Cost of Registering a Company in Thailand

URL Magazine

It is possible to establish a corporation in Thailand to gain from commercial expansion into Asia or to obtain real estate ownership rights. The registration process has multiple steps and is fraught with legal complications; as a result, it must be carried out under the guidance of experts.

Several service providers, including local and foreign law firms and accountancy organizations, provide company registration services; fees range from 10,000 Thai Baht to more than 100,000 THB.

Each of these businesses will offer its unique service, including and excluding various elements. It is significant to remember that THB 7,500 is the formal registration charge for a corporation in Thailand. Please keep this in mind when hiring any services because not all businesses include the official fees in their bids.

On paper, setting up a business in Thailand appears to be a simple process, but in practice, depending on how the company is initially structured and how you plan to do business, there may be numerous unknown costs and obstacles. Companies wishing to register their business in Thailand must conduct thorough research, ensure that all of their demands are addressed, and cover all of their bases.

 

What is a reasonable cost to register a business?

The safe range is in the middle, or between THB 40,000 and THB 60,000 (excluding VAT and government taxes), as is frequently the case.

You get what you pay for; if a company charges less, it may not provide a comprehensive package, employ people with limited knowledge, or, worse yet, provide a company registration service as a ruse to attempt and sell you further services. Sadly, this happens frequently since offering these extra services allows these businesses to boost their profit margins (this is frequently the case with accounting firms).

Companies that charge more typically offer a comprehensive package and have knowledgeable employees, but the additional cost is not always necessary. Typically, this is the situation with foreign law companies, which may maintain large margins without having to use efficient procedures.

Registration services may start as much as 25,000 THB for corporations with 100% foreign or Thai ownership and 40,000 THB for corporations with a combination of Thai and foreign shareholders. For creating articles of association with a preference share structure, an additional 20,000 THB is required. Both packages include advice on post-registration tasks as well as a business eligibility analysis to make sure the business structure you choose will meet your needs.

The key considerations that must be made while registering a company are outlined below. You can use this list to assist you sort through the various offers you might get.

 

What should a package for registering a business include?

Choosing the best bundle for your company's needs is crucial, as we said before. At the absolute least, a company registration package needs to have the following items:

- The creation of the company registration documents (such as the shareholder list, the memorandum of association, and the company name reservation).

- For the benefit of the international shareholders, the English translation of the Company Affidavit and Shareholder List

- The creation of each shareholder's certificate of shares (in Thai and English)

- The process of creating the Share Registrar Book, which serves as a record of share transfers. Please be aware that there are fines of up to THB 10,000 and THB 20,000 for failing to issue a share certificate and failing to maintain an updated share register book, respectively. 


Although the aforementioned responsibilities are very important, they only touch the surface of the company registration procedure. It is crucial to do your homework and confirm that you have chosen the ideal organizational structure when planning to launch a business. Thailand offers a wide variety of company structures, each with unique advantages and disadvantages. Always ask your advisor to perform the following checks:

- Is a Limited Company in Thailand the ideal legal form for your business's operations? The most common business structure in Thailand is a limited company, although representative offices and branch offices should also be taken into consideration since they each have special benefits that could be useful. Could you also be eligible for a promotion from the Thailand Board of Investors (BOI)?

- Additionally, Thailand's presence in South East Asia opens up new, distinctive economic options. There may also be alternative structural alternatives in Singapore or Hong Kong. These other areas might offer your company additional advantages that you weren't previously aware of.


Before forming a company in Thailand, there are 9 key factors to take into account.

 

1. Can I run a Thai company that is entirely foreign-owned?

In Thailand, it is feasible for foreigners to own a firm outright. A 100% foreign-owned corporation, however, may need to get a Foreign commercial License in order to function, depending on the company's commercial operations. Always have your advisor confirm whether your business qualifies for a Board of Investment promotion or a foreign business license.

 

2. Can I maintain control over a business with a native Thai partner?

Well-written documentation (preferred share structures with articles of association, shareholder agreements with reserved subjects, and option agreements) are required to secure the foreign minority shareholder's effective influence over the company. To ensure you won't run into any problems in the future, it's crucial to make sure your advisor has a clear grasp of how you intend to run your business and can appropriately design the paperwork.

 

3. What amount of capital is required to register my business?

A share's worth must be at least THB 5 according to Thai law. On paper, the minimum registered capital amount needed to create a private limited company is THB15 because there must be a minimum of three shareholders. Contrary to popular belief, private limited firms typically have a minimum registered capital that is equal to the sum required to launch their business.

Please be aware that you would need to have 2 million THB in registered capital per foreign employee if you intend to engage and employ them (for example, if you have two foreign employees, you would need 4 million THB). The amount of registered capital necessary is reduced to 1 million Thai Baht if the foreigner you seek to engage is married to a Thai citizen. Companies that are supported by the BOI are exempt from this rule.

 

4. Do I need to establish articles of association for my company?

Although drafting articles of association is not required, it is highly advised. Companies can optimize their management structures by placing restrictions on the directors' authority, issuing preference shares with varying voting and dividend rights, granting pre-emption rights, and holding meetings virtually.

 

5. Are my company's business objectives comprehensive enough to encompass all planned business activities?

The business activities that the company engages in must be agreed upon and stated when the firm is registered. The company's objectives should then incorporate these operations. If this isn't done, the director may be personally liable for any business operations that are carried out in opposition to the goals of the firm. It is possible to change the goal at a later time, but doing so calls for an EGM (Extraordinary General Meeting of the Shareholders).

