The road to working for your own business legally

**Butterfly** · 12-01-2012, 08:29 PM

Originally Posted by madjbs

And if the business grows, you will certainly regret not having that 49% in the future!

yeah, but he could join later when the business is more solid and proven instead of throwing 500k at risk with no expected return.

10% of something real is better than 50% of very little

**Butterfly** · 12-01-2012, 08:32 PM

Originally Posted by Fondles

The "private small company" that my boss purchased a few moons ago put (NET) 60 million (USD) into his pocket last year and that was just from the automotive side of the "company".

sounds like it was more than a small private company,

anything making more than 30m THB per year in sales or 10m THB in profit, is more than a small private company by Thailand definition

**madjbs** · 12-01-2012, 08:32 PM

You don't have to throw 500k at it, you can capitalize the company with nothing, just don't run up any debts. Even if you did have to pay in the capital for real, it would be his girlfriend doing so anyhow.

**forreachingme** · 12-01-2012, 08:33 PM

Originally Posted by madjbs

Yes that is correct, you have to charge the minimum interest rate stipulated by the revenue department, which is 5% I believe. I should have mentioned that in my first post.

If it is 5% annual base and for a time of 3 days only, comes cheap to put it in the books...

**madjbs** · 12-01-2012, 08:37 PM

Well it would be for as long as the loan was on the books, unless you actually paid in the 2 million for real. So I guess if you loaned back out the entire 2 million (which is unlikely), you would have to charge yourself 100,000 interest per year (which would go to your own company anyway). I'm not entirely sure thats how it works though, I am not an accountant.

**Butterfly** · 12-01-2012, 08:41 PM

Originally Posted by madjbs

you can capitalize the company with nothing

for a farang investor during capital formation ? not sure if this is true,

**Butterfly** · 12-01-2012, 08:42 PM

Originally Posted by madjbs

you would have to charge yourself 100,000 interest per year

and that would be taxable at the company level, so not sure if there is any savings at the end

the director debt thing is a stupid idea IMO, and not clean, something a Thai would do for cheating, not a good way to start a company

**madjbs** · 12-01-2012, 08:48 PM

Officially there must be 2 million baht capital per work permit, fully paid up. But if you show the cash capital as being loaned back out to a director on the balance sheet, then you don't actually have to have any of the cash in hand to show the 2 million baht 100% capitalisation.

**madjbs** · 12-01-2012, 08:51 PM

Originally Posted by Butterfly

the director debt thing is a stupid idea IMO, and not clean, something a Thai would do for cheating, not a good way to start a company

Complete rubbish. Their is nothing wrong or dirty with it, many companies do it. The only risk is that you are liable to 2 million baht which you probably don't have, if the company became insolvent and creditors took you to court to claim back the loan.

**madjbs** · 12-01-2012, 08:53 PM

Originally Posted by Butterfly

and that would be taxable at the company level, so not sure if there is any savings at the end

It's not about savings, it is about setting up a company and getting yourself a work permit in the case of not having 2 million baht in cash or equipment to capitalize the company properly. If you have the two million baht to hand then great, no need to do anything.

**9999** · 12-01-2012, 08:59 PM

Originally Posted by madjbs

if you are doing work from overseas it would be hugely beneficial to do all the business through an offshore company to avoid paying any corporation tax.

Good point. If all the business income is payments from overseas, are their any extra tax obligations (technically exporting labour product). Obviously this is beneficial for Thailand so I hope it's not a road block.

**9999** · 12-01-2012, 09:00 PM

Originally Posted by William

a BOI or other investment exempt area would be easier

There's actually a chance our business model will qualify for BOI.

**madjbs** · 12-01-2012, 09:02 PM

Originally Posted by 9999

are their any extra tax obligations

It would depend on lots of factors such as, company structure, how you employ the staff in Thailand, whether you need a work permit or not etc..

You really need to talk to some decent lawyers and accountant about the best way to set it up, preferably one which has experience in companies operating offshore.

**9999** · 12-01-2012, 09:10 PM

Originally Posted by madjbs

Only a fool would set up the company out of a tax free zone if they were doing all their business offshore!

