Conducting business in Thailand (5.12.2023)

Some of us foreigners in Thailand have decided to start some kind of business for living. However, as I have been in business life for many years I know there won't bee too much profit.

There are many reasons for starting a business. Some of us try to earn some extra money, some think it's more like a hobby and some do it to help their local friends.

The Trade Law is well developed in Thailand and it is supervised by the Ministry of Commerce. There are many different types of companies but usually they have equivalents in other countries. The best form of a company for us foreigners is so called company limited which can be either public or private. Public companies are big stock market registered companies so usually people have private companies such as Hans Lankari.

As we offer business services, we can choose the right form of company for our clients and also help with the first steps.

The most general form of a company is a private company limited. In this kind of a company, managers are always responsible for the company's liabilities and obligations. This is different than in some western countries where a company can go bankrupt and its managers are not responsible for it. In these countries, a company is a company and its managers as individuals are not part of the bankruptcy. There might be liabilities but they still have their freedom. This is not the case in Thailand.

In Thailand, managers of a company limited are responsible for their company's acts and liabilities even when considering the Criminal Law. The most important obligation is to pay taxes, as we love it so much...

The owners of the company are the shareholders, and at the moment 2 shareholders are enough and there is not maximum number.
But in practice 3 is recommendable minimum to fulfill the safety concerns, and still fulfill the legality aspects to own immovable property.

Taxation in Thailand is simpler than in many other countries. You can make deductions of the costs of running the business but not as much as in some other countries. This makes accounting easier. However, in Thailand comparing to other countries, it is quite easy to sell off the records, but it is not something that we would do, is it?

In any case, a company must do accounting and have a balance sheet from every accounting period for tax officials. Even there wouldn't be any business action with that company at the moment.

If a company doesn't conduct these financial statements, there will be problems for managers. Generally it is about 6-7 month-delay which awakes tax officials and they start to throw letters with penalties. This is a very good point to react somehow. After a few months, if nothing has happened, they start to investigate the company. If there still is no reaction, the managers of the company will be arrested.

Tax officials also make random tests to companies and when it's your turn, you better have things in order with accounting.

This all means two important things: 1) a company MUST have accounting and be responsible from the very first step ahead, 2) when there is no need for existence anymore, the company must be revoked by its managers. You can not just let it be there and wait for its death because without revoking, it will live forever. On the contrary, for the managers, it is quite easy to die when you stay in a Thai prison for a while...

This is not meant to get you scared and not to start business in Thailand. Normal people have that common sense which tells they to do accounting of the company and if not skilled for that, to leave it for us professionals who do it for you. And we do it properly so there won't be any problems with the law.