Thai Company Or Sole Proprietorship

[guillaumimoso]

Hello all,

I'm a newbie here and would appreciate if you could help me with my (long) questions.

I'm a freelance translator and teacher in Singapore and would like to do the same in Thailand. However, from what i've read, there are many obstacles to setting up a company. Just a few facts about my situation first:

- I'm a French national

- I offer freelance translation and teaching services, ie, there's only me and no one else working. I wouldn't need anyone one to work with me, except an accountant for tax purposes.

- I don't have a lot of money to invest.

So here are my questions, two-fold:

1. Pte Ltd:

- Is there any way to go around this 2m baht capital requirement for the company? I know only 1/4 of that is to be liberated at the company setup, but this is still too much for me to invest at one go. How about the 3/4 remaining? Are they hanging up in the air indefinitely? Or do they need to be paid within a limited timeframe?

2. Sole proprietorship:

- As far as I know, no foreigner can live and work in Thailand under that scheme. However, maybe I missed a few info there. Any input on that?

Basically, the main obstacle for me is the capital of 2m bahts, as well as hiring Thai nationals under my company. As I said previously, I only need an accountant to prepare for my taxes and that's about it. It works here in Singapore, but I would really like to live in Thailand. From what I said, I guess the only benefit for the Thai authorities would be my spending power in the country, since I wouldn't hire people to work with me (unless I decide to go into Thai translations as well and develop a translation empire in Thailand!)

Thank you for any info you can give me,

Guillaume

[guillaumimoso]

I forgot to add this:

I want to learn thai and I'm a gym-goer. It sounds silly to me, but I don't know how Thai law works, so here it goes. To fulfill the hiring requirements, would it be possible to write a contract to a private Thai teacher and to a private gym instructor to work for me, hence "hiring" people? It is completely unrelated to my business, but I'm running out of ideas here...

Thanks again!

[digitalchromakey]

- Is there any way to go around this 2m baht capital requirement for the company? I know only 1/4 of that is to be liberated at the company setup, but this is still too much for me to invest at one go. How about the 3/4 remaining? Are they hanging up in the air indefinitely? Or do they need to be paid within a limited timeframe?

The 2 million baht capitalisation is not what you think it is. It only costs a few thousand baht per million of capitalisation to set it up on company formation and then you can reflect its value in your annual accounts as, for example: capital assets, trade marks, intellectual capital, etc.

[rishi]

- Is there any way to go around this 2m baht capital requirement for the company? I know only 1/4 of that is to be liberated at the company setup, but this is still too much for me to invest at one go. How about the 3/4 remaining? Are they hanging up in the air indefinitely? Or do they need to be paid within a limited timeframe?

The 2 million baht capitalisation is not what you think it is. It only costs a few thousand baht per million of capitalisation to set it up on company formation and then you can reflect its value in your annual accounts as, for example: capital assets, trade marks, intellectual capital, etc.

Now, - that's a nice way to say no ... The only other way I can think of for OP - as he describes his situation - would be to get "under the wings" of an existing entity to which it would not matter that this new employee would require 2 M baht registered capital to employ - on top of what might eventually already be registered to secure WP's for existing foreign employees.

[guillaumimoso]

Hello,

Thank you both for your replies.

To come back on the 2m baht capital requirement:

Given my company basically only consists of a computer, a printer and some office supplies, plus some additional software dedicated to translation, I'm still quite far from 2m...So would that mean I need to invest the rest in money? That's what I understood so far, but maybe I'm wrong. Let's say I still need to invest 1.8m bahts, how long do I have to put that money in, where do I put it (separate bank account?), etc, etc.

Thanks!

Guillaume

[digitalchromakey]

To come back on the 2m baht capital requirement:

Given my company basically only consists of a computer, a printer and some office supplies, plus some additional software dedicated to translation, I'm still quite far from 2m...So would that mean I need to invest the rest in money? That's what I understood so far, but maybe I'm wrong. Let's say I still need to invest 1.8m bahts, how long do I have to put that money in, where do I put it (separate bank account?), etc, etc.

You don't necessarily have to invest real money - it's 'accounting money' i.e. it can be accounted for as notional assets - intellectual capital, trade marks, etc.

