From Idea to Reality: How To Start a Business In Thailand

Are you interested in exploring business opportunities while seeing the world? If so, launching a business in Thailand could be an exciting and rewarding experience for you! From experiencing new cultures to forming long-term partnerships with potential business partners, starting a company in Bangkok or Phuket could open up many possibilities for savvy entrepreneurs. In our latest blog post, we’ll guide you through each step of the process, including market research and legal considerations, so that your Thai venture is successful from start to finish! Let’s get started!

To start a business in Thailand, you need to take care of various things such as choosing the appropriate legal structure, following the guidelines set by the Foreign Business Act and BOI regulations, acquiring visas and work permits, and registering your company. You also need to open a local bank account to manage finances and fulfill tax-related obligations to ensure seamless operations.

Key takeaways

• Understand the Thai Market and Local Regulations, from economic stability to competitive labor costs, and research the local market before launching a business in Thailand.
• Establish Business and Legal Structures, choose the right type of legal entity for your business, including Limited Company and Branch Office registration.
• Find the Right Location for Your Business, consider your business’s goals and resources as you decide where to locate. Obtain Relevant Licenses like foreign business licenses, and permits, and determine which permits are necessary for your business’s operations in Thailand

Research and Planning

Understanding Thai business culture

In business interactions, it’s important to uphold one’s reputation and that of the business. The idea of maintaining “face” is crucial. Tough talks should ideally come from those with higher authority or status, and it’s common to avoid being bluntly refused.

When doing business with Thais, keep in mind that they’re usually quiet listeners who rarely interrupt you. So, it’s advisable to watch your emotions and how they might be taken while communicating with your Thai business partner. But, it’s always a good idea to remain professional and composed when it comes to work interactions.

Sanuk

So, in Thai culture, they have this word: ‘Sanuk’. And it means finding happiness and satisfaction in all aspects of life. At work, Thai people wanna have a good time, you know? They aim to create a pleasant and enjoyable experience. Sometimes it’s hard to draw a line between work and personal life. But hey, it’s cool! They chat about social events during meetings and discuss business during social gatherings. Gotta love their work-life flow! Although punctuality is valued, Thai culture tends to have a more flexible attitude towards time and may not strictly follow deadlines.

Identifying market opportunities

There are several promising business opportunities in Thailand for individuals who are interested in expanding their current company into Asia or starting a new business in Thailand. The article lists ten of the top business opportunities available.

Import and Export Company

Thailand is not just an amazing tourist destination, it’s also a major transportation hub in Asia. With excellent air, road, rail, and sea links to other countries, it’s the perfect place to start an import-export business. The best part? The choice of option is completely up to you based on your personal connections, experience, and preferences.

So get this, in 2019 Thailand shopped around the globe to the tune of US$239.9 billion That’s almost 240 billion! (Impressive, right?) Even though there was a -4.4% dip in Thailand’s imports from 2018, they still accounted for 1.2% of the world’s imports totaling $19.665 trillion. And, most of their imports (a whopping 74.9%) came from other Asian countries.

Creating a solid business plan

Creating a solid business plan is essential for the success of any business, as it provides a roadmap and helps you stay focused on your goals. Here are the key elements to include when crafting a business plan:

1. Executive Summary: Start by giving a quick overview of your business, covering its purpose, vision, and mission. Keep this section succinct yet captivating, encouraging the reader to delve deeper.
2. Company Description: Provide a detailed description of your company, including its legal structure, industry, location, and any relevant history. Explain what problems your business aims to solve and how it differentiates itself from competitors.
3. Market Analysis: Conduct thorough research on your target market, including market size, trends, growth potential, and customer segments. Analyze the competitive landscape, identifying your main competitors, their strengths and weaknesses, and your company’s unique selling points.
4. Marketing and Sales Strategy: Outline your marketing and sales approach, detailing how you plan to attract and retain customers. This should include your pricing strategy, promotional efforts, advertising channels, and distribution methods.
5. Products and Services: Describe your products or services in detail, focusing on the benefits they provide to customers. Explain how they fulfill a need or solve a problem in the market, and highlight any unique features or competitive advantages.
6. Operations and Management: Detail your company’s organizational structure and management team, including the roles and responsibilities of key personnel. Explain how your operations will function, including any facilities, equipment, and processes needed to produce and deliver your products or services.
7. Financial Projections: Provide a comprehensive financial forecast, including projected income statements, balance sheets, and cash flow statements for at least the next three to five years. Include assumptions and explanations for your projections, and consider various scenarios, such as best-case, worst-case, and most likely outcomes.
8. Funding Request: If you’re seeking external financing, clearly outline the amount of funding you need, how you plan to use the funds, and your preferred terms and repayment schedule. Explain how the investment will benefit your business and help achieve your goals.
9. Exit Strategy: If your business plan is for investors, include a potential exit strategy, such as an acquisition, merger, or initial public offering (IPO). This demonstrates to investors that you have a long-term vision and a plan for realizing returns on their investment.
10. Appendices: Include any supporting documents, such as market research data, resumes of key personnel, product samples, or customer testimonials, that can strengthen your business plan.

Once you’ve completed your business plan, make sure to review and revise it regularly! This document should guide your business, keep you informed and help you make progress to reach your goals.

Legal Requirements

Registering your business

The process of registering a company in Thailand can be challenging, but I can provide you with a summary of the steps you need to take.

To start, you need to register your company name in Thailand and ensure that it does not bear any resemblance to the names of other companies. Once you have reserved your company name, you need to gather your company registration paperwork which includes a shareholder list, meeting minutes, and documentation showing proof of payment for share capital.

To register a company, visit the website of the DBD and follow the registration procedure listed there. You can do this procedure yourself if you know how to read and write Thai since all paperwork is in Thai. Moreover, it is necessary to complete the form using the specific words required by the DBD.

Being an ex-pat can make the situation more complex because the DBD may need to verify the source of your funds and the financial status of your Thai partners.

If you are unable to handle the tasks yourself, it’s advisable to hire a lawyer to assist you. Once you have completed the company registration process, you might need to also register for VAT and obtain licenses relevant to your business.

Finding Thai Partners

If you plan on staying in Thailand for the long term and starting a company, it is recommended that you find a genuine Thai business partner.

Having someone with knowledge of the area, proficiency in the local language, and the ability to manage administrative and staffing tasks can be extremely valuable.

Your management is not as efficient in dealing with the local authorities and staff as someone else can be. Additionally, there are individuals who opt for a paper partnership where 51 percent of shares are owned by someone who does not have any actual ownership or decision-making power in the company.

While it is a common practice among foreign-owned companies, it may cause issues in the future.

Choosing the right business structure

When starting a business, selecting the appropriate business structure is essential as it influences aspects like trying to pay corporate income tax, legal responsibility, and administrative obligations. The commonly used business structures are:

1. Sole Proprietorship: The business structure in which an individual owns and runs the business with full control and personal responsibility for all liabilities, debts, and taxes is the most basic one. It is appropriate for small businesses with a low level of risk and minimal compliance needs.
2. Partnership: A partnership is when two or more individuals or entities share the ownership and responsibility of a business. There are two types of partnerships: general (where owners have equal ownership and liability) and limited (where some owners have limited liability and don’t participate in management decisions). Partnerships work well for businesses with multiple owners and complementary skill sets.
3. Limited Liability Company (LLC): The structure of an LLC is a hybrid, meaning it provides the limited liability protection of a corporation while also allowing pass-through taxation similar to a partnership. The business structure where owners are referred to as members and are not held liable for company debts and liabilities is a good option for those looking for protection from liabilities as well as avoiding the complicated compliance requirements and double taxation of a corporation. Thai Limited Companies Limited Companies are the basic Thai corporate structure. They are governed by the Thai Civil and Commercial Code.