 

6. Is a shareholder agreement necessary?

Shareholder agreements are strongly advised because they provide additional information about the company's policies. Shareholder agreements are crucial because they let businesses prepare for potential risks in the future. For instance, callback provisions and leaver clauses for when a shareholder wants to leave the project, pre-emption rights, drag along rights, and tag along rights for when a shareholder wants to transfer his shares, and repercussions for when a shareholder dies and the transfer of the shares to their descendants. Procedures for situations like the ones mentioned above and many others can save a lot of time and trouble later on because there is already a set system in place.

 

7. Which Office Address Should I Use?

The registration address must be provided when registering a corporation. Virtual offices are typically acceptable in practice when forming a business, but a proper office is necessary if the business wants to be registered with the VAT system or hire foreign staff (the authorities would require a letter of consent from the owner of the office).

 

8. Can I quickly dissolve a company?

In Thailand, unlike in places like Singapore or Hong Kong, a business cannot be struck off. When shareholders of a company decide to dissolve it after it has been registered, they must first hold an EGM and then go through a formal liquidation procedure in front of the Ministry of Commerce and the Revenue Department. Even if the firm did not conduct any operations, a liquidator must be appointed and the company accounts must be audited. The duration for completion is about six months.

The typical closure costs for a firm are THB 35,000, but if the business did not maintain an appropriate accounting method, the costs could rise significantly. The process will take longer if accounting conformity is not maintained because the Revenue Department will want to confirm that all taxes are paid before approving the company's liquidation.

Answers to each of these questions should be given with sufficient thought and relevance to your demands. Since every business is unique, its requirements must also be taken into consideration. Additionally, should they be necessary, there should be a choice for drafting the shareholder agreements and articles of association.

 

After forming a corporation in Thailand, can I immediately begin doing business there?

It makes sense for the proprietors to want to go to work right away when the company registration process is over. A few extremely crucial factors must be taken into account initially because this is not always achievable.

 

i. Get Required Permits

One or more licenses may be necessary depending on your business's operations, such as a factory license, an e-commerce license, or a foreign business license. Your advisor should investigate whether your business needs to get any licenses in order to operate. Your advisor should always help you obtain any necessary licenses if they are needed.

The cost to obtain a license for your business often begins at THB 10,000. Depending on the type of license requested, the processing time for these licenses might take anywhere from one week to many months.

 

ii. Opening a bank account

The capital of the business must be released, so you must open a bank account. If your advisor's client is located abroad, they must adopt a practical attitude. This is true since a director must have access to the bank account. At the moment the bank opens, the signatories must be in the building.

A common component of our company registration package (see the package) is the establishment of a bank account. The cost ranges from THB 5,000 to THB 10,000 when it is not.

 

iii. Registration for VAT

A business that generates THB 1,800,000 or more in annual revenue is required to register for VAT. You might want to register right away depending on your business operations and transaction flow.

It's vital to remember that some industries, like farming, are not subject to the VAT Payment. Such information should be known by your advisor, who should also let you know if your business qualifies for any exemptions.

With the assistance of company registration specialists, VAT Registration in Thailand costs as little as 7,500 THB.

 

iv. Hiring personnel

The business must first register with the Social Security Fund (SSF) before recruiting new personnel. Following this, the business must register every new hire within 30 days of their hiring. A contract for employment is also required. Salary packages, allowances, incentives, and non-compete agreements need special consideration because they could have a big impact in the event that an employee is let go.

The fee to register a new employee with the SSF is THB 400, while the cost to create an SSF firm with company registration experts starts at THB 2,500.

A simple draft of an employment agreement typically costs THB 9,000, and an executive version can cost up to THB 40,000.

 

v. Tax and accounting filings

Every new business in Thailand must establish an accounting and invoicing system after registering their firm. Since tax filings (VAT, if the business is registered for VAT, and withholding tax on service transactions between businesses) and payments must be made on a monthly basis, bookkeeping should be done every month.

In order to properly assess how to best meet your accounting needs, it is crucial that your adviser spend time learning about your business flow. Understanding a company properly is crucial since some costs incurred by the company can be capitalized (for example, intellectual property), amortized (for machinery), and tax optimized. If such techniques are not investigated to see if they are feasible, a company may miss out on these benefits and incur unneeded costs.

 

Drafting documents

New firms typically need a number of legal documents to launch when they initially start operating. Terms & conditions, employment contracts, service agreements, NDAs, purchase agreements, etc. are examples of such documents. Again, in order to safeguard the company's interests, it is crucial that these contracts are created by knowledgeable attorneys who have a thorough grasp of your organization. Documents that were poorly written could lead to disagreements in the future.

Depending on the intricacy of the contract or document and the number of revisions required, the cost of creating a contract or legal document can range from THB 8,000 to THB 40,000.

 

Conclusion

Although registering a company may seem like a simple process that shouldn't cost much, there are actually several factors that need to be taken into account. For the registration procedure to go as smoothly as possible, it is crucial that your advisor carefully examines both your needs and the company's ambitions. Failure to do so might need expensive restructuring in the future.

If you wish to contribute to our blog, please email us on morhadotsan@gmail.com.

URL Magazine

Popular Articles