South Korea which is a potential economy is an attractive destination for foreign investors. The investors can establish a company and operate it to begin a lucrative venture. The registration process includes the following steps:
First step: Choosing the approriate field and company structure
The foreign investors do not allow to invest sectors such as banking, postal services, security trading, general education, radio and TV, as well as the agricultural industry – specifically rice and barley cultivation.
There are four types of business structures in Korea: sole proprietorship, partnership, limited liability company (LLC), and corporation. Each has its own advantages and disadvantages, and the requirement of establishment of each type is different.
Second step: Registering the name of company
The company name must be sole, not equal to any company names and not infringe on any existing trademarks. It is easy to search for available company names on the website of Korean Intellectual Property Office (KIPO).
Third step: Getting the business licenses and permits
The requirements vary depending on the industry and business structure. Some of the common licenses and permits include a business registration certificate, tax registration, and employment insurance registration.
Fouth step: Opening a bank account
The bank account will be used for getting payments and paying every expenses. Detailed documents depends on each bank but most of banks ask to provide a business registration certificate and identification documents.
Fifth step: Conducting Registration with the Korean tax authority
All companies in Korea must register with the Korean tax authority. The process of tax registration includes obtaining a tax identification number (TIN) and registering for value-added tax (VAT) and corporate income tax.
Sixth step: Conducting Registration for Social Insurance
Employers in Korea are required to register for social insurance including national health insurance, national pension, and employment insurance. Not only employers but also employees have to register for social insurance and the employer will pay a certain percent of the insurance premiums for the employees.
Final step: Filing Annual Reports
It is compulsory that companies in Korea submit annual reports to the Korean government. The annual report includes financial statements, business activities, and any changes in the company’s structure or management.
These basic seven steps that the foreigners need to know to set up a Korean company. Additionally, the investors should understand clearly consumer landscape, economic dynamics, legal frameworks, labor market and taxation system to running successfully a business in Korea.
