Webdesign Company

[manarak]

Question about creating a webdesign company.

If I register such company, will I be allowed to work myself in my company?

I will probably employ at least one Thai webmaster, but I don't know if I will meet the requirement of 4 Thais to cover my WP.

Is there a requirement for a minimum turnover or profit or tax payment?

Who has experience in this?

[mallyrd]

If you have a Thai wife then the Thai quota is only two. There is no minimum laid down for income or for profits, tax is based on the income of the company. If you have a good account then you can usually run the company for about two years without having to show a profit. The killer is VAT.

[manarak]

no thai wife...

[raro]

If you have a Thai wife then the Thai quota is only two. There is no minimum laid down for income or for profits, tax is based on the income of the company. If you have a good account then you can usually run the company for about two years without having to show a profit. The killer is VAT.

You need to show all profits you made, but you can run a company at losses for the first 2 or 3 years (not 100% sure here).

Why is VAT a killer? If you have a VAT registered business, all sales are subject to VAT. But your customers pay this, not you. The killer is rather the 3% Withholding Tax on services, especially during start-up when you are probably not yet in teh profit zone.

btw...a friend of mine is selling his webdesign company. If intersted, send me a PM.

[manarak]

btw...a friend of mine is selling his webdesign company. If intersted, send me a PM.

you friend's company looked good, but I missed it by a few days since another buyer paid the deposit...

:-(

suai!

So... I am looking for another similar company to buy...

[raro]

by a few days? He sold it months ago...

[JosephMcCann]

Im also interested in this.

I have been freelance in the UK for the past 5 years - and am at the stage when i have too much work for me to do;

I did look into setting up a limited company but looks a bit like a headache with the 4 local employees needed.

I have a Thai Girlfriend so was thinking id do it as a joint venture between the two of us;

So my question (much the same as above)

If I am a director and she is - how many extra staff (minimum) are needed to kick things off

Also does it matter what there positions are (ie can i get round it by employing a part time cleaner, part time pa, part time what ever - then one full time programmer?)

Also i wouldn't be doing any work in thailand only UK, US (west basically) - so how would that work for tax / vat purposes?

Thanks for the help

[raro]

yzou need four staff per work permit. If your girlfriend is director, she does NOT count as staff, even if she is on payroll.

[manarak]

by a few days? He sold it months ago...

Yes, it happened some months ago, and I missed it by a couple of days at that time...

[Khun Jean]

The company/workpermit is not that difficult. You have to take care of your visa first if you plan to be in Thailand. With that comes minimum income per month.

Another way:

You start a company in HK and your girlfriend can start a small business in TH.

HK company works for UK, HK hires TH.

HK makes profit, tax free!.

TH business makes little profit = no or low tax.

Edited March 12, 2011 by Khun Jean

[JosephMcCann]

The company/workpermit is not that difficult. You have to take care of your visa first if you plan to be in Thailand. With that comes minimum income per month.

Another way:

You start a company in HK and your girlfriend can start a small business in TH.

HK company works for UK, HK hires TH.

HK makes profit, tax free!.

TH business makes little profit = no or low tax.

I like the sound of that. But I'm guessing that would mean I'm not employed by the thai comp, so no work permit, and have to sort whatever visa.

Or could the thai comp be a representative office of hk comp, and I be employed that way?

I'm just thinking visa wise would be easier for me to stay here if I have a work permit??

[raro]

The company/workpermit is not that difficult. You have to take care of your visa first if you plan to be in Thailand. With that comes minimum income per month.

Another way:

You start a company in HK and your girlfriend can start a small business in TH.

HK company works for UK, HK hires TH.

HK makes profit, tax free!.

TH business makes little profit = no or low tax.

I like the sound of that. But I'm guessing that would mean I'm not employed by the thai comp, so no work permit, and have to sort whatever visa.

Or could the thai comp be a representative office of hk comp, and I be employed that way?

I'm just thinking visa wise would be easier for me to stay here if I have a work permit??

Setting up a rep office is rather costly and they are not allowed to produce anything. Bot very advisable to go that route.

If you have no work permit, you are not allowed to work. as simple as it is! So you need someone to run/manage your company while you are watching. This is allowed after all, but nothing more. I'm not sure under which visa category that would fall as you cannot have an income (in Thailand) either

[JosephMcCann]

ok that makes a bit more sense.

I wouldn't be doing any work for thai companies, nothing personal but its not financially worth it. So all work will be for western companies - not sure if that changes anything.

