Setting up business in Thailand

[viking123]

So after a few longer visits to LOS, I have started to play with the idea of trying a more long-term stay (I will start with 1 year, but possibly extend). I am currently running my own business in Europe, and intend to continue that while in Thailand. I am currently relying on some local freelancers here in Europe to help me out on bigger jobs and projects, but in Thailand, I would rather have those in-house (as I can afford the risk because of the wage levels). I have a few questions related to this.

1. Can I own the company myself, also on the paper?

2. Is it nessecary to involve lawyers in the formation process of the company? Can anyone recommend a law firm?

3. I need a working permit - is the easiest solution here just to flesh out an pay for the Thai Elite-package? From what I understand, obtaining an working permit is immensly easier - although I think 500k THB is a bit stiff.

4. Has anyone here any experiences in recruiting Thai staff? Care to share any advices? Should I go through a recruitment firm (say Adecco eg.) or is it just a waste of money?

5. The thai payroll and social security tax - it's just 5% right?

[thrilled]

I can't answer your questions.I do know this if it's A business with any kind of labor involved,you won't be able to do it.

That would be taking A job away from A Thai.

I can say if you get into some kind of bar/ restaurant business.Don't invest more than you can afford to lose.

[Andyfez]

You don't say what your business is so hard to advise.

If your business falls within the accepted categories its not difficult to set up. But you can't do it yourself because of all the Thai formalities. Lots of days queuing in crowded offices. Get a company who knows to do that

Also, don't think you can just walk in here and run it like your own country. Thai custom and Thai staff will slow you down all the time. Quite frustrating at times.

No you can't own the majority of the company.

[maidee]

it's pretty obvious that the OP is in IT related business (freelancers, continue work...), right ?

it is all about legality and finding GOOD thai IT programmers, you think they come on the cheap ?

paying 2 million baht to start your company

from day 1, you own only 49% of that ... so if you feel ok so throw away 1.020.000 baht to thais, and they control YOUR company

paying for thai it guys, speaking well enough english to understand you + doing their job and at what price ? 25.000 baht each ?

hope you have enough work for them...

[salo123]

Maybe you can contact these guys, it seem they made a correct Job http://www.buzzwoo.de

[TravelerEastWest]

I suggest that you start by buying a few business books in English on starting a Thai company - this along with reading the BOI site, Dept of labor and commerce etc will get you going.

A good Thai CPA that speaks English for most situations and for very complex legal situations a lawyer.

There are good Thai staff out there but you have to pay them well, treat them well and the other basics of management.

" from day 1, you own only 49% of that ... so if you feel ok so throw away 1.020.000 baht to thais, and they control YOUR company"

With a good CPA you can legally avoid most of the above problems.

Just as an example you can easily structure a company where you own all the common voting shares.

"...paying for thai it guys, speaking well enough english to understand you + doing their job and at what price ? 25.000 baht each ?"

Good Thai software professionals are not cheap perhaps triple the monthly salary above and you should be able to find someone with some experience and skills.

Stay calm and keep going you can make it happen - keep in mind that almost everyone I have met who does well in Thailand has already done well in their home country, and that just the opposite is also true.

[khunPer]

Short answer to your questions, based on my knowledge and experience:

1)

You can own 49 percent of a Thai limited company, also on paper.

You will need to find Thai partners/shareholders for minimum 51 percent, expect they will have to proof mean of funds to invest.

Preferred shares may be an option, but may not be juridical legal.

Proxy shareholders are not allowed (any more).

2)

Normally yes, and it’s worth the money as you often get good advices, often around 40,000 to 50,000 baht all-inclusive.

Look at TV sponsors or use Google – use what seem to be experience business lawyers and one not too far away from where you settle.

3)

I’ve not hear of Work Permit offered by Elite Card, that normally is for people with money that wish to stay and enjoy a work-free life in Thailand – but there may be something I missed.

For a Work Permit in “your own” limited company, you will normally need:

2 million bath in shareholder capital for 1st foreign WP

4 Thai employees for each foreign WP

1 year of operation with a full annual statement (auditor report).