This is intended to be a Thai company, employing Thai staff, paying Thai tax. The fact the the business is coming from overseas is irrelevant. This is nothing like an 'off-shore' company, and the goal is to do everything legitimately to build a solid Thai business that will be saleable in the future.

These shady HK set-ups do not compliment the business model but cheers for the input.

**9999** · 12-01-2012, 09:13 PM

Originally Posted by Butterfly

why does he want ownership in that company if it's only for the work permit ?

It's not just a work permit for the purpose of staying here. It's a work permit intended to allow me to legally do the work necessary to reach our targets.

**madjbs** · 12-01-2012, 09:14 PM

Well you could do both actually, build a legitimate solid Thai company while minimizing it's tax liabilities, and it wouldn't be "shady" but sensible. I think you will find that many companies offering outsourcing work from abroad operate similar structures around the world.

**9999** · 12-01-2012, 09:15 PM

Originally Posted by Butterfly

You need proper accounting analysis before you open the company I would suggest,

Sure, I will do my due diligence. This thread is the start of it.

**9999** · 12-01-2012, 09:18 PM

Originally Posted by madjbs

And if the business grows, you will certainly regret not having that 49% in the future!

Exactly.

**dirtydog** · 12-01-2012, 09:19 PM

Originally Posted by 9999

build a solid Thai business that will be saleable in the future.

Originally Posted by madjbs

Well you could do both actually, build a legitimate solid Thai company while minimizing it's tax liabilities, and it wouldn't be "shady" but sensible.

And on the sale when he shows bank statements from some off shore tax haven that will inspire confidence and trust in any potential buyer.

**9999** · 12-01-2012, 09:21 PM

Originally Posted by Tom Sawyer

I'd bet most small businesses with three or four employees even in Bangkok (think foot massage joints, cafes, beer-bars), are lucky if they can pull in 7 or 8,000 baht in revenue per day. If the four Thai staff get paid 1,000 - 1,200 total, that leaves you with around 6,000 baht. If rent is 20,000 per month + 6,000/mo water/power then that eats up another 1,000 per day (and certainly costs would be a lot more in a shopping centre or high-traffic area - though so would revenue). So that leaves you with 5,000 baht per day. Hardly worth the hassle is it?

No but when I'm looking at conservatively having 20 employees and those overheads are inflated. The business will pay the staff about half of what is paid into the business for the work they do. Think about that and multiply it a few times.

**9999** · 12-01-2012, 09:22 PM

Originally Posted by Butterfly

yeah, but he could join later when the business is more solid and proven instead of throwing 500k at risk with no expected return.

That's something I had not thought of but worth considering.

**madjbs** · 12-01-2012, 09:25 PM

Originally Posted by dirtydog

hat will inspire confidence and trust in any potential buyer.

Like I said, it's very common for companies taking work from abroad to operate that way. Whether it would work for 9999's line of work I don't know, because he hasn't stated what it is.

**9999** · 12-01-2012, 09:28 PM

Originally Posted by madjbs

ou really need to talk to some decent lawyers and accountant about the best way to set it up, preferably one which has experience in companies operating offshore.

Sure, just want to be as clued up as possible before doing so. I'd rather not waste time with basics and get straight to the gritty stuff with those guys. There's some knowledge here at TD so this is a kind of free pre-session. Cheers Dawg.

**9999** · 12-01-2012, 09:30 PM

Originally Posted by madjbs

ell you could do both actually, build a legitimate solid Thai company while minimizing it's tax liabilities, and it wouldn't be "shady" but sensible. I think you will find that many companies offering outsourcing work from abroad operate similar structures around the world.

Fair enough, worth checking out. Do you have a link for a good starting point on this by any chance?

**dirtydog** · 12-01-2012, 09:31 PM

Originally Posted by madjbs

Like I said, it's very common for companies taking work from abroad to operate that way.

I doubt that, first off when dealing with new customers there has to be trust, it comes down to, so your in Thailand, I am in America, and where do you want me to send the money? That doesn't instill trust, and that is just the beginning.

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