Tempting Business Offer

[Toffeeman]

Hi, Ive been reading these forums for a few months since I decided to move to Thailand.

Recently a friend has offered me his company to buy which apparently can get me a Non B visa and a work permit.

The company began before 2000 so is under the old rules.

The offer sounds too good to be true and I usually work on the principle of 'if it sounds too good to be true it usually is'.

Anyway here are some of the claims made about this business.

3 Directors are registered and each can get a work permit if they employ 3 Thai people.

The thais only have to be employed in theory as long as you pay some tax for them.

The company is registered for a certain amount of money but you dont have to have that money in the bank.

The office address and phone number is got by using another company for the day and taking photos.

Accountant fees are about 7,000 baht per year.

The work permit enables you to be like a self employed person.

Your visa isnt connected to the work permit.

Looking for advice from people in the know.

Thanks

[hhgz]

I think that you should put quote marks around the word friend.

Tell me your interpretation of the "old rules", and how they differ from the "new rules".

[KevinBloodyWilson]

Hi, Ive been reading these forums for a few months since I decided to move to Thailand.

Recently a friend has offered me his company to buy which apparently can get me a Non B visa and a work permit.

The company began before 2000 so is under the old rules.

The offer sounds too good to be true and I usually work on the principle of 'if it sounds too good to be true it usually is'.

Anyway here are some of the claims made about this business.

3 Directors are registered and each can get a work permit if they employ 3 Thai people.

The thais only have to be employed in theory as long as you pay some tax for them.

The company is registered for a certain amount of money but you dont have to have that money in the bank.

The office address and phone number is got by using another company for the day and taking photos.

Accountant fees are about 7,000 baht per year.

The work permit enables you to be like a self employed person.

Your visa isnt connected to the work permit.

Looking for advice from people in the know.

Thanks

Not sure what 'the old rules' means, and i know that US (and perhaps Australian) folk get a special 'Amity' privileges. But discounting those things, the response below reflects my own experience. Hopefully it helps.

You need to have 3 shareholders under a new law. You only need 1 director with a WP (or a Thai). There must be at least 51% Thai holding (perhaps excepting US and Aussies).

The Thais are commonly employed as a legal requirement and not as actual wage-earners. You need to show a book salary of 6,000THB per Thai, and pay their social fund contributions (630THB per month - just gone up from 600))

The typical 2Mil company has a capital of 2MTHB which need not be paid up. Normally this will be shown in a Directors loan account if the share capital is not paid up.

Sunbelt will arrange a virtual offce for you (about 1500THB per month - this may be adequate for the Gpvt but you will need to chack the fine print. it means you don't have to have an office. If you have an office you will be required to register it as the registered address of the company. Hoops to jump through - TiT and they do love making hoops - and hubs of course.

Your accountancy fees are very unlikely to be 7,000 per year. Mine are about 5,000 per month, Sunbelt an arrange VAT returns and social fund returns for about 3,000THB per month but this is not accounting and they may feel free to disallow some VAT invoices without telling you (they did with me). An annual audit will cost you about 15,000THB.

The work permit allows you to work. As I understand it 'working' is defined as 'expending energy' (which is almost physics-like in its nonsense() and can be even sitting in the registered office and picking your nose so do be careful not to work without a permit.

The WP will be linked to your visa in that you have to have a certain kind of visa to allow you a WP. I am not sure which is the chicken and which is the egg but a lawyer will advise you. If you PM me I will recommend a very good accountant and a very good lawyer, both of whom are cheap.

I think all the above is correct but will defer to those more knowledgeable. All the usual caveats apply.

Good luck!

Edited September 2, 2009 by KevinBloodyWilson

[geriatrickid]

In respect to the accounting fees, if one of the employees is able to do the paperwork and filings, wouldn't this cut down on the cost of accounting? Then, one would only need to have the statements audited on an annual basis, like anywhere else?

If I am wrong, please advise, because we are contemplating setting up a holding/investment firm where one of the Thais is capable of doing the bean counting work. (and yes, we will be retaining the services of legal counsel to vet the structure).

Thanks.

