Thailand has proven itself a promising place for entrepreneurs who want to start a business in Southeast Asia. It has many tourist destinations, a bustling economy, and rich natural resources. All these make it ideal for many types of establishments.
But when you start preparing for your company’s registration in Thailand, keep in mind that you must first decide on a suitable business structure. Let us explore the options available to you in the discussion below.
Points to Ponder First
Before we begin, we should also note that the structure you choose will impact various aspects of your enterprise, such as:
- Thailand’s company registration requirements for your business
- Your ability to raise capital and expand to other cities or overseas
- The amount of liability you have when issues arise from the company’s actions
- How you handle your accounting in Thailand
So be sure to study your options carefully so you can make an informed decision. If this means consulting with a qualified expert, then do not hesitate to do so.
Types of Business Structures in Thailand
Sole Proprietorships
A sole proprietorship is the simplest and most affordable type you can register, which is why many small Thai businesses start out as this. There can only be one owner, and they have full control over their operations.
However, one major drawback of this structure is that you have liability protection. This means your personal assets can be at risk if the proprietorship has debts or legal troubles.
Partnerships
In this structure, you can own a business and share the profits with two or more people. There are two kinds of partnerships you can set up in Thailand:
- Ordinary partnerships have all partners sharing unlimited liability over the business. They can decide between themselves the contributions they will give to the business.
- Limited partnerships have two types of partners. One type’s liability is limited to the amount they contribute. Meanwhile, the other has unlimited liability and manages business activities.
Limited Companies
Limited companies offer more liability protection than the first two structures. It is one of the main reasons why it is a popular option for many Thai and foreign investors. There are two main categories:
- Private limited companies require at least three shareholders, all of them with limited liability. However, foreign shareholders can typically only own up to 49% unless they apply for 100% ownership.
- Public limited companies can offer shares to the public as the term suggests. They must have a board of directors with at least five members and half of them Thai nationals.
Joint Venture
This arrangement involves at least two parties pooling their resources for a specific project or venture. It is a popular option for many foreign entrepreneurs looking to gain a foothold into Thailand. Thai law views the venture’s parties as separate entities, except when filing licences and taxes.
Other Structures Available to Foreigners
Foreigners can also register their businesses as other structures, including:
- Regional offices are extensions of overseas head offices. They must have at least one other branch or affiliate in Asia before they can set up shop. Their activities are also strictly limited and must not be used to generate income in Thailand.
- Representative offices are also non-profits, but they generally serve as liaisons for foreign parent companies and their partners and clients in Thailand.
- Branch offices can do income-generating commercial activities in Thailand. They are subject to local labour and taxation laws.
The Best Structure Always Depends On Your Business Goals
Choosing the right business structure is crucial to your success in Thailand. It is wise to always consider the nature of your business, your long-term goals, and your aversion to risk.
If you need more advice, consider speaking with Thai business consultancy. They have an in-depth understanding of each structure and can guide you on the best choice before your company’s registration in Thailand. Careful decision-making can set you on the path to success.