Inactive small business: keep or close down?

[bamboozled]

Hi folks,

I have a small business registered in Thailand (co. ltd.) since 2009. It was active for about two years at a loss and has been inactive since...meaning that it is still registered and that I pay my accountant 10,000 to 15,000 to do my end of the year report (with zero income/movement/taxes to pay). I am being advised by the accountant to shut it down in order to not get in any trouble with the government (I guess having an inactive company for a long time can be a problem...?) and so as to not pay the yearly accounting fee.

Must I really shut it down? It's costly to start a company and if I can keep it cheaply on the back burner for a possible future need I rather like that idea. Or will I indeed run into some problems? Similarly, do I even need to be paying an accountant for pushing some papers around? No offense to any accountants and I am not a cheap Charlie. I am, however, unfortunately at this moment a POOR Charlie. If I can save some money for future money making investments after which I can rain down 1000 baht notes on the accountants of the world I would like to do it.

Constructive advice/CONSTRUCTIVE criticism greatly appreciated.

Cheers, Bam

[Barin]

_{We have a dormant company as well. To keep this registered company for the future (you never know) we are paying 8,000 Baht every year to our accountant.}

Edited November 13, 2014 by Barin

[recycler]

If there are still assets in the company it might be costly to close it down too as you have to pay VAT over their remaining value, so if you close down do it when all assets are depreciated to zero.

And yes, if you might need it later just keep it on the back burner but make sure you are clear about the shareholder structure. I see some market coming up for the sale of established companies as it's getting more difficult for foreigners to set up one.

[bamboozled]

Thanks, guys. The company has no assets. Well, hmm, it has registered 1,000,000 baht I believe from the start up. I would need to pay VAT on that? I don't believe so. There is nothing registered in the company name. As for shareholders, they are two Thai sisters with whom I am friends and used to do business. We have since drifted apart due to work changes for all of us but I don't see a problem there. I'm now married and could/should change the structure if I keep the company but I don't see a need for it at the moment. Perhaps if I activate it again.

So as you two see it, there is no problem keeping the company inactive? And for how long can this be done? My accountant implies that it could be problematic, as if I might get fined or something. Let me clear up one thing: inactive means there is no billing/no income/no movement/no taxes paid, correct? And I am not doing any monthly accounting but only an end of the year declaration.

Barin, where are you that you pay 8,000 baht? I'm in Chiang Mai.

[mogo51]

I own a home in Thailand with a Thai company, I am the sole director. I have been paying 12k bht a year for 6 years. I met a Thaai business person about 12 months ago, who handles sale/purchase of properties for farangs in Thai companies.

She told me the annual fee is a big con and with a home specific company, there is no annual report needed whatsoever.

So add this to the Farang robs that we are all paying in the same predicament.

At first when the company was set up, a Thai 'friend' who does the 'annual return' was a director but I got her to sign resignation letter and share transfer docs (which should have been done by the lawyer originally and were as far as I was aware), all in Thai though so did not know ithad not been done.

I now have possession of the entire file and documents for my house and guess what - nothing indicating a receipt for each annual company fee - this vindicates what I have been told. Nice work if you can get it! How many others are paying under the same fale belief I wonder?

Of course if it was a business active company it is a different proposition. I had one of those wrongly opened by another incompetent 'lawyer' and it is just sitting there. It was never active and I have done nothing.

[JIMMY56]

TO MOGO 51

I also own a home in Thailand with a Thai company, I am the sole director, this is my first year, i am due to pay my lawyer the end of this year, very interesting what you say about your thai business person ( She told me the annual fee is a big con and with a home specific company, there is no annual report needed whatsoever)

I am in the same predicament, can you give me some more info as i would like to look into this a bit more eg phone # or email address of this person, or maybe i can talk to you, my email is [email protected]

cheers jimmy

[bamboozled]

Mogo,

Your company was set up in order to buy a house, correct? But this is not what the "business" of the company is...or am I wrong? I mean, folks incorporate a business perhaps in order to purchase assets but as far as I know the company must have a "proper" purpose. My company was set up to purchase goods and ship them overseas (if I remember correctly). So I'm wondering (hoping) that I too can stop paying the accountant. I am provided with a thick stack of papers at the end of the year...though when I asked for a copy of the newspaper announcement (do you recall that for the yearly accounting there is supposed to be a published announcement of the declaration?) I was told that it wasn't necessary or anyhow, I was not given a copy of that...which seemed a bit odd as if it wasn't done or that the whole thing was a fleecing.

