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Do you have the next big idea for a business on Koh Phangan and want to register your company?
Thailand attracts foreigners because it is an excellent place to start a business or invest.
But before you jump in, do your homework and ensure you're ready to spend a few years in Thailand living and growing your company. Many people believe that the island ‘“needs this or that” and unfortunately fails and closes after one year or less. Do your research before committing.
Here on Koh Phangan, a lot goes into starting a company. And the first phase should be prepared.
All successful companies have well-thought-out business strategies.
In Thailand, most people's businesses struggle because they want to take shortcuts or "go with the flow."
Doing market research and identifying your niche is the first and, arguably, most critical move in starting a company in Thailand, more importantly on Koh Phangan due to its size.
Spend time researching the industry, studying competitors, and getting to know the culture. Determine what is missing here and how to meet the need.
Also, I learned Thai. This can make it easier for you to communicate with your Thai coworkers, partners, and service providers.
You may also speak with other local business owners to get their perspectives on the industry.
It would help if you thought about marketing campaigns to support your business once you understand your market.
Give away free shots to first-time customers or free drinks at night if you're opening a restaurant.
However, you should find ways to differentiate your business from rivals and have a backup plan in case of a downturn.
A business could face a variety of commercial risks. Before starting a company, do your homework!
Find a genuine Thai partner if you intend to remain on Koh Phangan long-term and start a company.
Someone familiar with the area, speaks the language, and can handle administrative and staffing procedures is extremely valuable.
Thais are much better at dealing with local authorities and workers than you are, and they are more likely to know people, which can cut costs. This is because foreigners in Thailand are usually charged a higher rate for local services. Cleaning, taxi, and general contracting services are cheaper in Thailand.
Your Thai partner might be able to obtain 50% to 75% less expensive quotes than what you would get.
Even though you can still own and manage your own company, this is crucial. It is also easier to work with a Thai national as a partner.
Some people choose to have a partner just on paper; this is someone Thai who owns 51 per cent of the business but has no say or actual ownership. While this is a common practice for foreign-owned companies, it may cause issues in the future. Other methods are used to get around this law.
Please speak with a lawyer or an accountant, since they know the rules.
The laws in Thailand are constantly changing, and only someone who keeps up with them can tell you what is best. Make an acquaintance with a Thai expert in your area. They will assist you in running your business and holding company stock.
If you have a trusted Thai buddy, they will keep company shares on your behalf and sell them to you when you ask.
A foreigner may only own 49% of a business in Thailand. However, if you want to run your business, making a trusted friend own shares is a common practice.
You can do this when doing research; it might take a few trips here to establish good relationships, especially with Thai people.
The next step is to establish specific objectives for all parties concerned, determine your salary, and plan a budget for payroll, rent, and other expenses.
Check out the information below to get an idea of how much you could spend per month on a small business with five employees.
The costs are listed below. They aren't precise. They do, however, offer you a sense of what to expect.
Costs of Expenses
20,000 baht for rent
10,000 baht for utilities
3,000 baht for internet
Salary for seven employees: 140,000 baht
Salaries for three partners are 75,000 baht each.
Make sure you have enough money for the first six to twelve months to cover these expenses.
The most challenging aspect of starting a business is getting it off the ground. This is where you'll have to deal with all of the legal issues. And if you run into any problems, it might throw you off and dampen your enthusiasm for starting your own company.
Creating a company here is a difficult task. However, here's a quick rundown of what you'll need to do:
To begin, reserve your company's name to distinguish it from other Thai businesses.
Then you create the company's registration papers, which include a shareholder list, meeting minutes, and proof of share capital payment.
Then you go to the DBD and register your company.
Since all paperwork is in Thai, you can do it yourself if you know how to read and write Thai. You must complete the form using the exact wording that the DBD requires.
When you're an ex-pat, things get even more complicated because the DBD may need to check your source of funds and the financial status of your Thai partners.
Hire a lawyer to assist you if you cannot do so alone. Most foreigners do this on Koh Phangan unless they are married to a Thai who can help or have close relationships with others.
You may need to register for VAT and obtain licenses for your line of business after registering your company.
Other licenses can be required depending on the nature of your company. If you want to open a pub or bar, you'll need a liquor and music license. An import and export license is required if you own a shipping business. The FDA needs a license to import food and drugs for sale in Thailand.
Double-check with your lawyer to escape fines or other issues down the road.
An accounting company may also be used. They ensure you have all the required documentation and apply on your behalf.
Companies may request photos of your bank account and a map of your company's position. After that, you must wait for these licenses.
Wait times vary by province, area, and license, so do your research ahead of time because Thai bureaucracy alters processing times.
Each of these licenses will cost you between 600 and 2,000 baht. Such permits, such as liquor and music licenses, must be renewed annually.
The most necessary license for a restaurant owner is the music license, which most people overlook. The so-called music police will fine you if you don't have one.
This license is primarily intended to ensure that local and foreign musicians are compensated for the music they perform in your establishment. You'll need a certificate if you play other people's songs. The music police will not threaten or extort you without a warrant.
Regarding office or workspace, things can be slightly different on Koh Phangan to the rest of Thailand. The island doesn’t have serviced offices, and the offices' premises are more like shops.
You'll need to buy furniture most of the time, set up phone and internet accounts, and possibly employ an administrator to keep track of the office's inner workings.
Office spaces make sense in some situations, such as if your office is connected to your company or your team is growing.
You have a few options when it comes to recruiting employees.
You can also post job openings on sites like Jobdb, Jobthai, and Jobtopgun. A single ad typically costs a few thousand baht per month. For hiring foreign staff or managerial employees, LinkedIn and Craigslist are excellent options.
Other options include putting up a "Staff Wanted" sign, posting the work in a local Facebook community, or asking for referrals from locals.
You should provide the employees with free food, beverages, snacks, and a paycheck. You will allow workers to drink with customers for free, within reason.
Each Songkran, or Thai New Year, you can offer a 2,000 baht bonus to all of your employees.
However, these extras are at the employer's discretion and are not required by Thai law. Some employers provide sleeping quarters and assistance with travel.
When you have good employees, pay them equally, so they don't quit or get hired by companies that pay more.
Your employees will recommend your company to other potential employees if you pay a fair wage.
Managing and owning a business on Koh Phangan can be a rewarding and enlightening experience. Employ a knowledgeable team to help set up and promote your business once you've found your niche.
So, instead of doing all the tedious back-end work, you can focus on what you do best: serving your clients.
If you need assistance in establishing your company, please get in touch with us, and we will put you in touch with someone who can assist you.