Incorporation
The population of non-Koreans living in Korea continues to rise, and more and more long-term foreign residents consider establishing a business here. However, there are a great number of concerns when starting a business. Should you start a sole proprietorship, a corporation, a branch or a limited liability company? How much paid-in capital will be necessary? How many directors do you need on your board? Do you need an auditor to register the entity? The list goes on and on. Here are some answers to questions I hear most often in my accounting and consultancy practice.
If you would like to establish a corporation, or ju-shik-hoe-sa (주식회사), then you do not need an auditor if the paid-in capital was less than W1 billion (approximately US $900,000). You can also run your company with a single director, who is likely to be yourself. The minimum necessary paid-in capital amount for a Korean corporation is W10 million (approximately US $9,000), and you must submit the proof that you have the minimum amount in your business account in order to establish the company.
You don't need a certificate of deposit for the paid-in capital though if you’re looking to establish a yoo-han-hoesa (유한회사), which is Korean for a limited liability company. So you can establish a 100 million won paid-in capital company without the certificate of deposit if it's a yoo-han-hoesa.
Also for a yoo-han-hoesa, you are not required to publicly announce your financial statement through a media outlet, so a lot of large corporations take advantage of incorporating as this type of business, including Microsoft Korea, Chanel Korea, Apple Korea and Hermes Korea.
I also recommend this type of yoo-han-hoesa because you can establish it without the certificate of deposit for the paid-in capital and also avoid having to publicize your financials. The big guys love to take advantage of these benefits, and you can too. Some legal groups have argued that these large corporations should publicize their financial information regardless the type of corporate structure they fall under.
If you are a foreigner who doesn’t have residency through another source such as Korean ethnicity (F-4) or marriage (F-6), then in addition to deciding how to incorporate your business, you will also need to obtain a visa that allows you to stay in Korea, such as an permanent residency (F-5) or professional or student (D series) visas. To get such a visa, you need to take obtain a certification of foreign direct investment (FDI) equal to or exceeding W100 million (approximately US $93,000). For more information on investing in Korea, check out www.investkorea.org, or contact me at jz@taxjz.com.