Applying for necessary permits and licenses

If you’re planning to operate a restaurant, be sure to obtain a liquor and music license. Many restaurant owners forget to do this and end up paying a fine imposed by the music police. Similarly, if you’re starting a shipping company, you’ll need to get an import and export license. And if you’re importing food and drugs for your business in Thailand, you’ll need an FDA license.

If you are unsure about the licenses you need to obtain, it is necessary to consult with a lawyer or accounting firm.

To obtain a license, firms may need to provide copies of their bank account and a map or sketch of their company’s location. The granting of licenses follows a timetable based on the province, region, and type of license.

The processing time for licenses in the Thai bureaucracy has been altered. However, you will have to pay a fee of 600 to 2,000 baht for each license.

Certain licenses, such as those for liquor and music in the restaurant industry, require annual renewal. This is done to guarantee that artists, both locally and internationally, are receiving royalties for their work included in your business. An updated license is necessary if you are using music that belongs to another person. This licensing also provides protection from potential police issues.

Financial Considerations

Opening a local bank account

Once your company is registered, select a bank that aligns with your requirements and preferences. You might require assistance from either an accounting firm or an individual to suggest a suitable bank or introduce you to the bank manager. Ask the bank to create an online banking account for you as it is a secure, convenient, and user-friendly option.

If you’ve been in business for a few years, you have the option to apply for a credit card from your bank to secure your finances. However, foreign businesses that apply for credit cards before being in business for a few years are required to provide collateral by depositing the full amount in the bank, which is called an unsecured credit card.

Tax obligations

If a company is registered in Thailand, it is taxed on all the income it earns globally. On the other hand, if a company is registered outside Thailand, it is taxed only on the profits it makes from doing business in Thailand or as a result of that business.

The CIT rate is 20%. If a foreign company that is not operating in Thailand receives assessable income like interest, dividends, royalties, rentals, and service fees from or in Thailand, it is required to pay a final withholding tax (WHT). In general, the tax rate is 15%. However, dividends are taxed at a rate of 10%. Additionally, other rates may apply if there is a double tax treaty in place.

Budgeting and financial planning

To run a successful business, it’s crucial to have a budget and a financial plan. These tools will help you manage your resources effectively, make informed decisions, and track your progress toward your goals.

Businesses can strategically allocate resources and prioritize spending by defining clear objectives, estimating revenues, identifying expenses, and creating a comprehensive budget.

Regularly monitoring and adjusting budgets helps businesses to recognize trends, identify potential issues early on, and adjust their strategies accordingly. Proper cash flow management, break-even analysis, and long-term financial planning enable businesses to anticipate future needs, plan for growth, and maintain financial stability.

Getting guidance from financial experts like advisors or accountants can help in creating accurate, feasible, and all-inclusive budgets and financial plans, leading to better financial outcomes for the business.

Hiring and Staffing

Local labor laws

In Thailand, the law allows for both fixed-term and permanent contracts, which can be written or verbal. While it’s not mandatory, it’s recommended to create a complete employment contract for any new hires in Thailand.

Having a clearly defined contract is essential to protect both the employee and employer from potential legal disputes in Thailand. This is because the Thai legal system tends to favor the employee in the absence of a well-defined contract.

When hiring internationally, it is safer to avoid using generic online templates as they may not include specific in-country requirements. Employment contracts must include such basic parameters as:

• The role and responsibilities of an employee
• Benefit packages
• Compensation expectations
• Termination requirements

The minimum wage in Thailand varies from 328 THB to 354 THB per day and depends on the province.

Finding and hiring employees

In Thailand, employment law permits employers to use written or verbal contracts, as well as both fixed-term and permanent contracts. It is advisable to create a detailed written contract for each employee, outlining crucial employment information such as:

• Position
• Compensation
• Benefits
• Termination requirements

According to Thai labor law, there is no specific requirement for how long a probationary period should be, but it is recommended that it lasts no more than 119 days. This allows for easy termination of the employment if the relationship between the employer and employee is not working out.

The termination requirements vary depending on whether the termination is with or without cause. If an employee is terminated without cause, the company must give them at least one pay cycle’s written notice and pay severance based on their tenure with the company.

