Best Company Form - Small Business?

[Gnarpjohan]

Me and my Thai wife-to-be are planning to construct a small apartment complex with 14-20 rooms to rent for factory workers. We will build it on land owned by her family. Possibly, I will rent the land at low cost from the family (write a long-term land lease). A member of the family will take care of the ongoing business and we will share the profit. Such are the loose plans at the moment.

Question: What type of company/firm is suitable to register here? Or, is it perhaps not even necessary to register a formal company? We are talking about a small real estate business generating total monthly revenue of, say, 25 000 baht per month.

At this stage, I would rather avoid all the costs associated with registering a limited company. At least if we are talking about monthly administrative costs above 5000 baht. In the future, owning a limited company could be a good legal form, I guess, if we expand the business, I need to get a work permit etc. But not right now, I am not living in Thailand and we are talking about a small business here. I am looking for some easy and cheap way to run this small operation.

Edited April 12, 2006 by Gnarpjohan

[rishi]

Not an easy one to comment on for an outsider - it all depends on your expectations, what kind of people your gf and family are and the strenght of your relationship.

The Thais can simply just run a business of that kind without any formal registration, except they might need a license or two of some kind. You'll have no protection of your investment, though. The main reason for forming a company would be: 1) secure your investment to some extent 2) yield a workpermit. You're not interested in a WP at the moment and with respect to investment securing - well you're missing out on that one anyway by not attending to company affairs on a daily being-there-in-charge basis.

Although a company can be set up in such a way that you'll have majority of shareholder voting rights, nothing can prevent the managing director(s) from making business decissions, that could rip the company for all its capital and assets and channel it to some other family member. What would you do in that case - take them to court? - Sounds like an expensive and likely lost course.

So, from a strictly business wise point of view - don't make the investment until you're ready to get involved on a daily basis. However, if you merely want to give your gf and her family some means of income - and trust them and can spare the dimes - well, why not?

[Gnarpjohan]

Thanks for the reply. Figured the thais had some easy way to run a small business, and now I know it. The main reason for building the house with rooms to rent is to provide the family with a chance of some well needed income. It could be a nice little earner it they take care of it well. Knowing how thinks work, we would probably have to put up with the money ourselves in the future anyway, one way or the other. But I like the idea of a win-win, that's how business is supposed to work, isn't it?

I think I will make my girlfriend the owner, seems like an incredible hassle to start up a company for this purpose. Perhaps create some sort of investment pay-back scheme by profit sharing. If they would cheat me (have no reason to assume that) - well, that's good to find out...