hiccups, it could throw you for a loop and deflate the excitement that comes with starting your own company. I’ve described how my husband and I set up our business, but I’ve also noted the contact details of a lawyer who could help you.
We include a list of all service providers that Karsten himself has been using for his own company in Bangkok. We’ve created it as a thank you to our Patreon supporters. To access this content, head over to our Patreon and support our mission of creating content that helps expats live, work, retire, or start a business in Thailand.
Registering a company in Thailand is filled with complicated steps and processes. But here’s a summary of what you need to do in your case:
First, book your company’s name. This will ensure that your company’s name isn’t the same as other companies in Thailand. Then you can prepare your company’s registration documents, including such things as share holders list, meeting notes, and proof of payment of share capital.
Then you’ll have to register your company at the Department of Business Development. The Department of Business Development lists a full registration procedure on their website. It’s possible to do it by yourself. But this would involve a lot of time preparing documents. We had a professional help us with our registration.
Once the company is registered, you need to register for a vat and get the proper license for your line of business.
In Thailand, you will need three main licenses to open a restaurant, below is a list of the licenses required at the time and the approximate time it took to get them.
*VAT licenses are only for a company with over 1.8 million baht annual revenue.
These are the main licenses for our business, but again, double check with your lawyer to avoid fines or other problems down the line. As we used an accounting firm, they made sure us we had the correct paperwork and applied for us. We had to provide them with photocopies of our bank account and drew a map of our area.
Also, you’ll wait for these licenses, so be patient. The wait times above are for Krabi and from a few years ago. They differ by province and region, so do your local homework, as Thai bureaucracy changes these processing times. You’ll pay about 600–2000 baht for each of these licenses. Liquor and music license need to be renewed yearly.
I think the most important one that most people forget about is the music license. You can get a fine by the so-called “music police” if you don’t have one. This license is mainly to make sure the local and international artists get paid their royalties for the music you play in your restaurant. If you are playing anyone else’s music then you will need one. In our case, we didn’t need one, as we played original music that we owned, but got one anyway. It’s worth it to avoid hassles or extortion by the music police.
Finding Office Space
You basically have two choices when it comes to office spaces: serviced offices and traditional offices.
Serviced offices are a good choice if you don’t want to deal with all the small details that come with setting up an office: buying furniture, setting up phone and internet accounts, supplying your employees with drinks and coffee, finding maids and cleaning equipment. The list goes on.
With a serviced office you can sign a contract, bring your laptop, and start doing business the same day.
If you want to go this route, Regus is who we recommend. They have office spaces available throughout Bangkok.
Traditional offices, on the other hand, are more complicated and expensive to set up. You need to invest in furniture, set up phone and internet accounts, and you might even need to hire an administrator to keep up with the inner workings of the office.
Using traditional offices does make sense in some cases, like if your office is attached to your business or your team is getting big. For us, we use a traditional office because we run a restaurant and have room for an attached office.
Getting Visas and Permits
Getting work permits and visas for you and your employees is challenging. So I recommend hiring a lawyer who specializes in this field. Below is the process we followed to get our visas and work permits.
Next, we had to apply for business visas and work permits. The same accounting firm also handled the paperwork for a small fee of 1,000 baht per person. We left the country, got Non-immigrant B Visas in Malaysia, and came back to Thailand to get our work permits.
At the Thai Consulate, you’ll need to apply for a Non-immigrant B Visa. They will ask for copies of your business registration, a letter from the local labor ministry, and a letter from the Thai partners of your business, offering you the position you’ll be working. Here’s a list of the documents you’ll need.
In Penang, Malaysia, where we applied, we used an agent who specialized in getting visas. The fee was about $20 and worth every penny, as they double check your paperwork and apply on your behalf. These visa services are in Malaysia. Thailand has a few that will arrange your whole trip. If you’re interested in this service, you can find them anywhere you see the words “visa run” advertised.
You should note that every foreigner who gets a work permit needs to have four Thai workers per foreigner working in the company, plus two million baht in capital based on Thai regulations, unless you’re promoted by the BOI. In our case, we needed two work permits, hence the four million.
Also, having a Non-immigrant B Visa doesn’t entitle you to work. The only way you can legally work is to get a work permit.
You can work once you have applied for a work permit, while waiting for the approval on the final permits. The entire process took us forty days, from applying to receiving our work permits. But if you have all documents ready, the process can only take a few days.
Opening a Business Bank Account
Once you’ve registered your business and received your business registration, you can get a business account. In our case, we used Krungsri Bank’s Yellow Sign for our business account. We chose them because they have more ATM’s and branches in Southern Thailand than their competitors.
You’ll also need someone to introduce or refer you, as banks are hesitant to open accounts to foreigners. In our case, the accounting firm that registered our business also introduced us to the bank manager who handled this process for us.