There may be exceptions within some business areas, where foreign specialists are needed.

You can be shareholder and director (member of the board of directors), sign for the company and attend some meetings without a WP – a business lawyer will be able to inform you about details that may also be depending of branch.

4)

Sorry, I have no experience, but hear mixed opinions from others.

In very general terms, Thailand is short of labor in some areas, and Thais are known for often changing job, even without notice...

5)

The Social Security fee change every year, last year and this year it’s set at 10 percent, but has been down to 8 percent some years.

Normally half is paid by the employee (withheld from salary) and half is paid by the employer; i.e. 5 percent each.

Do expect as foreigner with Work Permit, that you shall proof a salary at a certain level and pay some tax to obtain extension of stay based on non-B Visa and WP.

Wish you good luck with your project...

Edit: The book "How to Establish a Succedful Busines in Thailand" by Philip Wylie (Paiboon 1-887521-75-8) may be a helpful guide - there may be other books available.

Edited April 13, 2015 by khunPer

[Na Fan]

Most of what's been said is only correct if you ignore the BOI (board of investment).

If you open a BOI-sponsored company you can own 100%, you also dont need 4 thai staff just to sponsor your own work permit but you're required to invest money in Thailand - see boi.go.th for details.

IMHO that's the best route to go.

[viking123]

Thanks for all replies.

I wasn't aware of industry differences.

Yes, I am in the IT-field - provided you stretch the category some. Is this one of the industries easy to set up in?

I can probably manage with freelancers for the most advanced tasks (like programmers) - paying 75k a month (as suggested above) is at least completely out of question. Thats not far from EU salaries.

[thousandpercent]

I can't answer your questions.I do know this if it's A business with any kind of labor involved,you won't be able to do it.

That would be taking A job away from A Thai.

I can say if you get into some kind of bar/ restaurant business.Don't invest more than you can afford to lose.

"Taking a job away from a Thai" has nothing whatsoever to do with whether or not you can incorporate, or get a visa or work permit. By repeating this nonsense, you mislead and confuse people. It would be better if you didn't comment on matters far beyond your expertise.

[Pheat123]

Plenty of bars for sale

Much easier to just buy a ready made business

Soon you will be rolling in the stuff

[TravelerEastWest]

"1) You can own 49 percent of a Thai limited company, also on paper.

You will need to find Thai partners/shareholders for minimum 51 percent, expect they will have to proof mean of funds to invest.

Preferred shares may be an option, but may not be juridical legal.

Proxy shareholders are not allowed (any more)."

Preferred shares are certainly legal and used in Thailand, and a very simple way to maintain control.

[khunPer]

"1) You can own 49 percent of a Thai limited company, also on paper.

You will need to find Thai partners/shareholders for minimum 51 percent, expect they will have to proof mean of funds to invest.

Preferred shares may be an option, but may not be juridical legal.

Proxy shareholders are not allowed (any more)."

Preferred shares are certainly legal and used in Thailand, and a very simple way to maintain control.

To my knowledge not been tested in court – there has been some previous posts about it, and my lawyer has also mentioned it – the question is when owned by an alien to control more than 49 percent of the votes.

[jdinasia]

I assume Sunbelt Asia is still a forum sponsor.

Feel free to ignore the advice of people on here. Most have read the rules but few have run a business here. There are legitimate exceptions to almost every rule as well as legitimate ways to work around most other issues.

Going with a lawyer who understands the process is the way to start.

[berybert]

I would advise to choose a lawyer very carefully. Many have been ripped off by the very people they paid to assist.

You certainly wouldn't be the first to be in trouble before you even open for business.

[viking123]

_{Thanks for all responses. I would really try the BOI-path. Does anyone have any experiences with specific law firms assisting you in this process?}

[The Big Mango]

You can contact them directly , english speaking and actually extremely helpfull :-)

[rwdrwdrwd]

Thanks for all replies.

I wasn't aware of industry differences.

Yes, I am in the IT-field - provided you stretch the category some. Is this one of the industries easy to set up in?

