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How to start a business in Thailand
How to start a business in Thailand
Gradually improving infrastructure and cost efficient work force combined with its superb location are playing a vital role to make Thailand an interesting place to start businesses or invest in Thailand. How to start a business in Thailand is a topic most often brought up by travelers who have been appealed by the resurgent Thai market. However, in Thailand foreigners who want to open a shop is not allowed to fully own a company; except for US citizens under the US Treaty of Amity. In addition, they wonder how much it costs to start up a business in Bangkok, Chiang Mai or on any of the idyllic beaches along the country’s beautiful coastline.
Foreigners who visit Thailand frequently or long stay residents have implicit desire of opening a bar business in Phuket, a coffee bar in Bangkok and even a seaside bungalow resort in Koh Chang. Unfortunately, many businesses started by foreigners do fail at a high rate due to lack of planning and foresightedness. There are also cultural differences and legal boundaries that have to be considered before planning to open a shop in Thailand Nevertheless, the potential rewards are great if you are up to the task and if lady luck smiles upon you with good fortunes.
As Thailand is very capitalistic and extremely receptive to foreign businesses, starting a business here is relatively easier. Your success or failure graph in business will mostly depend on things like:
- The market for your services or goods
- Your research
- Fulfilling Licenses requirements for your goods
- Your general experience and ability to do business
- Your partner(s), if any
- The quality of the staff you hire
- Your peer group and guidance
- A strong idea and business plan
- Ample supply of fund to start your business
- Willingness to understand Thai culture, mentality and be open minded with a huge dose of patience
Moreover, whether you like it or not you will have to learn the Thai language and perhaps even read Thai in order for your business to set up and expand successfully.
Finally, you should assess your goals and think through your plan. If you invest a limited capital and open a small business, you have to accept the fact that it might not make you a millionaire back home. However, if your business is successful, you can certainly lead a very comfortable and enjoyable life in Thailand.
Money needed to set up a business
There is no specific figure. Just keep in mind that the expenditure of opening up a shop in Bangkok will cost slightly more than other parts of the country. The cost of rent in prime locations in the big city is higher compared to the rest of the country. However, it is also where you can make the most money since the majority of the wealth is in Bangkok. Electricity, water, inventory and staff salaries are way more affordable here compared to the western countries. As of writing a salary of 6,000 THB – 8,000 THB is the norm for Thais working in restaurants, department stores and shops in Bangkok. Manual labor and construction is also very affordable. This cost-effective is one of the root cause behind foreigner’s desire to open up their dream business in Thailand.
NEVER MAKE A MISTAKE OF NOT HAVING A BACKUP PLAN!!!
The field of business is oscillatory and therefore a backup plan or exit plan or emergency plan is needed. There is no guarantee for success in the Land of Smiles no matter how well you planned and executed your business. You should always reserve a portion of your funds for emergencies and return home if necessary.
Types of Business:
You can set up several types of corporations depending on how much you are investing or how well you know the people you are getting into business with. Remember, foreigners are not allowed to own 100% shares of any business in Thailand, unless you are a US citizen.
The most common way to start a business in Thailand is to register a business under a Thai person. Not to mention, if you are going to register your business under a Thai partner, it has to be with someone you trust life and death with along with your hard-earned money. The majority of successful small foreign owned businesses in Thailand have started out this way. It is also by far the quickest way to set up shop and you may not even need to involve hiring a lawyer which cuts costs. Foreign business owners usually file a business under a Thai wife, Thai girlfriend or very good Thai friends/business partners that they have known for a long time with a good background. You and your partner must absolutely understand each other both personally and fiscally before you start your venture.
Then you have to register your business and go through all the paper works associated with it. After that your partner will need to deal with a governmental agency involved with taxes and get any necessary business licenses. Moreover, if you will be setting some type of street side restaurant you will need to have your Thai partner head over to local police precinct and agree on rent payments, which is really not much, depending on size and establishment.
Limited Thai Partnerships and Established Thai Partnerships are two types of legal corporations you can set up, however you still need to have to have Thai partners along with your name as company shareholders where foreign partners own the minority share.
Whichever route you choose to take it is imperative to let your Thai partner or representative do the majority of the negotiating when buying a Thai franchise, dealing with construction or with local Thai suppliers. As a foreigner you will have a higher risk of being subjected to dual pricing, unnecessary price haggling and more red tape.
Hiring a Lawyer is recommended:
If you want to have your name on record as a company shareholder, a lawyer should be hired who will be by your side to set up agreements with your partners. Remember, in Thailand, contracts written in Thai take precedence over foreign written contracts.
It is strictly forbidden to work or even volunteer in your own-funded business in Thailand without a work visa. A minimum of 5000 Bahtis charged for monthly fees or taxes for work visas. For a small business in Thailand that is a reasonable amount especially when you multiply it by 12 months. Since visa rules may change at a moment’s notice so it is best that you do visa research on your own. Thai visa.com can serve you well in this regard. In restaurant business you might just get away without work visa without any consequences. However, if the local immigration office gets any hint, the penalty is deportation and in extreme cases shutting down your business permanently.
* Takes place simultaneously with previous procedure.
Being a successful businessperson in Thailand as a foreigner is an eminent way to enjoy the country and live abroad. The possibility of making profits is high with so many Thai youths and a growing middle class willing to spend money. If you are fully prepared, have done your market research and know your business plan inside and out with plenty of funds for startup and exit then you are way too close to start your business in Thailand. Good Luck!