When you open a company you buy capitalisation, it costs a few thousand baht per million of capitalisation.

[rishi]

As for the importance of fully paying up the "registered capital" here's my experience: I did have the required sum available in cash and since my prospected business would need that kind of sum in any case I had no reason to do other than just getting the capital properly booked on the company's bank account as actual money properly poured into the company in the shape of hard cash. Thus, I'm the proud owner of a company bank account book showing that the registered capital was fully paid up and deposited on the company account book even prior to any (potentially questionable) deduction of expenses or claimed assets.

Ask me which authority has ever asked about copies of the company's bank account book (which is the only evidence of to which extend the registered capital is paid up) --- after more than 4 years the answer remains 'none'... Sofar only the bank and I know about transactions on the one and only company bank account which thus constitutes the one and only documentation of how the REAL cashflow in and out of the company has been going.

This, however, is all local and individual - do not take it as a guarantee that the local authorities at your place won't request hard cash on the table before issuing the desired WP.

Edited October 3, 2008 by rishi

[guillaumimoso]

Ooooh! So now I understand this "accounting" concept. As you might have seen, I'm no smartie when it comes to these things, which to be honest, I don't see the point of. Why declare you have 2m bahts if you don't have it...but I guess somewhere down the line, there is a reason.

In my industry, things are basically summed up like that:

Revenue from translation/teaching work - miscellaneous fees (internet connection, office supplies, maybe rent of a dedicated space) = my salary.

That's why in my case, having a sole proprietorship would be ideal, but the Thai law doesn't allow that for foreigners, so...

So digitalchromakey, if I want to set up a company, I need to have:

500,000 bahts + the percentage due on the 2m bahts?

I know there are other costs for lawyers, WP, so on and so forth, but the bulk of it would be that, right? No 2m bahts to invest in hard cash?

Thanks for your clarifications, it's really helpful!

Guillaume

[eek]

This is a really interesting thread! I have been wondering about much the same Guillaume. I realise there are other threads similar but nothing seems quite as cleanly put as this.

I really wish someone in the know would put a step-by-step guide on what to do to make things simple and cost-effective (sadly this kind of info actually goes way over my head most of the time!), for im sure there are many of us who would appreciate the help.

Good luck. Hope this thread proves resourceful for you and those of us in a similar boat.

[digitalchromakey]

500,000 bahts + the percentage due on the 2m bahts?

I know there are other costs for lawyers, WP, so on and so forth, but the bulk of it would be that, right? No 2m bahts to invest in hard cash?

Sorry to seem dim, but what is the 500,000 THB needed for? Company set up costs start from only, say 30,000 THB upwards.

Your total first year's company costs including set up fees, WP, visa/border runs, plus tax paid should only come to around 120,000 THB.

[guillaumimoso]

Hi digitalchromakey,

The 500,000 bahts I was referring to is the amount that has to be liberated at the creation of the company. From what I've read, it is one quarter of the mandatory 2m bahts.

To investigate further, what do you mean with intellectual capital and trademarks? Would those apply to a translation/teaching business? Do you know what I could declare as non-cash capital in my case?

Thanks for your help!

Guillaume

PS: @ Eek: If this can help other people better understand the setup process, I'm glad I've put things so "neatly"!

[digitalchromakey]

The 500,000 bahts I was referring to is the amount that has to be liberated at the creation of the company. From what I've read, it is one quarter of the mandatory 2m bahts.

To investigate further, what do you mean with intellectual capital and trademarks? Would those apply to a translation/teaching business? Do you know what I could declare as non-cash capital in my case?

There is no requirement that I have ever heard of to cash invest 25% of the capitalisation on start up.

Intellectual Capital: The value of the training, for example you received as a translator/teacher, reflected as an asset that you have brought in and invested in the company on formation.

Trademarks: Design a fancy logo for your company, branding and letter heads then get your accountant to value all this stuff as an asset in your annual accounts.

Maybe you don't have to get that creative, I am sure that you will need to buy computers, materials, etc as well. Plus I am sure you already have business matierials, computers and stuff that you would bring to invest in the company at formation.