How To Hire Thai Workers

[sarpesius]

To open a business in thailand and hire thais, it would be good to cover the following issues:

1. Do you pay weekly, bi-weekly, monthly....?

2. should you pay in cash or by another method?

3. Do you register under Treaty of Amity as american operating sole proprietor company before hiring the workers?

4. how is social tax paid-- directly to the workers or to the government?

5. are there unwritten rules operating here?

6. are there dangers of being cheated by workers, and what would be ways to anticipate these?

7. Are there other obstacles to hiring thais for a business -- for example, if you have to fire one, is their brother going to shoot you, or do you have to go to a government office and go through a lot of red tape?

As an American, I am planning to start a sole proprietorship without a thai wife, which will require me to hire 4 thais.

comments appreciated

sarpesius

[smartecosse]

couldn't you just give them coffee beans instead?

[Sunbelt Asia]

1. Do you pay weekly, bi-weekly, monthly....?

Monthly

2. should you pay in cash or by another method?

Wire transfer or by check

3. Do you register under Treaty of Amity as american operating sole proprietor company before hiring the workers?

You register first

4. how is social tax paid-- directly to the workers or to the government?

Taken out of the paycheck. You match this amy and give it to the government on the 26th of the following month.

5. are there unwritten rules operating here?

Like what? Unwritten rules are the norm upcountry.

6. are there dangers of being cheated by workers, and what would be ways to anticipate these?

In any country, you have risk by being cheated. Most business owners either have a very good staff or all hel_l has broken out. If one apple goes bad, its a cancer in the company.

7. Are there other obstacles to hiring thais for a business -- for example, if you have to fire one, is their brother going to shoot you, or do you have to go to a government office and go through a lot of red tape?

No red tape. Just have to know what you are doing. How to write the termination letter so you have mininum liability.

www.sunbeltasiagroup.com

[sarpesius]

2. should you pay in cash or by another method?

Wire transfer or by check

A wire transfer would not be needed with employees in the same city would it.

My understanding is that wire transfers are sent internationally bank-to-bank and cost about 30 USD, so we must be talking about a different type of wire transfer. Do you mean that I just instruct my bank to make a payment to the account number of the worker?

If I have to pay employees by check it means I must have a bank account.

It is possible to make it simple and pay them by cash?

sarpesius

[smartecosse]

i am getting slightly confused

you are talking about running a "pilot" project in a niche market yet you do not even know how to affect a bank transfer for a wage bill

have you ever actually run a business or employed anyone? I think the price that you buy your coffee beans at will be the least of your worries

[Martin_F]

Regarding salary payments:

The easiest way is to request that all employees open bank accounts with the bank that you are banking with and the branch is in the same provence catchment area. You can then transfer the money to each account yourself at the bank or use the banks electronic method but for 5 emplyees (inc you) it is probably not worth it.

I would seriously consider using the services of an accounting co to do all the work because there are a number of forms that need to be completed for income tax, social security, workmans compansation etc.

[captcraig]

I think this a very valid post and I for one find it very interesting. I think that in order to grow and gain knowledge on a subject, is to ask questions....Amazing concept! Sunbelt always seems to come forward with some very good advice and I for one really do appreciate it.

[sarpesius]

Regarding salary payments:

The easiest way is to request that all employees open bank accounts with the bank that you are banking with and the branch is in the same provence catchment area. You can then transfer the money to each account yourself at the bank or use the banks electronic method but for 5 emplyees (inc you) it is probably not worth it.

I would seriously consider using the services of an accounting co to do all the work because there are a number of forms that need to be completed for income tax, social security, workmans compansation etc.

Can you give me more details on hiring an accounting firm to do this?

How much would such a service cost to process the wages of 5 thai workers for a sole proprietorship?

Would the accounting firm be paid a lump sum to do this over an entire year, or would they paid with some other periodicity?

sarpesius

Edited March 7, 2007 by sarpesius

[Martin_F]

It depends on the level of service that you require.

The fees per month would probably range from THB500-THB5,000 depending on the service.

Sunbelt detail the fees exactly. See http://www.sunbeltaccounting.com/Pricelist.html.

It would depend on the service agreement and agreed terms with the accounting firm but I would suspect that it would be a monthly or qtrly fee arrangement.

Edited March 7, 2007 by Martin_F

[GuestHouse]

I think a bit of background reading might be a good idea so that when you speak to Sunbelt, or who ever you get to help you set your business up, you at least have an idea of the main issues.

I'd recommend having a look at Start Up and Stay Up inj Thailand. It's has a selection of case studdies that examine the various issues that you'll then be able to go seek detailed and specific advice on.