• Less than one year: 30 days’ compensation
• One to three years: 90 days’ compensation
• Three to six years: 180 days’ compensation
• Six to 10 years: 240 days’ compensation
• 10 to 20 years: 300 days’ compensation
• 20 years or more: 400 days’ compensation

In some cases, the employer may opt to pay additional compensation to shorten the notice period.

If a company terminates an employee for financial reasons rather than performance-related reasons and the employee has worked at the company for six years or more, the company must provide additional severance pay. This pay should equal 15 days’ salary for every year of employment, maxing out at 360 days’ salary.

Visa requirements for foreign workers

In order for a foreigner to work legally in Thailand, they need to obtain a work permit. This document specifies their job title, the Thai company they work for, and the type of work they are permitted to do as a foreigner in Thailand. The work permit serves as both legal documentation and authorization to engage in a permissible job or occupation within Thailand.

If you are a foreigner coming to Thailand, you cannot work without a work permit, no matter what type of visa you have. To be able to apply for a work permit, you need to have the appropriate visa for working in Thailand.

Foreigners wishing to obtain a work permit in Thailand must first obtain a non-immigrant visa before entering the country.

After obtaining a non-immigrant visa, the foreigner can start applying for a work permit. It usually takes 7 business days to complete the process, which is done at the Ministry of Labor office.

If you are a foreigner and have a non-immigrant or resident visa, you can apply for a work permit. Just make sure you have an employer who can provide the necessary documents and that the job you will be doing is not restricted to foreigners.

Marketing and Networking

Creating an online presence

In order for businesses to grow and become more visible, marketing and networking are essential. Nowadays, having a strong online presence is also critical for modern marketing strategies. By developing an attractive website, taking advantage of social media platforms, and applying search engine optimization (SEO) methods, businesses can expand their reach and establish themselves in their respective industries.

Businesses can use online networking tools like industry forums, professional associations, and social media groups to connect with potential clients, partners, and peers. This helps to build beneficial relationships and opportunities for collaboration. Combining successful marketing and networking strategies will help businesses increase brand awareness, strengthen industry connections, driving sales and growth.

Utilizing local media and advertising

Using local media and advertising can help businesses effectively reach their intended audience in a particular geographic region. This method can help establish brand recognition and a strong community presence. Utilizing tools such as local newspapers, radio stations, television channels, billboards, and transit ads can enable businesses to create campaigns tailored to their local audience.

To increase visibility and strengthen relationships within the community, businesses can engage in community events, sponsor local initiatives, and partner with other local businesses. Using local media and advertising opportunities strategically can enhance their reputation, attract new customers, and ultimately drive growth in their target market.

Joining business associations and networking events

One effective way for businesses to make connections, gain knowledge, and find collaborations is by joining business associations and attending networking events. By becoming a member of either industry-specific or general business associations, entrepreneurs can tap into resources, insights, and support from other professionals with similar goals.

By participating in networking events, whether online or in-person, you can connect with potential clients, partners, and industry experts, building strong relationships that can lead to new business opportunities or referrals. Engaging in these activities helps you expand your network and enhances your professional development and industry knowledge, ultimately contributing to your business growth and success.

Challenges and Tips for Success

Overcoming language barriers

Overcoming language barriers is essential for success in multicultural environments or international markets. To address this challenge, consider learning basic phrases and greetings in the local language, which demonstrates respect and helps build rapport.

Hiring bilingual staff and utilizing professional interpreters for complex or sensitive situations can greatly facilitate communication and minimize misunderstandings. Additionally, leveraging translation services for written materials ensures accurate information sharing.

Emphasizing clear and concise communication, using visual aids, and being patient and open-minded during interactions can further enhance cross-cultural understanding. By proactively addressing language barriers, businesses can foster strong relationships and effectively navigate diverse business environments.

