How to Set Up a Business in Thailand
Starting a business in Thailand is a good and sustainable way to make a life in the Land of Smiles. With its great weather, charming people, fascinating culture, amazing food and affordable cost of living, there is no shortage of people who have visited Thailand and decided they want to turn it from a holiday destination into a place to live. While you can find work with an established business, those with an entrepreneurial spirit will want to blaze their own trail.
Fortunately, when it comes to the administrative side of the process, the trail has already been blazed, cleared, paved and heavily trodden. There is now a well-established process for starting a business in Thailand as a foreign national, which we will be summarising in this article. Grab a notebook and a coffee, get your brain in business gear and let’s get started.
How hard is it to set up a business in Thailand?
The first and most pressing question on your mind right now is, naturally enough: ‘is this going to be a huge headache?’ The short answer is: no - at least, not a huge one. Naturally, starting your own business in Thailand comes with a fair amount of hoops to jump through, paperwork to fill in and red tape to endure. However, the same can be said of starting your business in any country anywhere in the world. The reality is that, according to the World Bank’s ‘Doing Business’ report, Thailand is one of the easier places to start a business.
With choosing this country, you naturally add a bit of a language barrier, which will make the process a little harder than it would be in your native country. As many of the forms you need to complete and submit will need to be filled in using the local language, you will need to secure the services of a trustworthy translator.
Additionally, unless you want to pour a lot of time into studying Thai law, it’s advisable to find a good local legal advisor and an accountant. Again, these would be advisable in any country in the world, so they do not add any considerable complication to the process. You can ask around other business owners and check for online reviews in order to find reliable translators, legal advisors and accountants, just as you would in your country of origin.
What kind of business can I start in Thailand?
The exact process of registering a business in Thailand varies according to the size and type of business you are planning on starting, just as it does in most other countries. The options available broadly fall under three categories, though there are sub-categories that will add changes to the process. The main categories are:
• Solo trader
• Partnership
• Company
Can I start a solo trader business in Thailand?
If you are a solopreneur and want to start a one-person business in Thailand, you will find rather more roadblocks in your efforts to do so than you would for a larger company. It isn’t impossible to start a solo trader business in Thailand, but it is significantly more challenging.
The reason is that Thai law (and particularly the Foreign Business Act of 1999) contains a number of provisions to protect the local workforce from being forced out of the job market by foreigners. For this reason, it is virtually impossible for a foreign national to get a work permit for a job that a Thai is capable of doing, especially those roles involving manual labour and construction. Since you need a work permit in order to register a solo proprietorship business, you will be severely restricted in what businesses you can start.
It’s worth noting that US citizens will find a lot of these obstructions removed, thanks to the US-Thailand Treaty of Amity and Economic Relations of 1966. This allows US nationals to start businesses in most industries, including those prohibited to other nationalities. For everyone else, a partnership is a much simpler option.
What kind of business partnership can I start in Thailand?
One of the easiest ways to simplify and speed up the whole process of registering a business in Thailand is to have it half-owned by one or several Thai nationals. This makes it effectively a local business with a foreign investor, rather than a foreign business in Thailand. You will find a business of just two people (one Thai and one foreigner) significantly easier to start than a solo trader business.
Partnerships in Thailand can take various forms, with different rules and requirements for each. The main forms are:
• Unregistered ordinary partnership
• Registered ordinary partnership
• Thai limited liability partnership (LLP)
To briefly summarise these, an unregistered ordinary partnership is not required to register with the Commercial Registrar, the business's income is taxed directly from the individual owners and they are also individually liable for their share of any debts. A registered ordinary partnership, by contrast, is registered with the Commercial Registrar, the business as an entity is taxed (making it therefore necessary to submit annual financial statements and pay corporate income tax) and is also liable for any debts.
A Thai LLP is a partnership that contains two types of partner: general partners and limited partners. The former are those that do the running of the business and are fully liable for the financial obligations while the latter are not allowed to manage the business and are only liable for debts up to the value of the capital they initially contributed. Like registered ordinary partnerships, LLPs have to be properly registered and are taxed as a corporate entity.
What kind of company can I start in Thailand?
You can start either a private or public company in Thailand, though private limited companies are the simplest and most common. However, this approach does come with a considerable amount of paperwork and the requirement or a lot more people to be involved. For starters, you will require at least three shareholders, the majority of whom must be Thai nationals, with various rules around the value and power associated with the shares. Additionally, limited companies must meet strict financial reporting requirements, though small businesses are exempt from some of them.