[sarpesius]

The fees per month would probably range from THB500-THB5,000 depending on the service.

Sunbelt detail the fees exactly. See http://www.sunbeltaccounting.com/Pricelist.html.

It would depend on the service agreement and agreed terms with the accounting firm but I would suspect that it would be a monthly or qtrly fee arrangement.

I would seriously consider using the services of an accounting co to do all the work because there are a number of forms that need to be completed for income tax, social security, workmans compansation etc.

What would you estimate the fee would be to do what you described in a previous post: 5 unskilled workers at a low wage, with income tax, social security, workman's comp. and everything else that would be minimally necessary?

500 to 5,000 baht is a huge range. Would the arrangement I envisage be closer to 500 or 5,000?

Assuming you have actually done this, you might have a good idea.

sarpesius

[Martin_F]

I used a large accounting firm as it was an MNC and they wanted a name and it was for a total accounting package requiring.

The range I gave is valid and will depend on the services the company and the additional services that are required.

Discuss with some providers and get quotes.

[Martin_F]

There is also another interesting book in Asiabooks detailing the setting up a business in Thailand. It is a blue cover can't find it on their website but it details the accouting and legal processes in english with translations of the the forms. (you can get these anyway from the Thai revenue dept site).

[Sunbelt Asia]

I think this a very valid post and I for one find it very interesting. I think that in order to grow and gain knowledge on a subject, is to ask questions....Amazing concept! Sunbelt always seems to come forward with some very good advice and I for one really do appreciate it.

Thank you for the kind words. Much appreciated.

What would you estimate the fee would be to do what you described in a previous post: 5 unskilled workers at a low wage, with income tax, social security, workman's comp. and everything else that would be minimally necessary?

500 to 5,000 baht is a huge range. Would the arrangement I envisage be closer to 500 or 5,000?

Our professional fee to file with the Thai Government the withholding tax( PND #1, PND #3, PND #51) and social fund is 1,000 Baht per month. This is up to 30 transactions for all four filings( if needed).

www.sunbeltasiagroup.com

[sarpesius]

Our professional fee to file with the Thai Government the withholding tax( PND #1, PND #3, PND #51) and social fund is 1,000 Baht per month. This is up to 30 transactions for all four filings( if needed).

www.sunbeltasiagroup.com

Then in addition to the cost of monthly wages (฿265,000/year), the fee to process them with the government would be ฿12,000 a year. I am assuming this would be the total cost of all worker payment processing.

Does your footprint include all Thailand, or are you limited to particular provinces?

sarpesius

[Sunbelt Asia]

Then in addition to the cost of monthly wages (฿265,000/year), the fee to process them with the government would be ฿12,000 a year.

In addition, you would have the government social fund tax of 10%. Half of this 10% is the employer’s responsibility and the other 5% is taken out of the employee’s salary. In this case it would be 26,500 Baht (13,250 Baht from the employer and 13,250 from the employees)

I am assuming this would be the total cost of all worker payment processing.

Yes as long as is the filing of the monthly tax

This is NOT for the writing the check or depositing the payroll in the bank account for employees.

This is filing the monthly PND#1, PND #3, and PND #51; collecting and submitting the withholding tax you had received from employees, natural persons that were not employees and withholding tax you withheld from corporations and give this amount to the Tax Revenue Dept. As well, collecting and submitting the monthly social fund tax from your corporation to the Social Fund Dept.

Does your footprint include all Thailand, or are you limited to particular provinces?

Limited to where we have accountants located, which is Pattaya, Chaing Mai and Bangkok.

www.sunbeltasiagroup.com

[CaptainIgloo]

To open a business in thailand and hire thais, it would be good to cover the following issues:

1. Do you pay weekly, bi-weekly, monthly....?

2. should you pay in cash or by another method?

Labor protection Act :

Section 54

All monies paid by an employer as basic pay, overtime pay, holiday pay, holiday overtime pay, and other benefits payable in cash shall be in Thai currency, except where the employee consents to be paid by cheque or in a foreign currency.

> You can pay by cash, no issue there ...

3. Do you register under Treaty of Amity as american operating sole proprietor company before hiring the workers?

4. how is social tax paid-- directly to the workers or to the government?

5. are there unwritten rules operating here?

6. are there dangers of being cheated by workers, and what would be ways to anticipate these?

7. Are there other obstacles to hiring thais for a business -- for example, if you have to fire one, is their brother going to shoot you, or do you have to go to a government office and go through a lot of red tape?

As an American, I am planning to start a sole proprietorship without a thai wife, which will require me to hire 4 thais.

comments appreciated

sarpesius