10 PITFALLS TO AVOID WHEN SETTING UP A BUSINESS (Phuket)
Setting up a business anywhere in the world is never an easy task and potential pitfalls will certainly line your route. Starting a business in a different country makes this task doubly difficult. Below is a list of 10 potential pitfall that may seem like common sense but it is surprising how often they are forgotten or ignored.
Make sure the business is economically viable
It may sound like common sense but many people coming to Thailand on the back of a whim. They have always dreamed of living in Thailand and see setting up a business as being the easiest way to achieve this with little or no thought about the viability of the business. Make sure when you setup your business that there is a demand for your product or service and sufficient profit margins. The old adage that “the easiest way to get 1 million in Thailand is by starting with 2 million” certainly rings true in many cases so it is important to do your research and have a business plan.
Make sure you have a trusty and reliable business partner!
Again it may sound like common sense but because of the rules governing foreigners setting up a business, this becomes more of an issue. Make sure your agreement is watertight and a contract drawn with a reputable lawyer. The last thing you want is to setup a successful business, plough in your own money only for your business partner to ‘do the dirty’ on you and leave you with nothing.
Make sure you meet all the legal requirements
Make sure you get a reputable, experienced lawyer to help you setup the business. As with all countries, Thailand has strict business laws so make sure you are correctly advised and meet all the requirements.
Issues regarding owning a Thai Company
Any Thai company can be a maximum of 49% foreign owned – in other words 51% must be owned by a Thai national. This is where the importance of a good lawyer and sound business partner comes into play as effectively you will be in the minority. Make sure that voting rights are fairly setup to ensure that you still maintain control over YOUR business. In specific cases with the BOI you can have 100% foreign ownership, and there are also treaties that allow Americans and Australians to own their businesses – subject to a number of contingencies that must be met.
Get a good accountant!
It is important to get a good accountant. All documents will be in Thai so make sure that the accountant is knowledgeable and competent as you may have great difficulty understanding what is required. Any problems or errors will be your problem and you will be liable for the penalties.
Remember, just owning a company does not necessarily entitle you to a work permit and if you haven’t got a work permit, working is illegal. Some tasks cannot be carried out by a foreigner so make sure you do the research and don’t fall foul of the laws.
The Thai language is another obvious barrier. Make sure that all documents are properly translated by an expert. Thailand is full of ‘helpful’ people who will say that can do things that they can’t. This is your business and it is too important to be left to a helpful amateur.
It goes without saying that Thai culture is very different from that in the West. Remember that this is their country so you need to follow their rules and their customs!
Loans are very difficult to obtain
It you are setting up a business it will be nearly impossible to get a bank loan from within Thailand. The only option may be from overseas or a private loan. Again make such you seek proper advice before considering this.
Working hours in Thailand are restricted to 8 hours a day or 48 hours per week. Overtime MUST be paid at between 1.5 and 3 times the normal rate. Take this into account in your business plan – your costs may be higher than you thought!
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