How to Set Up a Small Business in Thailand

The process of setting up a small business in Thailand as a foreigner is difficult, but with the right guidance and a bit of patience, you can open and operate a profitable business in the Land of Smiles. Understanding these various stages of the procedure is essential to ensuring that your company is established quickly and without any issues.?

This article offers an overview of how to establish a small business in Thailand and complete each step correctly.?

How can a Foreigner Establish a Small Business in Thailand?

The Foreign Business Act (FBA) imposes restrictions on foreigners owning and operating a company in Thailand, meaning that there might be some additional steps to go through to set up a small business. Regardless of industry or size, there are numerous stages to complete before opening your business, so you will need to carefully complete each one to give yourself the best chance of approval.?

Step 1: Coming up with a Name for Your Business

You’ve probably already got a company name idea that’s unique and catchy, but it will have to follow some rules to get approval from the government. The term “limited” must be added at the end of your company name and you must register it in both Thai and English.?

You will have to file your name with the Department of Business Development (DBD) to reserve it. After being approved, the name will be available to use for 30 days, during which time you should complete the registration of your company or risk having to reapply.?

Step 2: Decide on the Type of Company and its Initial Roles

You also need to decide on the type of company to establish, as different structures are subject to different laws. For small businesses, it is recommended that you set up a limited company, as it allows you to protect your business assets from debts and liabilities. There are two types of limited companies:?

• Public limited company: The shares of the company can be sold to the public and listed on the Thai stock exchange.
• Private limited company: The business’ capital is divided into shares, which are unable to be sold to the public.

If you are establishing a limited company in Thailand, you must appoint at least 2 initial shareholders and one individual as the director. You will need to locate some Thai partners as foreign ownership of your company is typically limited to 49%. If you want to grant foreign citizens majority or full ownership over the business, you need to apply for a Thai Foreign Business License.

However, there are some exceptions for foreign ownership. For example, under the Thailand Board of Investment (BOI) promotion scheme or under the US-Thailand Treaty of Amity, your business will have fewer restrictions placed on it. Registering your company with the BOI may also open doors to a wide range of other incentives to leverage. These benefits include:

Tax-based incentives, including:

• Businesses being exempted from income tax (the number of years this applies depends on the type of industry your business falls under)
• A reduction in import duties and dividend taxes
• Lower costs on transportation, water, and electricity

Non-tax-based incentives, including:

• 100% foreign ownership of the entire company
• No need to abide by the 1:4 foreign-to-local employment ratio
• The ability to own land in Thailand
• Permission to transfer funds in the form of a foreign currency
• Your company can be protected against nationalization

Whether or not you qualify for BOI promotion, some other exemption from foreign business restrictions will depend on your nationality, business’s industry, and initial capital.?

Step 3: Drafting the Required Documents

To register your limited company with the DBD, you will need to prepare and submit various documents. One of the most essential documents you need to set up a company in Thailand is a Memorandum of Association (MOA). An MOA details the basis for which the company is formed, highlighting its overall structure, and what its established rules are.??

You will need to prepare this and other important documents at a statutory meeting with your shareholders. In this meeting, you and your shareholders will:

• Draft the articles of association (AOA), which highlights all the guidelines that the business needs to abide by to operate legally in the country.?
• Approve any additional registration documents
• Decide on how to distribute any shares and registered capital
• Appoint auditors in the company
• Transfer management over the company to the directors.?

Once the meeting has been convened, you will be able to move on to the next step of the journey. You also need to have a suitable workspace, office location, or co-working space for your business during this stage, and provide proof that your company has a mailing address.?

Step 4: Registering your Company

Once you have the appropriate documents drafted, you can finally register your company, which can be done at the DBD. You must register the small company and pay a registration fee within 3 months after completing the statutory meeting. You do not have to proceed through this process if you are setting up a sole proprietorship or a non-registered ordinary partnership.?

Once your business has been established, you also need to register it for taxation purposes at the Thai Revenue Department. You must apply for a company-wide tax ID, and in some cases, you will need to register your company for value-added tax (VAT).?

Step 5: Opening a Thai Bank Account

Much like setting up an individual bank account, opening a company bank account is as simple as choosing a Thai bank and setting one up. It should be noted that to set up a company bank account, the director of the business and an individual authorized to conduct transactions with the bank will need to be physically present.?

Step 6: Considering What Visa and Work Permit to Get

As a foreign business owner, you need a work permit and a visa to operate a functioning business in Thailand. If you need a visa, the Thai non-immigrant B visa is perfectly suited for managing a small business. Choosing this particular visa also gives you the option to apply for a Thai work permit. The same applies to any foreign citizen employee you hire, as they will also need a visa and work permit to be able to work at your company.?

Typically, your company will need to meet the following requirements in order to support work permit applications for foreigners:

• Minimum registered capital of 2 or 3 million THB, depending on the type of business.
• You must employ 4 Thai employees for every work permit issued to a foreigner working in your company.

Professional Assistance with Opening a Small Business in Thailand

Establishing a company as a foreigner, no matter how small, is always a challenging experience in Thailand. But, with an experienced corporate lawyer in Thailand to help guide you through the process, you can get your company up and running swiftly and plan your business operations without worrying about the bureaucracy. And, if you want the most reliable and effective bilingual business lawyers in Thailand, contact Siam Legal.

With over 20 years of helping foreigners open up successful companies in Thailand, our team of experts has the knowledge and experience to get your company started off on the right foot. With our direct assistance and support, you can open your new business swiftly and in full compliance with the law, laying the groundwork for future success.