For starting and/or registering a business in Thailand, there are three basic classifications of businesses to consider as follows:
1. Thai Partnership is a formal business arrangement between two or more parties. There are basically two types of Thai Partnerships: Ordinary and Limited. Ordinary partnerships can be registered but it is not necessarily a legal obligation to do so. All partners in such an arrangement are jointly and personally liable without limitations. This poses some disadvantages in the event where one partner performs any wrongdoings on behalf of another partner, since both partners are liable. Limited Partnerships, on the other hand, must be registered and provide limited liability to its partners as outlined in specific details of the partnership agreement.
2. Thai Representative Office, often called a subsidiary office, is for foreign based companies who are already established with a headquarters located outside of Thailand.. To qualify for an “Alien Business License” under this category and thus be permitted to form a representative office, a company would need to demonstrate a need for at least one of following purposes of limited “non-trading” activities:
- Source goods or services in Thailand for its headquarters.
- Check the product ordered by the headquarters overseas
- Offer advice to the headquarters about goods to order
- Supply information of the headquarters’ products to customers in Thailand
- Report the economic movement in Thailand to its headquarters
3. Thai Limited Company, also known as a Private Thai Limited Company and identified with the common suffix “Co Ltd”, is the most common business start up route. One of the main advantages of limited companies is that the level of liability is limited to the amount of shares one possesses in the company. Another advantage is that investment and management bodies can be separated. In order to form a Thai Limited Company, a minimum of three promoters are needed. As for registration, the main steps are as follows:
- Applying for name permissions (i.e. name of company is not violating other trademarks, etc.)
- Depositing 25% of registered capital (for a foreign company, a minimum of two million baht registered capital is required to register)
- Acquiring a corporate seal (rubber stamp to affix to important documents)
- Filing a memorandum of association
- Holding a statutory meeting
- Registering the company and obtaining a company income Tax Identity card.
- Submit work regulations to Office of Labor Protection and Welfare (for companies with 10 or more employees)
In addition to following accounting procedures as specified in acts such as the Civil and Commercial code, the Revenue Code and Accounts Act, a balance sheet must be submitted annually to the Department of Revenue and Commercial Registration. Moreover, companies are required to withhold income tax from the salary of all regular employees.