[TerryLH]

"...and pay their social fund contributions (630THB per month - just gone up from 600))"

I thought the contributions were cut for the rest of the year.

[emsfeld]

I am by no means an expert on this but from what I have heard is that Thailand does not have customary law, so whenever a new law is introduced it'll replace the old one rendering it invalid for everyone - even if the old law applied to you in the first instance. So whatever the new legislation is, it'll apply to the business.

[ericthai]

The payroll for the Thai employee seems high.. Although depends on what they are doing and where. Minimum wage in BKK is 203 baht per day, 24 days is only 4,872. I thought you needed 4 thais for each work permit, also work permit will state what your job is and where you work, they do sometimes come check your place of work. I would check around, I used one place and they screwed everything up, Don't know how the did it but it ended up the share for the company was 94% foreign owned and I did not apply for the US Aminity . The share holders was to be 51/49, Im now having this corrected, make sure you check everything that is being done. I assumed (shame on me) that using a reputable law firm everything would be done correctly.

Does thing guy want to sell you his business, for how much and is it making money? What are you looking for, just to get a visa to stay here?

[Arkady]

You see quite of lot of farangs offering companies for sale claiming that they come with a work permit or some special privilege, all of which is complete nonsense. They are usually companies that have been either set up for some no hope business idea or to get work permits which proved too complicated or costly. Unless you are in a desperate hurry there is no advantage to buying a ready made company. You will just save about three weeks and it will take this time anyway to change directors of an existing company under the new rules that came in last year. No company comes with an automatic right to a WP. The Labour Ministry and Immigration Bureau consider all cases on their individual merits. An old company that has been making losses may be rejected as having a proven track record of failure and unable to support an expat. Even worse the company may have hidden liabilities and may owe back tax and fines for not filing its accounts and tax properly and on time.

In short, only consider buying an existing company, if you really want the business it is engaged in and, even then, you are probably better off transferring the assets of the company to a new company to avoid any hidden liabilities. If you just want a WP, set up your own but do bear in mind all the responsibilities and costs of running a company and that it should make a profit to satisfy Immigration, the Labour Ministry and the Revenue Dept which might investigate you, if you persistently report losses, to find out how you are concealing the profits. Whoever does your bookeeping must these days have at least a bachelor's degree in accounting.

[KevinBloodyWilson]

"...and pay their social fund contributions (630THB per month - just gone up from 600))"

I thought the contributions were cut for the rest of the year.

You might well be right, my accountant normally deals with that. It was that last time I heard...

[KevinBloodyWilson]

In respect to the accounting fees, if one of the employees is able to do the paperwork and filings, wouldn't this cut down on the cost of accounting? Then, one would only need to have the statements audited on an annual basis, like anywhere else?

If I am wrong, please advise, because we are contemplating setting up a holding/investment firm where one of the Thais is capable of doing the bean counting work. (and yes, we will be retaining the services of legal counsel to vet the structure).

Thanks.

You may well be right there. I don't have anyone capable of doing that so it never arose. There are some returns to complete (VAT, social fund, income tax), but the rest is book-keeping really.

[Toffeeman]

In respect to the accounting fees, if one of the employees is able to do the paperwork and filings, wouldn't this cut down on the cost of accounting? Then, one would only need to have the statements audited on an annual basis, like anywhere else?

If I am wrong, please advise, because we are contemplating setting up a holding/investment firm where one of the Thais is capable of doing the bean counting work. (and yes, we will be retaining the services of legal counsel to vet the structure).

Thanks.

You may well be right there. I don't have anyone capable of doing that so it never arose. There are some returns to complete (VAT, social fund, income tax), but the rest is book-keeping really.

Many thanks for your replies. It's interesting to note that this isnt an uncommon offer. I was led to believe that it was an offer that was rare and needed to be taken quickly. Reading the forums I can see how complicated everything is so I will give this some more thought and ask the guy some more questions.

[ludosiam]

As other posters have already mentioned buying a company makes only sense if it comes with an operational, profit - making business or other assets worth the money, getting a company registered from scratch isn't that hard. An advantage you have (if applicable) when buying an existing company is that it might come with a tax record, but not sure if this is still needed for visa extensions