In terms of getting a business credit card, most banks will only give you credit once you have been operating for a few years. I have heard of people getting business credit cards earlier, but usually they’re unsecured credit cards, meaning the full amount of credit must be deposited with the bank as collateral against purchases on it.
We didn’t apply for credit as our normal bank ATM was like a pre-paid visa and we could spend up to our bank balance anyplace that accepted visa.
We had to hire staff, so first, we hired four waitresses and two bartenders along with an assistant cook. We hired the majority of our staff through referrals from locals. We also advertised by putting a sign up saying “Staff Wanted,” and a few posts on the local Facebook group, Krabi Locals. We filled the positions in less than a week.Another recruiting technique, used by friends who owned businesses, was to put ads in the local paper. We didn’t use this method because we staffed our restaurant through word of mouth.
You can post job advertisements on job generic websites such as Jobdb, Jobthai, and Jobtopgun. It usually costs a few thousand baht per month for a single ad. LinkedIn and Craigslist work well for recruiting foreign workers or employees at managerial levels.
Aside from salary we also offered our staff meals on the house. We let staff drink with patrons and within reason, for free. We did give all our staff a 2,000 baht bonus every Songkran , or Thai New Year. But these extras are up to the employer and are not necessary by Thai law. Other employers gave staff a place to sleep and helped with travel.
We learned quickly that staffing in Thailand was an ongoing struggle for our business type. You will find that some Thai’s leave and move on with little to no warning. Some of the staff we hired were also seasonal, meaning they would leave during low season and sometimes wouldn’t return. For Karsten, he manages to build a team of rock star Thai employees through his cross-cultural management system.
When you have staff you like, pay them fairly so they don’t leave or get picked up by better-paying businesses. What we did find was that once we paid a fair wage, the staff would recommend us to other potential staff.
Another major problem we found when staffing is that some employees would leave as soon as they found a boyfriend. Some people are not in your place to work, but rather to find Mr. Right.
You should ask the staff that stays for a while to help put the word out to fill positions.
Next, we got our kitchen equipment, signs, painted the restaurant, and got ready to open. When it comes to your initial set-up, plan and budget everything. Know exactly what equipment you need in the kitchen and what furniture you need for your customers and theme. A rough budget of our equipment and set-up costs follow.
|Kitchen Equipment||130,000 baht|
|Kitchen Supplies||70,000 baht|
|Paint Supplies||10,000 baht|
|Pool Table||50,000 baht|
|Lighting and Fixtures||35,000 baht|
|Sound System||40,000 baht|
We got our supplies from Makro, a wholesale cash and carry where you can stock up on restaurant supplies. They also have low priced industrial restaurant equipment. If you don’t see a specific piece of equipment ask to see their catalog. They have more than what’s in their showrooms.
Another great tip for finding equipment is to look online. Thailand’s towns have extensive Facebook pages for expats. These pages are usually full of quality, second-hand equipment and furniture. We ended up buying our kitchen and sound equipment from a local expats group. The one we found to be the best in Krabi was Krabi/Aonang Locals.
Developing Your System
In the beginning, we had a huge learning curve. We didn’t plan for the challenges that came up. For example, extortion attempts by the local authorities and cultural differences between western managers and our Thai staff were just a few of the common occurrences.
A few examples of this is the seemingly lower initiative that Thai staff showed compared to Western counterparts. This is due to Thai’s having a much more laid back social and working culture than Western countries.
Another example is the way you speak to elders, regardless of whether you’re higher in the corporate structure than them or not. It’s common curteousy to respect your elders in Thailand, and when speaking to them, use the word khun, like sir or madam, when addressing them.
We worked through our cultural differences and made a operating system, whether that meant for the way we processed orders or the way we set up and cleaned it. We developed a system that worked for us, our staff and our customers. We found that, after the initial period, we fell into a groove and ran our business seamlessly.
Another major operating responsibility is filling taxes and renewing licenses. You should hire an accountant. Usually, the same person who registered your business can do this for you.
If that isn’t a possibility, ask local business owners for a good referral. Not paying your taxes can result in getting heavy fined, work permit cancellation, or worse, imprisonment, asset seizure and even shut down.
Corporate Income Tax
The corporate tax rate in Thailand is 10% in 2017 for profits more than 300,000 baht per year, due to regulations from the Revenue Department. Normally it’s between 15% and 20%.
You need to hand in corporate income tax twice a year.
VAT and Withholding Tax
VAT is calculated on sales of goods and services. In our case alcohol was not calculated the same way, as it’s calculated on a per liter basis. However, the VAT rate is 7%. VAT is only calculated on the difference between the price you buy the goods for and the price you sell the goods for.
Some types of company service income are subject to withholding tax, or WHT. The company has to give withholding tax certificates for all transactions that fall under this category. You must pay WHT to the Revenue Department every month. WHT rate is based on income types as seen from the Revenue Department website on Subject 6.