I can probably manage with freelancers for the most advanced tasks (like programmers) - paying 75k a month (as suggested above) is at least completely out of question. Thats not far from EU salaries.

Pay peanuts get monkeys - why would decent programmers work for 25k a month when the nature of the job means they can easily work remotely at closer to western rates (which can go much higher than 75 - more like 250-300 average for a senior dev).

Bad ones for 25k, sure, but not good ones, since they will have the language skills, networking ability and peer group to find much higher paying work.

Unless you need FT programmers, freelancers is probably the way.

Edited May 2, 2015 by rwdrwdrwd

[viking123]

Thanks for all the help. I have a few more questions:

1. Should one have an in-house accountant or would an external one be sufficient provided one goes the BOI way?

2. Is theft a big problem with educated employees? I have read a few horror stories now about employees quitting abruptly and taking euqipment with them on the way - with little or no help from law enforcement.

3. Are there any fall pits in employee management one should be especially causious about? Eg. letting go of a pregnant employee in Europe is like unleashing Satan and his whole extended family.

4. Has anyone done the BOI way without external advisors?

Thanks for all replies.

I wasn't aware of industry differences.

Yes, I am in the IT-field - provided you stretch the category some. Is this one of the industries easy to set up in?

I can probably manage with freelancers for the most advanced tasks (like programmers) - paying 75k a month (as suggested above) is at least completely out of question. Thats not far from EU salaries.

Pay peanuts get monkeys - why would decent programmers work for 25k a month when the nature of the job means they can easily work remotely at closer to western rates (which can go much higher than 75 - more like 250-300 average for a senior dev).

Bad ones for 25k, sure, but not good ones, since they will have the language skills, networking ability and peer group to find much higher paying work.

Unless you need FT programmers, freelancers is probably the way.

I dont agree with your assesment, and neither does Addecco: http://www.adecco.co.th/Uploads/Knowledge-Center-Thought-Leadership/Thailand-Salary-Guide/Adecco-Thailand-Salary-Guide-2015.pdf

[rwdrwdrwd]

Adecco states rates way over 25k for experienced software engineers in country onsite.

0 - 5 Years (This is a Junior developer with little experience) - 20 - 50k

5 years + (This is mid - senior) - 50 - 100k

Which precisely matches the 75k suggestion by another poster.

My point however is that very strong developers with 10 years plus demonstrable commercial experience and good English skills can land remote contracts with Western orgs, which can easily double the higher rate mentioned and still undercut Silicon Valley, London etc. (100k USD and 60k GBP average respectively for senior dev level) - these individuals are not captured in the Adecco stats.

I'm not pulling figures out of thin air, I have twenty years worth of experience as a software engineer, with half of that remote consulting for UK and US organisations.

One big project I had was a complete rebuild of a system 'designed' by 25k a month offshore devs that had the side effect of allowing production databases to be dropped via messing with a url. That's why I mention peanuts and monkeys.

Yes you can get developers for 25k a month, but they will either be very junior, or worse, experienced but inept. I know remote devs that charge that a day, and are (rightly given their ability and quality) booked up.

Edited May 3, 2015 by rwdrwdrwd

[viking123]

Adecco states rates way over 25k for experienced software engineers in country onsite.

0 - 5 Years (This is a Junior developer with little experience) - 20 - 50k

5 years + (This is mid - senior) - 50 - 100k

Which precisely matches the 75k suggestion by another poster.

My point however is that very strong developers with 10 years plus demonstrable commercial experience and good English skills can land remote contracts with Western orgs, which can easily double the higher rate mentioned and still undercut Silicon Valley, London etc. (100k USD and 60k GBP average respectively for senior dev level) - these individuals are not captured in the Adecco stats.

I'm not pulling figures out of thin air, I have twenty years worth of experience as a software engineer, with half of that remote consulting for UK and US organisations.

One big project I had was a complete rebuild of a system 'designed' by 25k a month offshore devs that had the side effect of allowing production databases to be dropped via messing with a url. That's why I mention peanuts and monkeys.

