Running Your Own Small Business in Thailand

Thailand has many allures: beautiful beaches, a warm clime, a beautiful people, delicious food, impressive Buddhist temples, romantic and sunny isles, a low cost of living...

Many foreigners--frequent visitors to Thailand-are persuaded to set up and manage their own businesses in Thailand. They see it as the best of both worlds: settling down in paradise with its easy-going lifestyle, while earning enough money to pay the bills.

Thai Food

Without compromising your dreams, you need to know the pitfalls that might arise and how to avoid them. Here are some of the issues:

Running Your Own Small Business in Thailand

1. It is entirely possible to set up a small business in Thailand and meet your goal of covering your living expenses. However, you need first and foremost to know what you are doing. If, for example, you want to set up a small gems-trading business, it is critical that you bring solid experience to this line of work. If you wish to open a bar or restaurant-something many foreigners have tried-prior experience in setting up and managing such a business is critical. Without relevant experience, you may be in danger of losing your entire investment in a very short period of time.

Thai Food

2. Once you've determined that you bring enough experience to the task, you need to investigate the Thai market to determine who will be your customers; how to reach them (marketing); and where to locate your business in order to be most successful.

3. Once you decide to take the plunge, it is important you seek out a competent legal advisor to guide you through the process. There are a number of law firms that have Western advisors, so you can settle on someone who knows the in's and out's of these rules, and in whom you can trust.

4. In most cases, you will need a Thai partner-a true co-investor, or a nominal partner. This will meet the requirement of the Thai authorities for Thai shareholders to hold a minimum 51% of the business. However, don't be put off by this particular requirement: there are legal ways to insure that the foreign investor remains in complete control of his/her investment and your legal advisor will explain those to you.

5. Furthermore, your business will need a registered business address: this can be a small one- to four-man office, or an entire suite of offices, depending on the number of staff you need to hire. There are many office rental options in Bangkok and in the smaller cities and towns to suit your budget; however, if you are thinking of running your small business out of your apartment, your advisor will need to work with you carefully to find the location that meets the expectations of the Thai authorities.

6. If you are running the business in Thailand yourself, you will need to obtain a work permit, failing which you will be in conflict with immigration and labor law: that you want to avoid at all costs! The need for the work permit in turn brings up the issue of the number of Thai staff you will employ: there is a minimum stated in the rules (4), however these Thai staff can be phased in according to your start-up plan. Your legal advisor will tell you how to meet these interlocking rules without causing yourself too much of a headache.

7. It is critical that you retain a competent accountant (it is not likely you will need to hire a full-time accountant if your business is small). Accounting services are not expensive, starting from a low of GBP 100. (US$ 167) per month. You do want however to chose an accountant with whom you can comfortably communicate in English, as you need to be on top of the tax and accounting issues: the interlocking nature of the rules for Thai business is such that tax and accounting issues are linked to the renewal of your work permit & visa each year.

8. You will want to insure that the Thai staff you hire for your business are competent as well as capable of communicating effectively in English. You will be pleased to know that there are a number of Western-managed recruitment firms that have solid experience assisting Western managers with the selection of technical and administrative staff. You will need to pay a fee for this service of course, but it will allow you to avoid the lengthy process of newspaper advertising, pre-screening and the short-listing of candidates.

9. Some legal advisory firms can provide additional services to assist the investor setting up his new Thai business: help with the selection of office space to suite your needs-or an apartment for yourself; help to find a reputable office furnishings center; and many law firms can introduce you to an English-speaking accountancy service.

Running Your Own Small Business in Thailand

Should you wish to meet with an experienced legal advisor in Bangkok to discuss how to set up your new business, feel free to contact the author of this article, Mr. Phillip Venne, an American with over 15 years' business experience in Thailand. I can be reached at cell-phone +66-8-7595-0501 or via e-mail at info@gam-legalalliance.com. Details about the range of services available from our firm can be found at http://www.gam-legalalliance.com.

Mr. Phillip Venne is an American Legal Advisor who has 15 years of experience providing legal consultations in Thailand to foreigners concerning Thai Immigration, Setting Up a Business in Thailand, Family laws, Property Conveyancing and Foreign Visas Applications.