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Why consider company formation in South Korea?
South Korea is one of the liveliest countries in the world for starting a business in Korea. It can be the right place for your company formation in South Korea. South Korea has been consistently ranked as one of the most open economies in the world in the Ease of Doing Business Report. The reasons for this consistent performance include a transparent and efficient system. South Korea has emerged as a hotspot for businesses involved in applied technologies. Apart from this, post-COVID pandemic, South Korea has projected itself as among the most preferred places for company formation. South Korea's rapid rise as a MICE (meetings, incentives, conferences, exhibitions) destination makes it even more attractive for start-ups and other business investors. The Government of South Korea has taken a plethora of steps to attract more company formation in South Korea. South Korea has immense opportunities in various sectors like electronics, automobiles, etc. Any person or company can form their own company in South Korea based on the nature of their business activities. Therefore, our team will navigate you through the intricacies of the company formation in South Korea.
Types of Business Entities & Company Formation in South Korea
Before the company formation in South Korea, you must choose a type of company based on your business needs. The choice of business model depends on your business aims and the trade rules of the company you choose in South Korea. Most foreign entrepreneurs start with a liaison office due to the simplicity of its registration. There are seven different types of business models in South Korea, which have been mentioned below
Joint Stock Company (Chusik Hoesa)
It is the most chosen form of business entity in South Korea. It is a type of business structure that authorizes the public issue of shares. The stockholders in this company are not liable to the company. Additionally, the stocks can be transferred with approval from the board of directors.
Partnerships (Hapmyeong Hoesa)
All the partners are fully and equally liable for the company's debts in these business models. One of the disadvantages of this business model is that to transfer ownership, the approval of all the partners is required to move further with the registration process. The debt ratio will be limited to the shareholders in a limited partnership company.
Sole Proprietorship (Geonhoesa)
These types of business models are owned and operated by a single individual. It is the simplest form of business model and requires minimum paperwork to register your business.
Limited Liability Company (Yuhan Hoesa)
This business model is the most preferred among investors in South Korea. It has about 50 shareholders who are not liable for any of the company's debts, and their liability is limited to the amount of capital that they subscribed for. are required. No minimum paid-up capital is needed. The directors can be from all nationalities. Additionally, you require a registered address for your company formation in Korea. To set up a Limited Liability Company, a minimum of 2 shareholders
Branch Office
A branch office is usually an expansion of the parent company. Therefore, a branch office can only conduct business activities that align with their parent company's. Hence, the parent company is fully responsible and liable for any costs that are being incurred through their branch offices to set up a business. Apart from that, there are no restrictions or caps on the amount of investment or ownership. These are governed by the Foreign Exchange Transaction Act (FETA).
Representative Office
The name of the Liaison office in Korea also knows these. They have the simplest form of company in Korea for registration requirements. Therefore, many foreign business investors prefer these representative offices.
These offices are not allowed to conduct commercial activities or generate income within South Korea. However, they can engage in non-commercial activities like Research and Development. They are comparable with a branch office. However, they are not allowed to participate in any profit-making business transactions.
Private Limited Company (Yuhan Hoesa)
The company's business structure is most suitable for medium and large-sized companies with a profit motive.
Steps of Company Formation in South Korea
- At least one director who is a resident of South Korea
- At least one shareholder
- Registered office address in South Korea
- No minimum paid-up capital required
- Capital of KRW 1,000,000 (USD 900 approx.) with at least 20% of it paid up in case of the foreign investor.
- Unique company name not taken up by any other company
- The company's articles of incorporation must be filed with a government agency like the Ministry of Justice or the local district office.
Major Business Districts for Company Formation in South Korea
Seoul has 3 major office districts. These are the major business districts and major shopping areas of the country as well, and they have a major impact on investors seeking company formation in South Korea. They have diverse categories of businesses.
Gwanghwamun
Gwanghwamun is the topmost-rated district in South Korea when it comes to doing business and setting up a company. Some reports suggest that Gwanghwamun has registered the highest sales of $4.6 billion in a single year, which is an 8 times hike compared to the previous report analysis conducted in 2013.
Yeouido
This tiny island on the Han River in western Seoul has turned into a hub for foreign investors and attracts FDI Companies. It is also known by the name "Wall Street of South Korea". This district also has a presence on the South Korean Stock Exchange, contributing to its immense popularity. As a result, many fintech company registrations in South Korea have taken place.
Gangnam
Gangnam is located south of the Han River. Until 40 years ago, it used to be a farming area. Later on, this area also spread its footprint in the educational and commercial sectors. You might have heard the popular YouTube song "Gangnam Style”.Gangnam has many hi-tech media agencies and can be popularly known as the "Beverly Hills" of Seoul. It is placed in 2nd position on the list of top business districts to start a business in South Korea.