Yes you can get developers for 25k a month, but they will either be very junior, or worse, experienced but inept. I know remote devs that charge that a day, and are (rightly given their ability and quality) booked up.

Of course indepdent consultants who manage to sell themselves in to end-clients is going to bank a lot more than the average joe. I see your point, but mind you - I'm in the business too, and I'm looking to hire the equivilant of EU employees banking 3000 - 3500 EUR a month. But I do see your point. I have had the misery of dealing with Indian freelancers in the past. A living nightmare. We're just talking about apples and oranges. Thanks for your input though.

[The Big Mango]

Thanks for all the help. I have a few more questions:

1. Should one have an in-house accountant or would an external one be sufficient provided one goes the BOI way?

2. Is theft a big problem with educated employees? I have read a few horror stories now about employees quitting abruptly and taking euqipment with them on the way - with little or no help from law enforcement.

3. Are there any fall pits in employee management one should be especially causious about? Eg. letting go of a pregnant employee in Europe is like unleashing Satan and his whole extended family.

4. Has anyone done the BOI way without external advisors?

Sometimes when you ask for advice please follow up on some of it.

The BOI would of answered all of the above and many more if you had of called them.

[viking123]

Thanks for all the help. I have a few more questions:

1. Should one have an in-house accountant or would an external one be sufficient provided one goes the BOI way?

2. Is theft a big problem with educated employees? I have read a few horror stories now about employees quitting abruptly and taking euqipment with them on the way - with little or no help from law enforcement.

3. Are there any fall pits in employee management one should be especially causious about? Eg. letting go of a pregnant employee in Europe is like unleashing Satan and his whole extended family.

4. Has anyone done the BOI way without external advisors?

Sometimes when you ask for advice please follow up on some of it.

The BOI would of answered all of the above and many more if you had of called them.

Sure I can ask them, but my experience with government employees in Europe is that they are sometimes unaware of how it actually is in the real world for small business owners.

[khunPer]

Thanks for all the help. I have a few more questions:

1. Should one have an in-house accountant or would an external one be sufficient provided one goes the BOI way?

2. Is theft a big problem with educated employees? I have read a few horror stories now about employees quitting abruptly and taking euqipment with them on the way - with little or no help from law enforcement.

3. Are there any fall pits in employee management one should be especially causious about? Eg. letting go of a pregnant employee in Europe is like unleashing Satan and his whole extended family.

4. Has anyone done the BOI way without external advisors?

Sometimes when you ask for advice please follow up on some of it.

The BOI would of answered all of the above and many more if you had of called them.

Sure I can ask them, but my experience with government employees in Europe is that they are sometimes unaware of how it actually is in the real world for small business owners.

I don’t know what ”the BOI way” is – seems like just an informative advisory board with the same rules and regulations that everybody establishing a business in Thailand needs to follow – but in reply to your questions, as you specific mention “small business”:

1.

An external accountant is often sufficient. You can make an agreement with an accountant company – some times the lawyers also offers accounting or have co-operation with an accountant company – they will often give you a fixed price per month, depending on the amount of work. If your business expands the accountant may ask for more money, as they often base their fee on number of employees (to report tax and SS for) and average monthly number of documents to be posted. On top comes fee for auditor and annual balance.

2.

I presume horror-stories are more spread than the boring good stories. May be depending on your internal set-up and control – there is a book available about “Managing the Cross-Cultural Workplace in Thailand” called “Bridging the Gap” by Kriengsak Niratpattanasai (Asia Books 974-8303-67-8 asiabooks.com) that may be worth reading.

And yes, Thais can (often) quit their job with short or no notice.

Don’t have any bad experience myself – apart from leaving without notice – but perhaps other forum members can advise you...

3. & 4.

I presume you will need a lawyer to set-up the company for you – even you get advice from BOI – and an experienced business law firm should be able to advise you also with questions about employment and the employers responsibilities. Normally the first informative meeting with a lawyer is free of charge, and if you don’t feel the law firm can give you the right answers, you can always try to talk to another. A business lawyer should have the feeling and knowledge about what is going on “in the real world for small business owners” – hereunder what restriction or benefits you may have in special business fields, and how to do the best set-up at present to make you have the most control over your business and company/partnership.

