Business Monthly Operating Costs

[bodunchar]

Hi

I know this is a complicated question and I am asking a lot for a simple answer but please do your best!

What would I have to pay (officially) on a monthly basis to maintain a, "legal" business entity which provides me with a work permit - assuming I do not make any profit for several years? I ask because I know how long it takes to find these things out and can never find a consistent answer. I ask for budgeting and reality check purposes.

I also ask this question because I hope it will benefit others. I cannot see after a brief search that anyone has asked this specific question yet.

I am just talking about the expenses on paper as a minimum needed to satisfy Thai "standards".

I have heard figures ranging from 2000 to 20000 upwards a month. Can any one pull on their direct experience to narrow this figure down?

I am aware of start up capital, "sleeping partners" etc.

Apologies for the prolific use of speech marks but how else do you describe Thai "standards".

Kob khun mak

[SolarOhm]

A reat great question. But - Might as well ask - How long is a piece of string?

20k a month would seem to be a reasonable upper limit - but it depends on the parties involved. Does your figure include the cost of all Thai Directors monthly salaries, ss contributions; Cost of your Serviced Office; and your Contribution to the tax department for your minimum expected income tax? Add to those the cost of paying accountants for preparing and lodging your tax returns for yourself and for your Thai company.

Maybe that would be a good business to establish - i.e. handling all the above for people such as yourself? In which case include a salary for yourself of atleast 30k a month.

I am looking forward to the brave person who can total all the numbers to see what the best budget might be.

[tombkk]

I don't think 30K is enough for a foreigner's salary to get a work permit and an extension of stay. I was earlier told that you can get a work permit below the threshold of THB 50,000/month, but not an extension of stay, thus have to do visa runs every 3 months. But that doesn't make sense to me.

So, THB 50,000 salary for yourself plus any salaries you have to pay for your employees, then rent and other expenses (electricity etc) need to be paid for. Every company can make a loss in the beginning, but for companies with foreign investment, I hear that this is limited to three years. I have no links to verify this, just rumours and friends who experienced trouble.

Of course, you would want to make profit if you open a company, not only in Thailand but anywhere.

[raro]

If you do not want to make profits, I assume you are trying to use this set up as a circumvention of the immigration laws. It might work, it is not really according to the meaning of the laws (but not necessarily illegal, rather a loophole) but under the bottom line it would be a rather costly method of obtaining a visa.

[bodunchar]

All great answers thanks!

Sleeping Thai partners have to be paid a salary?

[bodunchar]

1 work permit = 4 thai staff

Thats 40k a month for extra liability and hassle x 4.

Then there's other taxes to be paid a rough guess of 20k a month.

I am up to 60k a month now.

What was I thinking?

I will just have to do it the "Thai way".

mai pen rai

[raro]

not sure where your 20,000 Baht a moneht taxes come from, but you forgot costs for monthly accounting, Year-end balance sheet, office rent, utility bills...

If "doing it thai way" means to work without a work permit, I wish you best of luck...enjoy it while it lasts.

[tombkk]

All great answers thanks!

Sleeping Thai partners have to be paid a salary?

I don't pay my people for sleeping.... scnr

You need four staff for one work permit. You have to pay salary and social security (and taxes, if applicable) for them. However, Thai staff have to be paid according to Thai minimum salary laws, which the current government will increase to THB 300/working day. That's a lot less than the minimum requirement for a foreigner.

Edit: I agree it does not make sense to open a (fake) company just to obtain a staying permit.

Edited August 9, 2011 by tombkk

[raro]

All great answers thanks!

Sleeping Thai partners have to be paid a salary?

I don't pay my people for sleeping.... scnr

You need four staff for one work permit. You have to pay salary and social security (and taxes, if applicable) for them. However, Thai staff have to be paid according to Thai minimum salary laws, which the current government will increase to THB 300/working day. That's a lot less than the minimum requirement for a foreigner.

Edit: I agree it does not make sense to open a (fake) company just to obtain a staying permit.

It is nowhere said that you need to employ those 4 Thais full time. If they work only half day, you can pay half salary and accordingly less taxes and social security.

[bodunchar]

Thanks again you have all been very helpful.

I dont know why some infer as to what my motives are and why it is relevant, but since it keeps coming up in conversation I will respond.

I asked this question to work out how much cash I need to make every month to legitimately and successfully operate a business in Thailand...

You think foreigners working without work permits long term is uncommon? It is probably the case that most foreigners work here illegally. Increases in regulation increases black market activity.

The part timers give me hope it is a great suggestion!

[Valjean]

Not 100% sure but I think the actual employee requirement is 5,000 in social security tax or payroll whatever tax it is. That's what you report to the government and if I'm not mistaken what you would show for payroll proof.

The expat is a salary of $50,000 per month minimum.

You need 2M THB in paid in capitalization for each WP. 1M THB if you're married to a Thai.

The Revenue and Labor and other departments do show up sometimes unannounced. They do like to see the people working. There might be many good reasons why someone isn't in the office, but you could be asked.