Who to turn to to get a credible, accurate answer?

[Soiyamoto]

I have inactive company. Anual fee 12,000bt. If i close it 28,000bt,

[KonaRain]

Interesting, I know a Thai woman in Chiang Mai with a University degree.Her husband is a govt.

Architect. She might be able to help. Looks like a good business for her..getting at the truth.

I'll try to contact her, unless You All can find a good excuse to call her.I have the number. She does Spa work..health stuff.

Aloha

Buy her lunch..P.M. me if u like.

[bamboozled]

This Thai woman has an Uni degree in....?

I'm hoping Sunbelt will chime in here. They should know the true answers to all these questions.

Sunbelt, are you there?

[DLP]

WHY NOT ASK THE LAWYER?

[mogo51]

WHY NOT ASK THE LAWYER?

Because they are the ones that are benefiting from this scam! What do you think you will be told? I would like to know how many houses in Thailand originally purchased by aged and trusting Farangs, With the 'advice' and help from said Lawyer of course. He

falls off the perch, voila game set match to Lawyer!

[mogo51]

This Thai woman has an Uni degree in....?

I'm hoping Sunbelt will chime in here. They should know the true answers to all these questions.

Sunbelt, are you there?

So she has a University Degree, where did she get it? I met a Thai woman who had a masters in English and could not speak English to save herself. The person I was dealing with was a very good friend or so I thought!

Give you something to think about?

[mrfaroukh]

I really don't understand you keeping a company never gain you anything and still paying to hold it.

[bamboozled]

That's a good point, mrfaroukh. It's that it is fairly expensive and time consuming and maybe difficult to open one. It is also fairly expensive to close one, believe it or not. That is the reason I am unsure whether to close or not.

[mogo51]

Mogo,

Your company was set up in order to buy a house, correct? But this is not what the "business" of the company is...or am I wrong? I mean, folks incorporate a business perhaps in order to purchase assets but as far as I know the company must have a "proper" purpose. My company was set up to purchase goods and ship them overseas (if I remember correctly). So I'm wondering (hoping) that I too can stop paying the accountant. I am provided with a thick stack of papers at the end of the year...though when I asked for a copy of the newspaper announcement (do you recall that for the yearly accounting there is supposed to be a published announcement of the declaration?) I was told that it wasn't necessary or anyhow, I was not given a copy of that...which seemed a bit odd as if it wasn't done or that the whole thing was a fleecing.

Who to turn to to get a credible, accurate answer?

As far as I understand the sole purpose of my company was to purchase my house. You are in a different situation and I cannot really help you there.

I can only suggest to you that you question your accountant come next return. Ask questions like show me each years's logement, what taxes were paid, show me the receipts where you have paid them, show me documentation of your lodgement etc.

I found out by pure accident, plus the goodness of a native resident who does not have an agenda to rip off Farangs.

[Maestro]

This document, published by PricewaterhouseCoopers Legal & Tax Consultants Limited, tells us just about everything we need to know about taxation in Thailand, both for natural persons (individuals) and for juristic persons (corporations):

thai-tax-2013-booklet.pdf

Source: http://www.pwc.com/en_TH/th/publications/2013/thai-tax-2013-booklet.pdf

The penalty for failure to file the annual tax return is 100% of the due taxes, which in the case of a company without taxable income means that the penalty is zero.

I believe there is also an obligation, under a different law, to file certain documents annually with the company registration office, but I do not know the penalty for failing to submit these documents.

[bamboozled]

Maestro, thanks for that. I have downloaded the file and will take a look. I was dubious at first but I see it was prepared by the Thailand office (or at least by a Thai). I'm a little put off by the disclaimer at the beginning but I suppose that is par for the course.

I'm still waiting for Sunbelt to chime in here.....................

[KonaRain]

Good morning ?

Degree in...Thai..LOL Probably business..

They know the scams..

Good luck..

Aloha