I'm just a little confused with exactly what my best option would be. And don't totally understand how the hong kong rout would work

Cheers

[raro]

HKG would be the contractor to make the webdesign. HKG would subcontract to a Thai company.

Now we get into hot waters....if the HKG company and the Thai company belong to the same owners and/or one is the subsidiary of the others, then the Thai Revenue Department would (correctly) assume that we are trying to evade taxes...

Work Permit: as you are performing the actual work in Thailand, you need a work permit, the usual conditions apply.

[Phil Conners]

If you have a Thai wife then the Thai quota is only two. There is no minimum laid down for income or for profits, tax is based on the income of the company. If you have a good account then you can usually run the company for about two years without having to show a profit. The killer is VAT.

You need to show all profits you made, but you can run a company at losses for the first 2 or 3 years (not 100% sure here).

Why is VAT a killer? If you have a VAT registered business, all sales are subject to VAT. But your customers pay this, not you. The killer is rather the 3% Withholding Tax on services, especially during start-up when you are probably not yet in teh profit zone.

btw...a friend of mine is selling his webdesign company. If intersted, send me a PM.

I was the one selling my webdesign company.

Though we made a loss the first year we were still obliged to pay "minimal taxes", i.e. not allowed to run at a loss.

Though I am married to a Thai and the company registered as a 1M company as per that rule, we were required to hire 4 Thais before I could get a work permit. I was also required to register and pay tax of 50,000 baht/month regardless of that salary was possible (it wasn't).

VAT in this business is a killer as there are many customers who are not VAT registered and they will compare prices with you and other, non-VAT registered companies - or one of the many individuals designing websites without company, work permit, taxes or anything else here in Pattaya. Yes, they are breaking the law but to be honest, they seem rarely caught. In fact they were the biggest problem for us being able to run a profitable company. You can't compete with someone with no overhead.

Im also interested in this.

I have been freelance in the UK for the past 5 years - and am at the stage when i have too much work for me to do;

I did look into setting up a limited company but looks a bit like a headache with the 4 local employees needed.

I have a Thai Girlfriend so was thinking id do it as a joint venture between the two of us;

So my question (much the same as above)

If I am a director and she is - how many extra staff (minimum) are needed to kick things off

Also does it matter what there positions are (ie can i get round it by employing a part time cleaner, part time pa, part time what ever - then one full time programmer?)

Also i wouldn't be doing any work in thailand only UK, US (west basically) - so how would that work for tax / vat purposes?

Thanks for the help

I am not sure what you mean by that last sentence. If you don't work in Thailand you don't need anything suggested here. If you mean you do the work in Thailand for customers overseas you need to follow exactly same rules as if you were selling to Thai customers. If you work in Thailand you need a work permit and to pay taxes regardless of where your customers are. You can also not avoid VAT on exports as they interpret the rule to be "VAT must be applied to any product that MAY be used in Thailand. A website MAY be viewed in Thailand hence you need to apply VAT for it's construction".

You need a limited company and 4 staff to get a work permit. It doesn't matter what the staff does, in theory you could hire 4 cleaners. In my case my wife was one of the 4 staff and she was later made director as well. That was never commented upon.

ok that makes a bit more sense.

I wouldn't be doing any work for thai companies, nothing personal but its not financially worth it. So all work will be for western companies - not sure if that changes anything.

I'm just a little confused with exactly what my best option would be. And don't totally understand how the hong kong rout would work

Cheers

That doesn't change anything.

[SGD]

I was the one selling my webdesign company.

Though we made a loss the first year we were still obliged to pay "minimal taxes", i.e. not allowed to run at a loss.

Though I am married to a Thai and the company registered as a 1M company as per that rule, we were required to hire 4 Thais before I could get a work permit. I was also required to register and pay tax of 50,000 baht/month regardless of that salary was possible (it wasn't).

VAT in this business is a killer as there are many customers who are not VAT registered and they will compare prices with you and other, non-VAT registered companies - or one of the many individuals designing websites without company, work permit, taxes or anything else here in Pattaya. Yes, they are breaking the law but to be honest, they seem rarely caught. In fact they were the biggest problem for us being able to run a profitable company. You can't compete with someone with no overhead.

I think this is what people don't grasp, that you need to pay the taxes on a minimum salary even if you sell nothing. Thus, you need a chunk of money to pay out the western and multiple Thai salaries and the associated social costs and insurances. I threw a figure of at least 1m baht for the year though you would get around half that back in net salary.