There's a lot of paperwork in the process. From picture of your offices, maps, signs on your door, financial statements, etc. etc.. Seems to me it must be 50 pages of paper. All of this needs to make sense and add up. They will ask for more if it doesn't. Maybe a list of all your customers and invoices for instance.

You can lose money but there might be issues if your capitalization falls under the 2M THB. Not sure, guessing. So your loses would need to be covered by additional capital infusion. Not sure if there's any time limit on how long you can lose money, but most businesses do in the first years so that's expected.

Edited August 9, 2011 by Valjean

[RickBradford]

Sleeping Thai partners have to be paid a salary?

Their social security contribution has to be paid and recorded. As for the rest....

[tombkk]

You need four staff for one work permit. You have to pay salary and social security (and taxes, if applicable) for them. However, Thai staff have to be paid according to Thai minimum salary laws, which the current government will increase to THB 300/working day. That's a lot less than the minimum requirement for a foreigner.

Edit: I agree it does not make sense to open a (fake) company just to obtain a staying permit.

It is nowhere said that you need to employ those 4 Thais full time. If they work only half day, you can pay half salary and accordingly less taxes and social security.

I didn't know that, thanks.

[DerekAbroad]

The expat is a salary of $50,000 per month minimum.

Why so much?

The Revenue and Labor and other departments do show up sometimes unannounced. They do like to see the people working. There might be many good reasons why someone isn't in the office, but you could be asked.

In regards to not employing Thais full-time, what about # of days per week? E.g. if I have four employees, I have two work Monday, Wednesday, Friday and the other two work Tuesday, Thursday, Saturday. If they ask, "They're off today" wouldn't be a good answer?

[raro]

The expat is a salary of $50,000 per month minimum.

Why so much?

The Revenue and Labor and other departments do show up sometimes unannounced. They do like to see the people working. There might be many good reasons why someone isn't in the office, but you could be asked.

In regards to not employing Thais full-time, what about # of days per week? E.g. if I have four employees, I have two work Monday, Wednesday, Friday and the other two work Tuesday, Thursday, Saturday. If they ask, "They're off today" wouldn't be a good answer?

50,000 Baht per month is required by the Immigration to extend your permit of stay based on employment. This rate applies actually for Europeans, Americans need to show 60,000 Baht and other nations less.

If the part time staff is not in the office when the Immigration checks, you must be able to contact them by phone and they have to talk to the immigration officer and arrange a meeting at your office as soon as possible, say the next day. Guess what, the immi cops know all the BS stories and the overall picture must show that they are really working for you and not just on the paper. So better have a desk for them that looks like it is in use.

[TigerWan]

You need four staff for one work permit. You have to pay salary and social security (and taxes, if applicable) for them. However, Thai staff have to be paid according to Thai minimum salary laws, which the current government will increase to THB 300/working day. That's a lot less than the minimum requirement for a foreigner.

Edit: I agree it does not make sense to open a (fake) company just to obtain a staying permit.

It is nowhere said that you need to employ those 4 Thais full time. If they work only half day, you can pay half salary and accordingly less taxes and social security.

I didn't know that, thanks.

But isn't it a monthly minimum based on 4 full time employees ? Is it true start up can get away with only two

Ive had someone tell me 150,000 a month with a median rent, utilities , ss, taxes all included it all. sound high, or right?

Can you have a company with a business but not work at the business thus not having to have 4 employess?

Can you have a company without a business?

Is there anywhere this stuff is written ?

[raro]

You need four staff for one work permit. You have to pay salary and social security (and taxes, if applicable) for them. However, Thai staff have to be paid according to Thai minimum salary laws, which the current government will increase to THB 300/working day. That's a lot less than the minimum requirement for a foreigner.

Edit: I agree it does not make sense to open a (fake) company just to obtain a staying permit.

It is nowhere said that you need to employ those 4 Thais full time. If they work only half day, you can pay half salary and accordingly less taxes and social security.

I didn't know that, thanks.

But isn't it a monthly minimum based on 4 full time employees ? Is it true start up can get away with only two

Ive had someone tell me 150,000 a month with a median rent, utilities , ss, taxes all included it all. sound high, or right?

Can you have a company with a business but not work at the business thus not having to have 4 employess?

Can you have a company without a business?

Is there anywhere this stuff is written ?

What you get away with in Pattaya (! - other areas this might be different) is 4 employees with a m/m salary of 5,500 Baht.

You would certainly need a place where the business is operating from. I know at least one person who does this from his (relatively) small home with his employees being sales and labour who are not having a desk at the company location. When I tried the same thing in Pattaya a couple of years ago, the labour department came over for a look and told me that I cannot operate from home as the office and living areas are not completely separated.

You can have a company with a business. This is a dormant company. If it is dormant, it cannot employ someone, i.e. you get no work permit.

What is written down and what is common practice might differ sometimes. Talk to a lawyer and see how he can help you to jump through the hoops.