Benefits of Company Formation in South Korea
The benefits of company formation in South Korea are defined below
Conducive Business Environment
South Korea has been consistently performing well in the Ease of Doing Business Report of the World Bank, and it has been one of the most preferred nations worldwide for company formation in the business landscape.
Strategic Location
South Korea is strategically located between China and Japan. It is within reach of around 60 cities, so South Korea offers a variety of market facilities.
Free Trade Agreements
The signing of the US-South Korea Free Trade Agreement in 2007 led to South Korean business access to the world’s largest consumer markets. South Korea also has a Free trade agreement with the Association of Southeast Asian Nations (ASEAN) and a provisional agreement with India. An FTA has been signed with the European Union, Canada, Mexico, Australia, New Zealand, and many other nations for establishing a subsidiary in South Korea or new companies.
Excellent Infrastructure
South Korea has meticulously planned and has well-developed seaports, airports, and road networks for Korean companies.
Tech Savvy Clients
South Korea's tech-savvy clients have played a major role in developing the home market or business expansion into Korea for the last 10 years. Thanks to these digital-savvy customers, South Korean mobile phone companies and home appliances have become immensely popular in their home countries and globally.
Intellectual Property Protection
South Korea has a good reputation for protecting companies' intellectual property rights.
Highly Skilled Workforce
The country has a highly skilled and educated workforce and provides a cheaper labour pool for newly incorporated companies.
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Download PDFTips for Company Formation in South Korea
We at Enterslice will help you form your company in South Korea, open a bank account online, and pave the way for your business success by leveraging the power of AI and legal technology. Company Formation in South Korea can be a daunting task. Therefore, we have made a list of tips that you must follow to make your experience more hassle-free and easier.
Research your business-specific requirements
For instance, if you are starting a healthcare-related business, you must research the types of permits you may need before you embark on your journey to set up a company.
Consult with a lawyer or registration agent
It’s always a good move to consult a lawyer who shall navigate you through the legal intricacies of company formation in South Korea and how to keep up with the compliances to carry out business activities.
Get business insurance
Business insurance could provide you with peace of mind and help you mitigate risks.
Recordkeeping
Keeping accurate records can help you in company registration in South Korea in a quicker way.
Ongoing Compliances
You must ensure that you comply with all the regulations, like filing annual reports and renewing licenses and permits after your company's formation in South Korea.
Company Formation in South Korea Packages
We can offer you a hassle-free company formation in the South Korea process. Our team simplifies the company formation process in South Korea for you, whether you have a residency in South Korea or are an overseas citizen, for business registration in Korea. We have successfully helped 1000+ companies start their business in South Korea. With Enterslice as a guide, company registration in South Korea has never been easier. We offer the following services
- Dream Company registration in South Korea
- Trademark Registration Services after company registration in South Korea
- End-to-end Assistance in all Business Formats after company registration in South Korea
- Reducing the Compliance Burden to register a company in Korea.
- Assistance in the Preparation of Statutory Documents for company registration in South Korea
- Managing paperwork and post-registration tax filing activities in Korea.
- Streamlining all the Company Registration in South Korea Processes
- Set up South Korean corporate bank accounts for individual or foreign companies.
Accounting Services for Company Formation in South Korea
Our robust panel of accountants shall provide you with a comprehensive service package, looking after all your accounting, bookkeeping, and reporting needs. We shall be providing you with the following accounting services
- Corporate Income Tax Filing
- Financial Statement Preparation
- Custom Reporting
- VAT Filing
- Bookkeeping Services
- Payroll processing Services
- Accounting Practices Advisory
Legal Support for foreign investors in Company Incorporation in South Korea
If you are a foreigner or wish to set up any business model in South Korea on behalf of a foreign company, then you will require a partnership or a business visa. An application in this regard shall be presented to the South Korean Embassy in your home country.
The foreign direct investment company under the Foreign Investment Promotion Law, any foreigner wishing to form a company in South Korea will have to invest KRW 100 million in their newly incorporated company. Furthermore, you will have to apply for the entrepreneur visa by completing the D-8 form.
Additionally, you will require a residence permit from the South Korean immigration department. We at Enterslice shall help you get the required residence permit and initiate the further process for your company formation in South Korea.
Start a company by performing Company registration in South Korea
Business Structure evaluation
Our highly qualified experts shall help you in selecting appropriate business models according to your business needs so that you can easily start a company in South Korea.
Company Registration in South Korea
We have successfully incorporated 1000+ companies and branches in South Korea. Global investors prefer our company due to our highly efficient services and consultancy.
Legal Consultation
Our robust panel of lawyers assists our clients in registering a company in South Korea.
Legal Representation
We represent our clients in front of any legal authority in South Korea if any case arises.
Corporate and secretarial support services
We provide our clients with the maintenance of their companies' statutory records, accounting and tax compliance services, liquidation services, tax consultancy services, and payroll services.
