If you’re interested in setting up a business in Asia, South Korea is one of the ideal destinations to try out. This country has become one of the most popular destinations for entrepreneurs and investors. You’ll come across hubs for technology and innovation in different parts of the country. As a result, you’ll have ample chances to showcase your products or services to the Asian market. While it makes plenty of sense to establish your business in Korea, there are many things you’d do well to note. Setting up a business in Korea requires more than a detailed business plan. This piece will teach you how to set up a business in Korea easily.
What Are The Benefits Of Creating A Business In Korea?
Since 1998, the South Korean government has created a suitable environment for expats to establish their businesses. They highlighted unique provisions for expats in the 1998 Foreign Investment Protection Act. This act focuses on benefits such as;
- Provision of support resources by Invest Korea
- Professional guidance from bodies such as Seoul Global Center, who’ll also offer you office space if you qualify for it
- Access to tax incentives
- Government cash grants
- Financial support
What Are The Steps To Set Up A Business In Korea?
It’s been established that Korea is a favorable destination for investors and business owners. But what’s the process of establishing a business and turning it into a legal entity in Korea? Please see the following steps;
1. Get A Visa
As a foreigner to South Korea, you’d only be allowed to start a business in the region after getting a visa. Often, the terms of your visa will determine whether or not you’re allowed to start a business in the country. You’ll be unable to start a business in South Korea if you have a student, employee, or English teacher visa.
To start a business in the country, you’ll need to apply and get either a marriage, Korean heritage or permanent residency visa. Every business owner should note that Korean visa regulations change regularly. Therefore, it’s important to stay up to date on what’s expected from you.
2. Determine The Type Of Business
Don’t assume that the business structures in your home country are what applies in Korea too. This jurisdiction has several types of business. But with a slight difference from what’s found in Western countries. Before going ahead with your local corporation, confirm that your business activities are supported in the region. You’ll have access to the following types of business in South Korea;
- Sole proprietorship
- Independent contractor/Freelancer
- Limited company
- Limited company by share
3. Start Business Registration
After settling for the type of legal entity you want, next thing to do is register the business. Business registration in South Korea consists of numerous steps. You may need to hide a business consultancy firm or legal professional to explain some of the steps. This would help you avoid any sanctions and penalties due to non-compliance.
When registering a business, the tax office may call you to verify some of your business details. This call will be held in Korean. Therefore, it may be a good idea to have someone that could easily translate to you.
4. Create A Business Account
After registering your business in Korea, the next step is creating a business account. A business account is essential because it will keep any cash inflow from business activities, such as foreign exchange investment, sales income, rental income, etc, separate from personal spending. Businesses that fail to make a business account usually have cash flow problems.
To open a business account, you’ll need the following documents;
- Copy of Corporate Register
- Certificate of Corporate Seal Impression
- Corporate Seal
- Certificate of Business Registration
- Original copy of Foreign Investment Notification
- Certificate of Foreign-Invested Enterprise for FDI Company
- Corporate Representative’s ID
As long as you’ve gotten the required documents, opening a bank account is relatively simple. However, it may vary from one bank to another. All you have to do is walk into any bank branch of your choice and speak to a teller. They’ll walk you through the entire process.
5. Settle Ongoing Obligations
Every business or legal entity operating in Korea is subject to a few ongoing obligations. These obligations refer to returns you’re expected to file to the government. The ongoing obligations that you can expect from your company include the following;
- Annual tax returns
- VAT filing
- Withholding Tax returns
- National social insurance
How Can We Help?
Creating a company in Korea is not an easy task. It’s even more difficult as an expat or foreign investor. The conditions for setting up a company in Korea may differ from your home country. There are several details you’ll need to know before you get started. Failure to study these details may lead to non-compliance sanctions. That’s where a professional partner comes in.
At Premia TNC, we are a professional business consultancy firm. Our job is to make your business operate better and more smoothly. We understand that business owners struggle with establishing their operations in Korea. That’s why we’re here to help you. We have spent many years advising businesses on business incorporation in Korea. Our experts are familiar with all the essential details you need to know. And they would advise you on handling your business registration in the country.
Are foreigners allowed to start a business in Korea?
Foreigners are allowed to start businesses in Korea. According to the Foreign Investment Promotion Act, you can purchase stocks or set up a foreign branch or liaison company. However, you’ll need the right visa to do business in Korea.
What are the types of companies foreign investors are allowed to create in Korea?
As a foreign investor, you need to identify the type of company you will create in Korea. Foreign entrepreneurs can create either of Stock Companies, Limited Liability Partnerships, Limited Liability Companies, Unlimited Liability Partnerships, or Limited Companies.
