Plans To Do Business, Need An Entity

[sbaker8688]

Hello,

I am a farang, and plan to open a business with a farang partner, and possibly a Thai partner (as originally planned) if this does not end up complicating matters on the type of business structure we need.

The original idea was to do what I call a "Thai corporation" (I think they call it a "public company limited?"), but after doing my own investigating and reading, it seems to violate my basic KISS philosophy (KEEP IT SIMPLE, STUPID). Way too much red tape, way too much expense, way too much government scrutiny, way too much delay, yadda yadda. My question is whether or not it is possible to do some very basic "partnership" without "going corporate" so to speak, and getting involved in that can of worms?

Question: Are there more basic, simple business structures available for farangs (possibly partnering with a Thai) than this "public company limited" approach? Just a plain, vanilla "partnership" perhaps?

Thanks so much for any help.

S.

[Indo-Siam]

You are a bit mixed up on terms. A "Thai Public Company" is a legal entity with publicly traded stock. At the outset, it must have a minimum of 15 shareholders - and it must have at least three years of audited results as either State Enterprise, or as a Thai Private Co. Ltd, before going public.

What you are probably thinking of is a Thai Private Co. Ltd - which must have at least seven shareholders.

What you are probably 'fantasizing' about is a Thai Limited Partnership - which can be formed with just two people (one of them Thai, holding a majority of shares). The effort to register a Thai Limited Partnership is slightly less than for a Thai Private Co. Ltd. - maybe 10% less???? But - foreigner does not have signature authority in a Ltd. Partnership - unless the foreigner is willing to accept unlimited personal liability for claims against the partnership.

The "hardest" aspect of setting up business under either approach is identical - the establishment of a legally-sufficient registered business address.

If you set out to accomplish either process by yourself - "climbing the learning curve" for each and every step - then the processes can be quite daunting. But - if you "outsource" the process to a service provider who specializes in such processing, your task is reduced to making a series of decisions, and paying out a fee.

The hard part isn't setting up the corporate entity - the hard part is running a profitable business here.

Good luck!

Cheers

Steve

Indo-Siam

Edited May 28, 2006 by Indo-Siam

[Chang_paarp]

The hard part isn't setting up the corporate entity - the hard part is running a profitable business here.

Put that in a frame and put on you desk.

It applies in every country in the world.

[sbaker8688]

Okay, I understand I am a little mixed up on terms. So let's forget the terms right now, or better yet, just stick to terms such as "corporate" or "non-corporate," etc.

I am interested in setting up a legal business entity that is "non-corporate" and that will allow me to partner with 1 farang, and POSSIBLY (if it doesn't complicate matters any more) a Thai partner. I would like this business entity to be the simplest, easiest, cheapest route to go. For example, is there such a thing as a "regular old partnership" (non-corporate, of course) that we could set up? Just what are my options?

By the way, I am under no illusions or fantasies whatsoever about doing business in Thailand or anywhere else. This business with my partner is already successful for 20+ years in the U.S. We are simply going to try to move operations to Thailand, where we are right now. The Thai partner we would like to bring on board (*IF* it doesn't complicate the business structure too much and force us into some kind of corporate thing) has been operating a similar business in Thailand for 11 years already. But no illusions or fantasies. Doing business anywhere is difficult. Doing business in a foreign country, especially Thailand, is nearly impossible. But we already accept these risks, and already have the capital ready to go. If it flies, fine. If it goes bust, no problem, at least we tried.

If you know whether we can do a simple, uncomplicated sort of partnership, let me know.

Thanks.

S.

[tjo o tjim]

First off, KiSS is a lost concept in Thailand. I would suggest reading up on some of SeriManop.com's publications for a primer on Thai business structures.

[Indo-Siam]

S -

How simple do you want it? I make it this simple: you sign your signature twice - and pay my company money.

No matter what you do, you still need:

1) To maintain a legally sufficient business address

2) Registration with the tax department

3) Monthly accounting, and corporate tax withholding from your vendors.

4) An annual audit and annual corporate tax return

5) If you have any Thai employees, you will need corporate social fund registration

6) If your annual revenue will exceed 1.8 million baht, you will need VAT registration - and you will need to administer VAT accounting

7) You will need to open a corporate bank account

If you are all hung up on the fundamental PROCESS of getting incorporated here, then you should forget about even starting up - because you will never feel comfortable with the way things work here.

What you evidently consider to be a complex process, I simply consider to be a routine bureaucratic "fill in the blanks" exercise.

Look again at that list of seven items. You can't escape them. If you can't handle them, then give up.

Forget any corporate entities involving foreigners. Consider just all-Thai businesses. There are lots of sole proprietors - think noodle stand operators. Then there are partnerships, private companies, and public companies. I don't really know the actual numbers, but my guess is the breakdown is something like 2% public companies, 94% private companies, and 4% partnerships. Why do you think that is? Why would 23 out of 24 Thais choose to form a company, instead of a partntership?

Cheers!

Steve

Indo-Siam

www.thaistartup.com