You specific mention Europe, so being a European you cannot make use of the advantages in “US-Thailand Treaty of Amity”.

I have in an earlier post mentioned the book “How To Establish A Successful Business in Thailand” – that book has the answers to many or most of your questions...

Wish you good luck with your project.

[khunpa]

A few years ago, I was in the same situation as you. Opened the company, did everything correctly etc.

To keep things short: The entire process of starting a company here, has given us nothing but headaches. Actually so much, that we have now moved the company activities out of Thailand. Now left with a company that will be a pain to close down. Not because there is debt in the company (there is not), but because of a greedy and corrupt Revenue Department only focused on taking as much money from us as possible (regardless of the law).

I would highly recommend you to make your IT-oursourcing company away from Thailand or at least just keep a setup here, where you are just making a small profit. As soon as they see or think, you are making money here, you will only find trouble. That at least is my experience.

[Tomtomtom69]

I can't answer your questions.I do know this if it's A business with any kind of labor involved,you won't be able to do it.

That would be taking A job away from A Thai.

I can say if you get into some kind of bar/ restaurant business.Don't invest more than you can afford to lose.

"Taking a job away from a Thai" has nothing whatsoever to do with whether or not you can incorporate, or get a visa or work permit. By repeating this nonsense, you mislead and confuse people. It would be better if you didn't comment on matters far beyond your expertise.

Not to mention that most of the low-skilled labour in Thailand is now performed by Burmese and Cambodians (and to a lesser extent Lao) labourers with a smattering of Vietnamese (especially in the north-east and often illegal) and Bangladeshis too. So that would hardly be "taking a job away from a Thai" when Thais don't want to do these jobs. However, most westerners can't tell the difference between a Thai and Burmese and just assume that all the construction workers or restaurant staff they see are Thai, when in fact they are foreigners.

[seancbk]

I can't answer your questions.I do know this if it's A business with any kind of labor involved,you won't be able to do it.

That would be taking A job away from A Thai.

I can say if you get into some kind of bar/ restaurant business.Don't invest more than you can afford to lose.

"Taking a job away from a Thai" has nothing whatsoever to do with whether or not you can incorporate, or get a visa or work permit. By repeating this nonsense, you mislead and confuse people. It would be better if you didn't comment on matters far beyond your expertise.

Thank you. I was going to say the same thing.

[seancbk]

Thanks for all the help. I have a few more questions:

1. Should one have an in-house accountant or would an external one be sufficient provided one goes the BOI way?

2. Is theft a big problem with educated employees? I have read a few horror stories now about employees quitting abruptly and taking euqipment with them on the way - with little or no help from law enforcement.

3. Are there any fall pits in employee management one should be especially causious about? Eg. letting go of a pregnant employee in Europe is like unleashing Satan and his whole extended family.

4. Has anyone done the BOI way without external advisors?

Thanks for all replies.

I wasn't aware of industry differences.

Yes, I am in the IT-field - provided you stretch the category some. Is this one of the industries easy to set up in?

I can probably manage with freelancers for the most advanced tasks (like programmers) - paying 75k a month (as suggested above) is at least completely out of question. Thats not far from EU salaries.

Pay peanuts get monkeys - why would decent programmers work for 25k a month when the nature of the job means they can easily work remotely at closer to western rates (which can go much higher than 75 - more like 250-300 average for a senior dev).

Bad ones for 25k, sure, but not good ones, since they will have the language skills, networking ability and peer group to find much higher paying work.

Unless you need FT programmers, freelancers is probably the way.

I dont agree with your assesment, and neither does Addecco: http://www.adecco.co.th/Uploads/Knowledge-Center-Thought-Leadership/Thailand-Salary-Guide/Adecco-Thailand-Salary-Guide-2015.pdf

Don't go bursting the bubble of most posters here who think that Thai's all work for 9,000 baht or less a month.