Free consultancy session
We briefly analyze your company's needs through our expert call.
License and Permits
Our team will ensure that your proposed company acquires all the licenses and permits to cater to your specific business needs.
Preparing checklist
We will help you prepare a checklist of Documents that you will need to register your company in South Korea.
Risk Assessment
We shall provide our clients with monthly and quarterly reports to assess the risk of the proposed company.
Accounting Services
Our accounting services are based on accuracy and precision. We provide our clients with a wide range of high-class accounting services tailored to their business needs.
Process of Company Registration in South Korea
Open a company in South Korea by selecting the Business Model
Choose the appropriate business model per your business needs out of the 7 business models in South Korea. We at Enterslice shall help you choose the appropriate business model catered to your business needs before your company registration.
Choosing a Company Name for Business Opportunities
Choosing a suitable company name for your business and getting it approved by the South Korean Intellectual Property Office are two of the most important steps in company registration. Our robust team of experts can help you by suggesting a list of company names
Preparing Documentation for company registration in South Korea
We shall help you prepare and collect all the necessary Documents, like articles of incorporation, etc, to open a company in South Korea.
Obtaining Licenses and Permits for company registration in South Korea
Our team shall help you to obtain business licences and permits for your newly formed company in South Korea.
Documents for Company Registration in South Korea
You must submit the required Documents to the South Korean Commercial Registry to register your dream company with specific business and regulatory needs in South Korea.
After that, the registration can be done online through the Ministry of Trade, Industry, and Energy (MOTIE) website or by going to the Local District Court or the South Korean Commercial Registry Office. Then, you have to pay the required fee and obtain the registration certificate.
Documents of the registration procedure for Company Registration in South Korea
- Business Registration Form
- Articles of Incorporation
- Partnership Agreement ( in case of a partnership)
- Particulars of the company's directors and shareholders include South Korean resident registration cards and passport copies.
- Copy of the tax registration certificate of the company
- Registered Company address proof
- Any other Document required by any government agency
Company Formation in South Korea by Compliance Services for Business Registration
Documentation
After the successful company formation, you will receive the Documents of your new company, which include a South Korean business registration certificate or certificate of incorporation, memorandum & articles of association, and the register of directors and shareholders. You will also receive a business registration number, which shall be used to conduct the business.
Social Security Registration
We shall help you register for social security and other benefits for workers.
Corporate Bank Account
We shall help you create a corporate bank account for your newly set up company in South Korea.
Applying for the tax identification number
All the newly set up companies are registered with the South Korean Tax Authority. After the successful company incorporation, you will get a tax identification number.
Post Registration Compliances & Company registration in South Korea
Our experts offer easy and hassle-free Paper works assistance with checklists and updated formats regularly. Cross-border company registration involves multiple compliances, which, when not appropriately followed, cause delays in the licensing process. Our legal team will help you in systematic compliance formulation along with time-to-time compliance support per the regulation changes. We customize FinTech strategies as per the nature of your business model. Our robust team provides the below-mentioned compliances
Filing Annual Reports
All the newly set up companies in South Korea have to mandatorily file annual reports with the South Korean government. These annual reports include financial statements, descriptions of business activities, and any changes in the company's structure or management.
Social Insurance Registration
The newly set up companies have to mandatorily register for social insurance schemes like national health insurance, national pension, and employment insurance.
Setting up a Corporate Bank Account for Company Formation in South Korea
To carry out your business activities in South Korea, you need to open a bank account in your company's name. To open up this account. You need
- Business Registration Certificates
- Identification Documents of Directors and Shareholders
- Proof of Registered Company Address
- Business registration number or identification number
If you are a non-resident and wish to open up a corporate bank account in South Korea, then you would require the following Documents
- Alien Residence Card
- Passport
- Passport
- South Korean Phone number
Business Expansion & Company Registration in South Korea
Innovative Hotspot
South Korea's open and transparent R&D ecosystem makes it an innovation hotspot and attractive for company registration in South Korea.
Attractive taxation system
The tax rates for the newly set up company are lower in South Korea than other Asian nations. Due to this, the investors are attracted to the company's registration in South Korea.
Seamless Incorporation and Operation
The manner of company incorporation in South Korea is quite simple. It is devoid of any complex paperwork.
Start-up Ecosystem for Company Incorporation in South Korea
The Global Start-up Ecosystem Report 2022 ranked Seoul in South Korea as 10th in the start-up ecosystem category. Let's look at why entrepreneurs prefer Seoul for their start-ups and company incorporation in South Korea.
- Heart of the Start-up Centre
More than 60% of start-ups are present in Seoul for business in the Country.
- Incubation Centres
Seoul is home to the top start-up incubator centres.
- Global Start-up Festivals
Seoul hosts many global start-up festivals like COMEUP.