I looked at getting some web design stuff done a while back and the prices from a "reputable" company were a factor of 200% or 300% that of someone who could do the job for me and who may not quite have all the requisite paperwork. Just who do you think got the job ?

[makescents]

12 grand just in pay-roll taxes.

Cambodia looks better every time I read about Thai business expenses.

[Khun Jean]

VAT is not always a "problem" when your turnover is less than 1.800.000 baht a year no VAT registration is necessary.

However you can register for a VAT 0%. In that case you need to perform 'services' in Thailand that are not used in Thailand. For a website that means not for Thai customers and not in Thai language. Interpretations differ, so if you really need to register for VAT explain your particular situation and see if it is worth it to start a company in Thailand.

In case of a HK -> TH connection.

HK has the customer, outsources the work to a TH company. TH performs the service (design or program part of a website) sends an invoice to HK company. HK sends invoice to customer.

In my case it is a bit different because my HK company sells licences and my TH company is a dealer of those licences. TH company gets a percentage of each sale. And somehow miraculously all those sales together never amount to 1.800.000 per year.

[raro]

12 grand just in pay-roll taxes.

Cambodia looks better every time I read about Thai business expenses.

last time I was in Phnom Phen, about 2 years ago, I heard this story of a farang shop owner: a policeman walked into his office and asked for the equivalent of 20,000 Baht - no reason given for the payment. The shop owner refused to pay as he had everything above board and saw no reason for an under-table payment. A couple of days later he was shot.

So much about business expenses.

[raro]

VAT is not always a "problem" when your turnover is less than 1.800.000 baht a year no VAT registration is necessary.

However you can register for a VAT 0%. In that case you need to perform 'services' in Thailand that are not used in Thailand. For a website that means not for Thai customers and not in Thai language. Interpretations differ, so if you really need to register for VAT explain your particular situation and see if it is worth it to start a company in Thailand.

In case of a HK -> TH connection.

HK has the customer, outsources the work to a TH company. TH performs the service (design or program part of a website) sends an invoice to HK company. HK sends invoice to customer.

In my case it is a bit different because my HK company sells licences and my TH company is a dealer of those licences. TH company gets a percentage of each sale. And somehow miraculously all those sales together never amount to 1.800.000 per year.

in order to obtain a work permit you need to be VAT registered.

[makescents]

12 grand just in pay-roll taxes.

Cambodia looks better every time I read about Thai business expenses.

last time I was in Phnom Phen, about 2 years ago, I heard this story of a farang shop owner: a policeman walked into his office and asked for the equivalent of 20,000 Baht - no reason given for the payment. The shop owner refused to pay as he had everything above board and saw no reason for an under-table payment. A couple of days later he was shot.

So much about business expenses.

Because that doesn't happen in Thailand.

[manarak]

note: I'm still interested in acquiring a small webdesign business

[raro]

by the time spent for searching for it you could have set up your own long time ago....

[manarak]

The difference is in the startup phase.

By buying one, the company will hopefully be able to sustain itself, while if I start one, I'll have to foot the bills for about 2 years.

[InteractiveThailand]

If you are doing webdesign and outsourcing Thai staff to western companies then your project will qualify for Board of Investment status (BOI). Tech outsourcing is a highly promoted activity. So, if you are

This can provide:

- a lower basic minimum capitalization

- up to 100% tax free status

- less quota on foreign work permits

- tax free income tax status

If you are starting-up, you may want to go the BOI route from the beginning as it will make your company more valuable and profitable in the long run.

We can assist with a BOI company formation or a standard Thai Co., Ltd.

If you are seeking a business to purchase I suggest that you contact me directly and we can source opportunities through our business acquisitions team.

[emilyb]

The BOI is interesting as an avenue for this. People in some forums quote regs from the books and talk about capital assets and massive requirements, but that's like quoting the police regs to someone asking about how to deal with traffic infractions here (i.e. makes you sound smart to people who don't know and stupid to people who do). My advice to the OP would be to just go down in a suit and tie and talk to them time and again until you find someone to help you figure out what's really up with BOI approval and how you can shoehorn what you want to do into the BOI. They're actually pretty helpful and will essentially walk you through the whole process, provided you're smart enough to pick up on the cues needed to say and do the right things. Once you're approved, life changes dramatically and in short order.

Edited April 7, 2012 by emilyb