Small Business Op.... Advice?

[skettios]

You have a choice in the way you set up the company

1.all in a trusted Thai's name

or

2. going legit with a Thai company 49% in your name

This is what I never liked about setting up a company in Thailand. Unless you are investing large amounts, you have to be the minority shareholder in your own company.

This is probably why the current owner's girlfriend owns the company. Because they created a company and she is either the sole owner, or she owns 51% and he only owns 49%. So she calls the shots with all of his money. Works great now, but what happens later when the relationship breaks down?

Luckily I am from the US, so I would never get stuck in this situation. Let's hear it for the treaty

I don't get it... what treaty?

thanks in advance for humoring my ignorance.

[midas]

You have a choice in the way you set up the company

1.all in a trusted Thai's name

or

2. going legit with a Thai company 49% in your name

This is what I never liked about setting up a company in Thailand. Unless you are investing large amounts, you have to be the minority shareholder in your own company.

This is probably why the current owner's girlfriend owns the company. Because they created a company and she is either the sole owner, or she owns 51% and he only owns 49%. So she calls the shots with all of his money. Works great now, but what happens later when the relationship breaks down?

Luckily I am from the US, so I would never get stuck in this situation. Let's hear it for the treaty

Probably not, I should think she owns the business because it is a small company that does not have to pay tax or social security for staff or work permits etc that a westerner has to.

If the op wanted to set up a company, he can still be the sole director and the only one with voting rights regarding any decision made. The company can also be set up so that he owns preference shares at a 10:1 ratio of the Thai shares.

IMHO if the business makes any less than 50,000 a month profit I'd stick it in a Thai name.

I have a couple of questions. Are you sure your advice regarding preference shares is up-to-date?

I have lost track as to exactly what stage we are at regarding the Foreign Business Act

but I thought that was going to essentially stop results arrangements.

The other thing is, no one has mentioned the all-important " work permit " ? Surely if

the business which the OP is considering doesn't generate enough to pay his salary

plus the 4 employees, he will not legally be able to get involved at all in running the business?

You could be right, my company is a few years old now and was initially used to buy my house.

It doesn't matter if the op is earning less than the required amount as long as he pays the tax due on it, eg if he earns 25,000baht salary he will still have to pay tax on 50,000

Same goes for the staff, as long as he is paying social security on 4 staffs wages - he is ok, could be his girlfriends mother, whoever

Ok - but what about the requirement for 2 million baht fully paid up capital ?

What kind of assets can be included to make up this amount bearing in mind it's such a small

operation ?

[jstumbo]

The treaty expired

When did it expire? I read when it expired that Thailand and the US would have a FTA that would have the same provisions as the Treaty of Amity. Did they ever do this?

[chinadarling]

Man, met a girl 4 months want to buy a business...read these forums man.

If you dont act like a paranoid you will get what you deserve.

research is right. Dont put anything in her name, or the name of anyone she knows.

Someone just got murdered because he named his gf beneficiary of a life insurance policy.

One born every minute.

Hiya!

I've been in Thailand for just over 4 months now, bouncing around with 1 month visa runs and 2 + 1 tourist visas.

Despite promising everyone I wouldn't, I've fallen for a lovely thai girl and after living together for a few months, have decided to try and settle and possibly venture into business together.

I've read around the forums, but would like some specific advice anyone can give me:

(Aplogies if my questions are answered elswhere, just let me know)

We have the jump on a pretty good business opportunity. If it was in Australia (my country of origin) I would snap it up and gladly accept the financial risk (investment looks between 800,000 to 1,000,000 baht) since it is already a proven a profitable business that we would be taking over right away (sorry, it's on the qt for the moment guys - don't know who's on these forums. Could be the competition, you know. But I can tell you it's quite small and farang-orientated. Similar to a cafe, internet cafe or a bookshop)

There's just too many unknowns right now, though. i can't calculate the risk. I know there's a lot of details and fiddly things, but generally would you say it's a smooth course to travel? Or are there too many hurdles to just dive in and grab this op?

I have learnt that the previous owner was here for close to a decade, and was forced to bounce in and around on different short term visas... is this normal? Is this what a lot of you guys are doing?

Thanks so much!

[timpatco]

"And another one down,

And another one down,

Another one bites the dust,

Another one bites the dust,"

In the Thai vernacular, UP2U "sponsor"

In Australian slang - "Come in Spinner"

In one word - DON'T

[flyer]

Hi Lingyuk,

I am a long time investor in Asia. If you are western born (aussie i understand) you should evaluate any investment by your own country's good practice. 1 mio THB = 33 K AUD Not much of a company you could buy over there with this money. Same in Thailand ! Be aware that in most Asian countries they will call 'business' any activity where they sell even only one toothbrush a month... Below 1 mio THB there are thousands for sale i think. The most valid of those i would guess you can find with Sunbelt, but still don't mean it is a good deal.