- Presence of Leading Brands
Seoul has the presence of the world’s leading brands like Samsung and LG.
- Smart City
Seoul has been designated as a smart city with high-speed broadband and conducive business infrastructure.
- R&D Seoul has an advanced R&D infrastructure. It has also been ranked as the fourth most active
cluster in S&T in the Global Innovation Index.
- Large Consumer Market
According to some reports, Seoul will be the 3rd largest e-commerce market in the world in the coming 5 years.
- Tax Rebates
The South Korean Government offers many tax breaks and incentives to angel investors and venture capitalists.
Company Registration in South Korea and Foreign Investment
The South Korean government provides foreign direct investment incentives to international investors, thereby lowering their start-up costs. The government also offers tax rebates to those international investors who contribute remarkably to the South Korean economy.
The government also provides these investors with land and grants cash incentives and other types of capital assistance to attract company registration in South Korea.
The South Korean government also provides free trade zones with business-friendly manufacturing, distribution, and trade laws. Apart from that, there are cheaper rents on buildings and lands in these free trade zones, tax relief, and single portal administrative services.
The South Korean government is also creating free economic zones within these free trade zones to boost businesses and enhance the infrastructure at these international hubs for international investors. At present, South Korea's free economic zones are 8 in number.
Tax Structure & Company Registration in South Korea
The following taxes shall apply to your newly set company in South Korea
- Corporate Income Tax
Currently, the corporate income tax rate in South Korea is at 22%.
- Value Added Tax (VAT)
The VAT rate in South Korea is currently at 10%.
- Withholding Tax
South Korea has a law on withholding tax on various kinds of income, such as dividends, royalties, and interest. This tax rate depends upon the type of income.
- Local Income Tax
This tax is a small percentage of the corporate income tax.
- Other Taxes
The Company may be subject to additional taxes in the form of property, vehicle, etc.
Cost of Company Registration in South Korea
The cost of company registration in South Korea depends upon the type of business entity you choose. The fees may include application fees, registration fees, taxes, and the cost of obtaining licenses and permits. The cost usually varies between $1000 to $5000.
Business License to set up a company in South Korea
Usually, no licenses are required for company registration in South Korea. However, specific types of business sectors require licenses, which depend on the nature of the businesses.
Market Entry Strategy for Company Formation in South Korea
If you want your company formation in one of 8 South Korean Free Economic Zones, then you must meet one of the following requirements
- The concerned business must be in the manufacturing industry, with more than 30% of its total sales generated from exports.
- The concerned business must be in the trading industry.
- The concerned business must be in the logistics industry.
- The main advantage of a company formation in South Korea is that the Government of South Korea doesn’t levy any corporate and income tax on such companies, whether they are domestic or foreign.
Restrictions on Business Practices & Company Registration in South Korea
Prohibited Category
Foreigners are not allowed to hold any percentage of shares in this category of businesses. This category includes banking, postal services, security trading, education, radio, TV, and agricultural sectors.
Partially Prohibited Category
Foreigners are not allowed to hold more than 50 per cent of shares in this category of businesses. This category includes business sectors like fishing, newspaper, cattle sector, telecommunications, domestic transport, power plants( nuclear power plants excluded), and electronic network businesses.
Company incorporation in South Korea
We have 10+ years of experience in assisting entrepreneurs in their company incorporation in South Korea and business setup domain along with business license, market entry strategy, compliance services and other legal Support. Our journey is full of success stories that we achieved through these years by making the right decisions for a budding or an already incorporated company.
Why is a Registered Agent needed for Company Incorporation in South Korea?
You require a registered agent for your company incorporation in South Korea because there are some hindrances that you may get during your company incorporation in South Korea, which includes
- Choosing the correct form of business structure for your company
- Choosing an appropriate business name for your company
- Adhering to Regulatory compliances, Annual tax filing, Post Registration Compliances Maintaining Documents/checklist
- Opening up a South Korean Corporate bank account in the name of the company
- Getting appropriate licenses and permits for registering the business.
Our Foreign Business Incorporation desk and Registered Agents at Enterslice shall help you resolve these challenges and create a hassle-free registration experience.
Why should you choose Enterslice for company incorporation in South Korea?
- Tailor-made incorporation plans
- Successfully incorporated 500+ Companies in South Korea
- Solid Network of 50,000+ Lawyers/Attorneys/CAs/CPAs
- Partner Base of 40,000+ Auditing and Law Firms Globally
- Maintained Consistency with 99.7% Client Recommendations
- 100+ Queries for Company Incorporation in South Korea Daily
- Worked with over 30,000+ Entrepreneurs across the Globe
- AI-powered Service Delivery Platform ensuring Timely Support
- Zero paperwork Provide us with your Documents online
- Dedicated Foreign Investment Desk with 200+ Client Representatives
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