How do I register a company in Thailand?
As we said above, the path to getting a company registered in Thailand is one that has been well-trodden, so you will not need to fight too hard against the bureaucracy. However, that does not make it a quick process. Depending on exactly what type and size of business you are registering, it can be done in as little as a week or as long as a month - and that's assuming that your translator is reliable. It's probably best to avoid doing this at the start of a month that includes a lot of national holidays to increase the chances of getting everything done in time.
The first step is to reserve a company name with the Department of Business Development. This reservation will be valid for 30 days, so you'll have to do this immediately before you submit the rest of your paperwork. That paperwork includes:
• Articles of Association
• Memorandum of Association
• Application form and list of shareholders
• New director form signed by each director
• Declaration of Business Operation form
• Company name reservation
• Details of the offices and branches of your business
In order to make many of these forms properly validated, you will require an official company chop (stamp). You will need to buy one from a specialist shop, with prices ranging from 400 to 800 baht, depending on the type you get.
You will also need to have deposited at least 25 per cent of the initial investment capital into a corporate bank account, which of course means you will have needed to have opened one. You can check out our article on banking for business for tips on which bank and what kind of account is best for your needs.
Once you have filed the Memorandum of Association, you will need to have your first official meeting. During this meeting, you must adopt the relevant bylaws, appoint your auditors and shareholders and transfer management to the directors, among other errata.
Within three months of this meeting, you must submit your application for company registration (including the rest of the documents listed above). There is a registration fee of 5,000 baht per 100,000 baht of registered capital, up to a maximum of 250,000 baht. The fee is higher for public companies.
Finally, you will need to register with the Revenue Department. Upon application, they will issue the company with a tax ID, making the corporate entity liable for taxation as opposed to the individual directors. If your company's annual turnover is above 1.2 million baht, you will also need a VAT certificate.
What legal obligations are business owners in Thailand expected to follow if they have employees?
Thailand's legal system is slanted quite heavily in favour of employees, so there are a lot of regulations to follow regarding virtually every aspect of employment. If you are planning to have employees instead of founding nothing larger than a partnership, you will need to register your company with the Ministry of Labour. If you have more than 10 employees, you will need to have your rules and regulations checked by the labour office and displayed in your office.
If you are planning to employ so many people, you will be limited in exactly who you can employ. The aforementioned regulations to protect Thai employees from being replaced by foreign workers requires that businesses employ four Thais for every foreigner, though this number varies slightly depending on exactly what industry your business is in. A further way to adjust the ratio of Thai to foreign employees you must maintain is to register your business with the Thai Board of Investors.
Thai Board of Investors
The Thailand Board of Investors (BOI) is an invaluable asset for foreigners hoping to do business in Thailand. While registering your business with them comes at an additional financial cost and adds more paperwork requirements, the benefits of doing so are excellent.
Most significant among them, aside from the ability to have more foreign employees, is that foreigners may also own more than 49 per cent of the shares in your company. This means that you can properly own and control your company instead of it being mostly Thai-owned.
Other benefits of BOI registration include support with filing documentation with Thai government authorities, a better choice of visas and work permits that you can legally hold and support with finding investors and suppliers.
Where can I get support with starting and running a business in Thailand?
Aside from the Board of Investors, you will find plenty of formal and informal networks to support you in establishing and growing a business in Thailand. Formal ones include the various Chambers of Commerce associated with each national embassy in Bangkok. These include:
• India-Thai Chamber of Commerce
• British Chamber of Commerce Thailand (BCCT)
• Australian-Thai Chamber of Commerce (AustCham Thailand)
• American Chamber of Commerce in Thailand (AMCHAM)
Each holds regular meetings for the benefit of their citizens, helping to put them in touch with other key figures in a variety of industries. They can also offer advice and support.
The Institute for Small and Medium Enterprise Development may also be able to provide some assistance but, with no English version of their website, it's doubtful that they will be able to provide significant support for foreign business owners.
On the informal side, you can find groups of business owners keen to make connections, share ideas and generally support each other on basically every social platform. For networking, platforms like Meetup, Eventful and Eventbrite can be a big help.
If you do a search for your particular industry and "business support" on your search engine of choice, you will likely find one or two niche organisations offering more specific support and advice.
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