You can report WHT by paper before the seventh day of each month or by e-filing before the fifteenth day of each month. Again, our accountant handled these filings on our behalf.
Companies have to pay social security each month on behalf of employees. A 5% social security for health insurance is levied up to 750 baht per month per employee. As an employer, you need to take out Social Security on behalf of employees and pay an extra equal amount to the Social Security office.
For example, if you pay your worker a 15,000 baht salary, the total amount paid to Social Security is 1,500 baht, or 750 baht from the employee and 750 baht from the company.
You need to pay Social Security before the fifteenth of every month at either the Social Security office, Krung Thai Bank, or Bank of Ayudthaya.
It’s necessary to let the Social Security office know within thirty days after you hire a new employee, and before the fifteenth of the next month every time an employee leaves the company.
One thing to note is that medical coverage for social security isn’t enough in Thailand. To maintain the health of your employee in a good level, you may want to consider buying a group health insurance.
It’s totally optional but can attract skillful employees to your business. And the expenses you pay for insuring your employees can be used as tax deductions.If you’re interested in buying group insurance talk to Mister Prakan, a Thailand insurance broker that we feel comfortable recommending.
Personal Income Tax
Although it’s not a must, companies should pay personal taxes for employees. The tax rate in Thailand is progressive, meaning that it changes and your personal tax liability increases as you make more as seen from our moving to Thailand article on personal tax section.
For employees that did not meet the minimum taxable income of Thai’s in Thailand, which is under 150,000 baht, we only had to pay the social security on their behalf.
Minimum Wage for Foreign Employees
Thailand has four different classes of minimum wage when it comes to foreign workers. Here’s a breakdown of those classes based on Nationality.
|Minimim Monthly Wage||Worker’s Country of Origin|
|50,000 baht||Western European Countries, Australia, Canada, Japan, and the USA|
|45,000 baht||Taiwan, Hong Kong, South Korea, and Singapore|
|35,000 baht||Eastern European Countries, Asian Countries, Central American Countries, Mexico, South American Countries, Turkey, Russia and South Africa|
|25,000 baht||African Countries, Cambodia, Myanmar, Vietnam and Laos|
Note that the amount for minimum wage tends to change overtime. You should recheck again with Ministry of Labor.
We hired an accounting firm to handle everything related to accounting, including monthly, mid-year, and annual tax filing, paying Social Security fund, preparing and auditing financial statements, dealing with the Revenue Department, and providing tax advice when needed. What we needed to do was to only send all receipts and invoices to them every month. They changed us a monthly fee of 5000 baht for this.
I’ve heard of accounting firms charging lower than this. But they may only offer tax filling without handling. They do not deal with Social Security or handle unexpected problems with the Revenue Department. So, I didn’t use them. You need to be careful when choosing an accountant to prevent any unexpected tax problems resulting in a penalty from paying a big amount of fines to imprisonment.
We found a firm that was a one-stop-shop for the paperwork and accounting needs of our business. We found them through a referral from a neighbor, who already was a client and owned a successful boat tour company. When looking for an accounting firm, you should ask other local business owners, as they will know the best local choices.
Or you can just use the same accountant Karsten has been using for his personal life and business.
We faced a few other challenges while operating and owning our restaurant, aside from the staffing issues mentioned above. To begin with, we had a few fights in it. In most cases, they were just over-zealous patrons who had a few too many cocktails. My husband would break those fights up and arrange for the drunken customer’s ride back to their hotel.
We found that the Thai and expat locals behaved better than the party-hungry tourists. Then again, we expected this, considering Thailand is known as a party-with-no-holds-barred vacation spot.
The final challenge I’ll cover here is the never-ending changes that seem to arise when it came to visa’s, permits, and regulations. Since the military coup a few years ago, we have seen endless changes to the laws and regulations. It becomes hard to keep up with them, as now they seem to change every year.
But if you are still not sure whether or not you should build a company in Thailand, you can consider using a service from Iglu. They might be able to provide you with a visa and a work permit for your team. However, this option is available for companies in the industry of ecommerce and IT only.
Selling Your Business
We recently sold our restaurant for a rather generous profit. Without giving out an exact number, let’s we made about five times our initial investment. We did this because Ao Nang saw some huge growth during our time, and our restaurant became the center of town as it grew around us.
When selling the business, we transferred the lease and sold the equipment but not the company. We wanted to keep our Thai business for visa reasons and were not sure if we would open a new restaurant in the near future.
We found our three years operating a business in Thailand an amazing experience that definitely changed us for the better. The most important advice I could give anyone is: ask questions. Be willing to adapt and, above all else, find good Thai people to work with. Hire a professional to set up your business and spend time marketing it. Find your niche and fully leverage it. And finally, work hard and don’t get caught in the vacation mentality that some people fall into when starting a business in Thailand.