South Korea is one of the most important economies in the world. South Korea is the 4th largest in Asia and records show it is the 11th largest global economy. South Korea’s local economy is very strong, but it is also open to foreign investment, and that is why it is attractive to so many foreign investors. If you are looking to expand your business into Asia, South Korea is a very good place to start. But, before you set up a business in South Korea, there are a few things you should know.
There Are Lots of Opportunities
Due to the South Korean government taking steps to encourage foreign investment, there has been explosive growth in different industries. This means lots of opportunities for you. From drone manufacturing to starting a dropshipping business, entrepreneurs will not have to look too far to find lucrative opportunities.
As with getting into any market, entrepreneurs need to do their research to ensure there is a market for the type of business they want to set up. However, if you want to start a business in South Korea and sell to the global market, you likely have already validated your business idea and seen it to be lucrative enough.
Before you can start the business, you will need to apply for the right visa. This is important especially if you would like to live and run your business from South Korea. To get the same treatment locals get when they open a business, you should try to get a resident visa. Do note that if you have an E-1 or E-2 visa, it is illegal for you to open a business and you will have to apply for a resident visa or a D-8 visa, which allows you to make money in the country.
Additionally, you will need to open a business account with a South Korean Bank. You will be required to deposit a certain sum as prescribed when you open the account to show you are serious about starting a business here. The money should be wired from a foreign country, from an account with your name to the South Korean account under your name.
Registering the Business
Before registering the business, you need to have a business name. Fortunately, a simple online search should help you find a recognizable and catchy name for the type of business you would like to start.
Once you have the name and the bank account as discussed above, you will get the documentation that will help you register the business. Next, you will need to take the real estate lease and bank details to a district office to have the business registered. Because the forms have to be filled in Hangul, the Korean alphabet, you might need the help of a consultant to complete the forms.
Types of Business
The type of business you open will be determined by tax implications, your goals, and the business regulations. The types of business you can start include a limited liability company, joint stock company, private limited company, limited partnership company or a general partnership company. To get going faster, you can start with a liaison office as this option does not require difficult formalities. All you have to do is register with the tax authorities and the national bank.
Optionally, you can start a branch of your foreign business. To do this you need to complete the business and court registration, as well as report the new office to the foreign exchange bank you will be directed to.
One of the trickiest aspects of starting a business in South Korea as a foreigner is hiring the right people and managing them effectively. This is especially true if you don’t want to live and work in South Korea but just need a local presence there. Luckily, you do not have to undertake the hiring yourself because by hiring a South Korea PEO, the process becomes a lot easier.
By acting as a professional employment organization(PEO) or an employer of record(EOR), companies like New Horizons Global Partners can handle the hiring and HR responsibilities on your behalf, so you do not have to establish a local entity in South Korea or hire locals directly. New Horizons Global Partners acts as your partner, hiring the right staff for you and allowing you to manage them from wherever you are based. If you want to learn how a PEO or EOR can make hiring in South Korea easier for you, this site has information on this.
Because you will be a foreigner, you should pay close attention to the tax system and pay your taxes diligently. You need to register the company within twenty days of starting the business.
The process of starting a business in South Korea can be quite complicated and the discussion above only touches on the most important things you should know. You should get additional support from consultants and business lawyers to ensure you do everything right.