Opening Bar In Samui

[Isabel]

My partner and i are planning to open a bar in Bohput/ Koh Samui.

We have got some good ideas to make it different from the rest of the bars etc.

We are going back over later on for 2 months to talk to lots of people and look deeper into the matter.

Now can anybody give me a headstart and tell me the legal stuff I need to know.

For example I have heard you need Thai people working for you. If true, is there a rule, how many Thai people need to work in the bar etc?

I was actually thinking of just us running the bar, is that possible?

Also any idea about key money, taxes etc?

Thanks very much, Isabel

[~G~]

My partner and i are planning to open a bar in Bohput/ Koh Samui.

We have got some good ideas to make it different from the rest of the bars etc.

We are going back over later on for 2 months to talk to lots of people and look deeper into the matter.

Now can anybody give me a headstart and tell me the legal stuff I need to know.

For example I have heard you need Thai people working for you. If true, is there a rule, how many Thai people need to work in the bar etc?

I was actually thinking of just us running the bar, is that possible?

Also any idea about key money, taxes etc?

Thanks very much, Isabel

<{POST_SNAPBACK}>

You will need to set up a Thai company, in which you and your partner will have together 49% of shares. Lawyers can arrange legal ways which will give you 100% control.

You don't need any Thais working for you unless you want to apply for 1-year extended visa (then you will need to have 4 thais). For 2 work permits I believe you will need capital of 4,000,000 baht, but actually not all of that should really be paid in.

Taxes are tricky with bars, as far as I heard suppliers for bars are generally not working in the vat system, therefor it is like 7% tax on your income.

For professional advice better contact Indo-Siam or Sunbelt, sponsors of this forum.

[Isabel]

Thanks very much! How do I get in contact with sunbelt or Indo - Siam?

Also when you said about the capital for 2 workpermits what do you mean by that? Is that what you need to have in an account or what?

[Indo-Siam]

You can set up a bar using local front people - if want. But you cannot work for a bar. You need to work for a legally sufficient employer - a company.

As noted above, for each foreigner not married to a Thai, company needs 2,000,000 baht registered capital - which means you paid the Thai government 5,500 baht to register each million baht. Thai law specifies that you are supposed to pay in 25% of registered capital within 90 days of registering it - but I have not heard of there being any enforcement mechanism, early on.

Pay-in of capital is most easily documented by running it through yourcompany bank account - you will need to document it.

"Key money" is basically advance rent - for which you get no legally sufficient receipt, and for which landord is not reporting this as income. Example - instead of charging you 65,000 baht per month, landlord collects 600,000 baht key money up front (and - typically - each year thereafter), and you then pay 15,000 baht per month reportable rent. If tsunami wipes you out after month two - landlord is fat and happy. If water shortage forces end to toursist coming to smaui - no problem for landlord. If local officials shut your bar down for six months, because an employee failed a drug test - not landlord's problem. If you go broke, landlord just dumps you out, and finds another tenant willing to play the key money game.

Whoever thought this up and made it stick is a genius - in my mind, anyone who pays key money is definitely getting into a sucker's game. The entire premise of key money is: tenant isn't going to survive one year, so collect up a year's rent ahead of time.

You basically form company, then run key monry through your bank account as pay-in of capital.

Pay attention to the comment about VAT - thsi si a hidden factor that prevents most prople involved with bars from getting work permits. Your company cannot sponsor work permits without a VAT registration. You can't get VAT registration without declaring at least 100,000 baht per month revenue - and paying 7,000 baht per month to government. Most businesses don't have to actually pay the 7% - because they can deduct VAT they pay out to vendors - as documented with tax receipt. But - as noted above - most suppliers to nightlife industry operate outside the system - not declaring or paying tax on income. So - you get stuck for the entire VAT payment. Most bars can't support this - so they never apply for VAT - claiming that they make less than 100,000 baht per month - so they are not required to collect VAT. Result: Company that runs the books cannot sponsor work permits.

Many, many bar owners have learned this the hard way. So - a bar owner operates for five years without a work permit. Then - someday - he become successful and tries to open a conventional business, and get a work permit. At that point, he discovers that he cannot document any employment for the past five years - although his passport reveals he has been in Thailand that entire period. With a five year employment gap - all inside Thailand - the officials pretty much figure you are a "dodgy person" - and they are not inclined to cut much slack on your Work Permit application.

My company is not in positiuon to support start-ups in Samui - I am really writing to the board at large.

We are also very selective in supporting nightlife clients - because we are mainly involved in assisting with compliance with Thai rules - not avoidance of same. Most nightlife clients have serious "issues" haunting their situations - and being associated with too many flakey applications hurts a company like mine in dealing with the various ministries. Once you get a reputation for not bringing in flakey cases, they tend to treat our applications with less strictness on minor issues - and that is the position that we want to occupy.

There are exceptions, but in my five years in Thailand, my observation is that most bar owners who are successful financially are not getting all that income from the bar - if the bar just breaks even, or makes a small profit, that is great - it is just a backdrop for another revenue-earning business - often an on-line or informal consulting business, with recurrring customers.

Running a bar, you have only handful of income line items:

Beverages

Cigarettes

Bar fines

Pool table & game fees

Souvenirs - hats shirts, mugs

Food (maybe)

'Care to guess at how many expense line items there are? Many hundreds. And too many of them are fixed, or largely fixed - meaning that seasonal variation really hurts.

Good luck!

Steve Sykes

Managing Director

Indo-Siam Group

Bangkok

[email protected]

www.thaistartup.com

[~G~]

Thanks very much! How do I get in contact with sunbelt or Indo - Siam?

Also when you said about the capital for 2 workpermits what do you mean by that? Is that what you need to have in an account or what?

<{POST_SNAPBACK}>

Indo-Siam

http://www.indo-siam.com/

Sunbelt

http://www.lawyer.th.com/index.asp

Edited March 30, 2005 by ~G~

[Harmonica]

My partner and i are planning to open a bar in Bohput/ Koh Samui.

We have got some good ideas to make it different from the rest of the bars etc.

We are going back over later on for 2 months to talk to lots of people and look deeper into the matter.

Now can anybody give me a headstart and tell me the legal stuff I need to know.

For example I have heard you need Thai people working for you. If true, is there a rule, how many Thai people need to work in the bar etc?

I was actually thinking of just us running the bar, is that possible?

Also any idea about key money, taxes etc?

Thanks very much, Isabel

Don't do it, Isabel!

[Isabel]

Thanks VERY MUCH for all of the above information! Unfortunatley it's made us realise that it is nearly impossible or at least very unrealistic to start up a ligit business in the nightlife industry.

While we were out there some people made it sound so easy that we thought " hey why not do that ourselves".

We haven't got much money to invest and by the looks of it it will take quite alot of our savings up.

So for now we'll just have to try and find out a way to spend as much time there as we can afford because it is a lovely place!!!

I really do wish there was away cause we do want to live there.

Any suggestions? What about working out there for someone else?