Also be aware that it is common in Thailand that a business will announce like 1 mio THB revenue per year , leaving 600 K profit or so .... ohhh? 60 % . ha accounting practices in Thailand are quite elastic to say it in a polite way. Don't trust any figures they give you. Make an appointment with the owner and look trough all the invoices he got from his suppliers for the last year. Mostly that will be your last look at that very good deal you were hoping to have found.

Now this does not mean you don't have a good deal in hand. For that follow the following steps.

1; Don't involve anyone else then yourself (or another experienced investor you think you can trust) in the deal. Surely not a Thai GF or anyone of her family.

2. Be the owner of the company. Which means you need to have a Thai registered company, not only buy a business. Yes it is no problem to be the owner as a foreigner but you can only work in the company if you also have a work permit. To have a work permit and the residence permit that go with it, you need a minimum of 2 mio THB capital at company registration . You don't need to spend them all. You can buy the 1 mio business with it and have the ohter 1 Mio THB kept available for anything you deem suitable.

3. As a general rule stick strictkly to the law. Working around it will get you in (serious) trouble sooner or later, but most surely.

4. Before you buy over a business have it audited by the best financial auditor you could find. They are expensive, but worth their money. Never rely on the auditors of the seller or sales organisation like for example sunbelt. Only if an independent audit is positve, then you can take the risk to buy.

5. If at that point you still have questions about your eligability for work permit, residence permit and the like, then have a talk with the THai consul or embassador in your home country about the problem and let him bring up the solution for you. Be open about your plans to him and keep the GF out of the scene. You will be surprised what the Thai consul can do for you if you are an investor in Thailand ... however the more $$$$ there are , the more creative and cooperative he will be, that's normal. But that is only at the local office in your home country , not anyone in BKK.

6. My rule of thumb (but this is only my personnal vision) is that below 2 or 3 mio THB investment you can't get much value there. Small businesses in Thailand are succesful (sometimes) only because they are operated by Thai standards. Read, by the owner and or some employee(s) who earn 6,000 B / month to live with. But by western standards, the same company would have negative cashflow when you allocate to yourself even the minimum living allowance you would need to live there (the more with your GF) This is one of the reasons why below 2 or 3 mio THB capital you can't make it.

7. Transfer all and every money between your bank in home country and a bank account in Thailand or you won't be able to get the money out again if you want to. Never bring in money yourself.

If i can help you any further, just PM me.

[laxman1960]

You have a choice in the way you set up the company

1.all in a trusted Thai's name

or

2. going legit with a Thai company 49% in your name

This is what I never liked about setting up a company in Thailand. Unless you are investing large amounts, you have to be the minority shareholder in your own company.

This is probably why the current owner's girlfriend owns the company. Because they created a company and she is either the sole owner, or she owns 51% and he only owns 49%. So she calls the shots with all of his money. Works great now, but what happens later when the relationship breaks down?

Luckily I am from the US, so I would never get stuck in this situation. Let's hear it for the treaty

Probably not, I should think she owns the business because it is a small company that does not have to pay tax or social security for staff or work permits etc that a westerner has to.

If the op wanted to set up a company, he can still be the sole director and the only one with voting rights regarding any decision made. The company can also be set up so that he owns preference shares at a 10:1 ratio of the Thai shares.

IMHO if the business makes any less than 50,000 a month profit I'd stick it in a Thai name.

I have a couple of questions. Are you sure your advice regarding preference shares is up-to-date?

I have lost track as to exactly what stage we are at regarding the Foreign Business Act

but I thought that was going to essentially stop results arrangements.

The other thing is, no one has mentioned the all-important " work permit " ? Surely if

the business which the OP is considering doesn't generate enough to pay his salary

plus the 4 employees, he will not legally be able to get involved at all in running the business?

You could be right, my company is a few years old now and was initially used to buy my house.

It doesn't matter if the op is earning less than the required amount as long as he pays the tax due on it, eg if he earns 25,000baht salary he will still have to pay tax on 50,000

Same goes for the staff, as long as he is paying social security on 4 staffs wages - he is ok, could be his girlfriends mother, whoever

You don't need 4 Thai Staff to get a work permit, only need them for an extension of stay based on business. Without 4 Thai staff you just are forced to leave the country every 90 days, then update your work permit.

If you don't need 4 Thai's don't employ them.

You do need to pay yourself or at least pay taxes on 50,000 Baht income to get the Work Permit.

Dan

[jstumbo]

The treaty expired

According to Sunbelt, it is still available.