Adapting to cultural differences

When it comes to doing business in Thailand, adapting to cultural differences is essential for success. This Southeast Asian nation has a unique culture that values politeness, respect, and social hierarchy. As a result, business owners and entrepreneurs must learn to navigate cultural nuances and understand how to conduct themselves in the Thai business world. While this may seem like a daunting prospect, there are many tips and strategies you can employ to overcome these challenges. For instance, building long-term relationships with your Thai counterparts, taking the time to learn the language, and understanding the importance of non-verbal communication are all crucial to building trust and achieving success. 

Ensuring legal compliance

Operating a business in Thailand can be a profitable venture, but it also presents specific challenges that need to be overcome to ensure long-term success. One of the biggest hurdles is navigating the complex and ever-changing legal requirements. Ensuring legal compliance is crucial, and staying up-to-date with the latest regulations can be taxing.

However, with some tips and guidance, you can overcome this challenge. Seeking legal counsel from experienced lawyers, training your staff on the regulations, and establishing proper documentation are effective ways of staying in compliance with the law. By implementing these measures, you can confidently run your business in Thailand while adhering to the legal requirements, saving yourself and your business from unnecessary fines, and avoiding costly legal disputes.

Make sure to check out this article on “13 Things You Need To Know Before Doing Business In Thailand” before you take a leap!

How To Start a Business In Thailand FAQs

How do I open a local bank account in Thailand?

In Thailand, it’s typically necessary to go to a physical bank location to open a bank account. A representative from the bank will review your paperwork and watch you sign the account documents. This requirement typically applies to non-resident accounts as well.

What are the labor laws and regulations for hiring employees?

Employees must not work more than 8 hours a day or 48 hours a week, but they can agree with their employer to adjust their working hours as long as they do not exceed the 48-hour limit. For more information about the local labor laws in Thailand, visit this webiste.

Are there specific permits or licenses required to operate a business in Thailand?

If you plan to start a business in Thailand, you may need to obtain a license or permit based on the types of activities your business will be involved in. For instance, some activities such as tourism, running schools or childcare centers, selling liquor, providing medical services, and serving food and drinks are regulated and require specific licenses.

How can I market my business to Thai consumers?

Entering the Thai market can be a daunting task for any business, but with the right marketing strategies, it can be a rewarding one. Thai consumers value relationships and trust in their business interactions. Building a strong online and offline presence is vital to gaining the trust of your target market. Social media platforms such as Facebook and Instagram have a significant impact on consumer behavior in Thailand and should be utilized to showcase your brand’s unique values and culture.

Collaborating with local influencers or partnering with established businesses can also help to establish credibility and increase brand awareness. It’s important to keep in mind that adaptation and personalization are key when marketing to Thai consumers. Take the time to understand their preferences and behaviors, and tailor your messaging accordingly.

What are the common challenges faced by foreign entrepreneurs in Thailand?

Starting a business in a foreign country can be a real challenge, and Thailand is no exception. As an entrepreneur, you’ll face plenty of hurdles, from bureaucratic red tape to cultural differences. For foreign entrepreneurs in Thailand, language can be a huge barrier to success. Without a good grasp of Thai, it can be difficult to communicate with customers, suppliers, and government officials. Another common challenge is navigating the complex legal and regulatory landscape.

Thailand’s laws and regulations can be confusing and intimidating for foreign entrepreneurs who are used to a different legal system. Additionally, it can be challenging to build a network and establish trust in a new market, especially when you’re trying to compete with local businesses. Despite these challenges, however, many foreign entrepreneurs have found success in Thailand by taking the time to learn about the local culture and business landscape and building strong relationships with local partners.

Conclusion

Starting a business in Thailand can be both exciting and intimidating. Understanding the local regulations, doing research on the market, choosing the right legal entity, and finding the perfect location for your business require careful thought and planning. With determination and an eye for success, however, you can overcome any obstacles that come your way.

To make sure you’re up with all of the latest regulations and market trends to ensure your business’s success in Thailand, it’s important to always stay informed and prepared. Subscribe to our newsletter for updates on everything related to living in Thailand or entrepreneurs entering the Thai market. We stand ready to help answer any questions that you may have every step of the way!