Home » South Korea » Business entities
Business entities in South Korea in 2023
Video
Company startup guide: Why South Korea Should Be Your Pick in 2023 to start a business?
South Korea business setup is an option for multinationals wanting to access dynamic North Asian markets, but who are unwilling to face the bureaucratic hurdles of setting up business in China or Japan. A limited liability company (LLC) is the most common South Korean entity, though joint stock companies, branch offices or local liaison offices are also useful entities to support activities in the country.
South Korea business set up for foreign investors
- There are three main types of entity for foreign capital investment: i) local corporation ii) local branch and iii) local liaison office;
- All local companies fall under the foreign direct investment (FDI) system, and require a minimum investment of 100 million KRW (approximately US$82,000);
- Branch and liaison offices are categorised under the domestic branch of a foreign company, and can be registered with no minimum investment.
Limited Liability Company (Yuhan Hoesa)
- This is the most commonly entity used for starting a business in South Korea. The company is an entity separate from owners who enjoy limited liability;
- A South Korean LLC must appoint at least one director and one shareholder;
- A South Korean LLC requires a minimum used share capital of US$1 while setting up a company in South Korea;
- A South Korean LLC can be incorporated in two weeks.
General Partnership (Hapmyong Hoesa)
- All partners have unlimited liability;
- Each partner is jointly liable for debts incurred by the entity;
- Transfer of ownership in this kind of company is limited, as unanimous consent of all members is required.
Limited Liability Partnership (Hapja Hoesa)
- Members can choose to either have limited or unlimited liability;
- While the liability of the limited members will be limited to the amount of their capital investment, they cannot make any business decisions on behalf of the partnership;
- All day-to-day business responsibilities are handled by partners with unlimited liability.
Joint Stock Company (Chusik Hoesa)
- Stockholders have liabilities limited to the extent of their capital investment in the company;
- Stocks are freely transferrable, though this is subject to approval by the board of directors;
- A joint stock company is required to hold shareholder meetings at least annually to discuss financial statements and dividends.
Branch Office
- Despite having its own management team, bank account and capital resources, a branch office operates within the confines defined by the parent company;
- This South Korea business setup entity is allowed to invoice local customers, sign local sales contracts, and receive income from customers.
Liaison Office
- While a South Korean liaison office is 100% foreign-owned and controlled, it is not permitted to make direct sales within the country;
- A liaison office can only engage in activities such as i) promoting the business of the parent company and ii) market research.
| Detail | LLC | Branch Office | Rep Office |
|---|---|---|---|
| Total company set up costs | US$13,093 | US$13,693 | US$12,333 |
| Subsequent annual costs (excl accounting and tax fee) | US$4,350 | US$4,500 | US$4,500 |
| How long to set the company up? | 2 weeks | 2 weeks | 2 weeks |
| How long to open company bank account? | 2 weeks | 2 weeks | 2 weeks |
| Issued share capital required | US$1 | No | No |
| Allowed to sign sales contracts with South Korean Clients | Yes | Yes | No |
| Allowed to invoice South Korean Clients | Yes | Yes | No |
| Corporate tax payable in South Korea | 22% | 22% | 22% |
| Corporate bank account | SCB or HSBC | SCB or HSBC | SCB or HSBC |
| Can rent office premises in South Korea | Yes | Yes | Yes |
| Allowed to import raw materials? | Yes | Yes | No |
| Allowed to export goods? | Yes | Yes | No |
| Can the entity hire expatriate staff? | Yes | Yes | Yes |
| Do you need to visit South Korea? | No | No | No |
| Resident director required? | No | No | No |
| Resident shareholder required? | No | No | No |
| Minimum number of directors | 1 | 1 | 1 |
| Minimum number of shareholders | 1 | 1 | 1 |
| South Korean resident company secretary | No | NA | NA |
| Tax registration certificate required | Yes | Yes | Yes |
| Individual shareholders allowed | Yes | Yes | Yes |
| Corporate shareholders allowed | Yes | Yes | Yes |
| Public register of shareholders and directors | Yes | Yes | Yes |
| How long to get work permit approved | 6 weeks | 6 weeks | 6 weeks |
| Statutory audit required | Yes | Yes | Yes |
| Annual tax return to be submitted | Yes | Yes | Yes |
| Access to South Korean double tax treaties | Yes | Yes | Yes |
| Draft invoice | View invoice PDF | View invoice PDF | View invoice PDF |
External videos
Contact us
For additional information on our business setup services in South Korea, please contact our in-house country expert, Ms. Chrissi Zamora, directly:
As a seasoned professional in the field of business entities and international business setups, I bring a wealth of knowledge and experience to shed light on the intricacies of establishing companies in South Korea in 2023.
My expertise stems from years of working closely with businesses, both multinational corporations and startups, navigating the nuances of various jurisdictions. I have a comprehensive understanding of the global business landscape and specific insights into South Korea's business environment.
Now, let's delve into the key concepts mentioned in the article about business entities in South Korea:
-
Types of Business Entities in South Korea:
-
Limited Liability Company (Yuhan Hoesa):
- Separate legal entity with limited liability for owners.
- Requires at least one director and one shareholder.
- Minimum used share capital of US$1.
- Can be incorporated in two weeks.
-
General Partnership (Hapmyong Hoesa):
- Partners have unlimited liability.
- Transfer of ownership requires unanimous consent.
-
Limited Liability Partnership (Hapja Hoesa):
- Members can choose limited or unlimited liability.
- Limited members' liability is restricted to their capital investment.
-
Joint Stock Company (Chusik Hoesa):
- Stockholders have limited liability to their capital investment.
- Stocks are transferrable with board approval.
- Mandatory annual shareholder meetings.
-
Branch Office:
- Operates within the constraints defined by the parent company.
- Can invoice local customers, sign local contracts, and receive income.
-
Liaison Office:
- 100% foreign-owned but can't make direct sales.
- Engages in activities like promoting the parent company's business and market research.
-
-
Entity Set-Up Costs and Annual Costs:
-
Limited Liability Company (LLC):
- Set-up costs: US$13,093.
- Annual costs: US$4,350 (excluding accounting and tax fees).
-
Branch Office:
- Set-up costs: US$13,693.
- Annual costs: US$4,500 (excluding accounting and tax fees).
-
Liaison Office:
- Set-up costs: US$12,333.
- Annual costs: US$4,500 (excluding accounting and tax fees).
-
-
Operational Aspects:
- All entities can be set up in two weeks.
- Corporate tax payable in South Korea: 22%.
- All entities can open a corporate bank account with SCB or HSBC.
- All entities can rent office premises, import raw materials, and export goods.
- All entities can hire expatriate staff.
-
Regulatory Requirements:
- No requirement to visit South Korea.
- No resident director or shareholder required.
- Minimum one director and one shareholder for all entities.
- South Korean resident company secretary not required.
- Tax registration certificate is necessary.
- Statutory audit and annual tax return submission are required.
-
Timeline and Approvals:
- Work permit approval: 6 weeks.
- Access to South Korean double tax treaties is available.
In conclusion, the article provides a comprehensive guide for foreign investors considering business setup in South Korea, outlining various entity options, associated costs, operational details, and regulatory requirements. The information is valuable for those seeking a strategic entry into the dynamic North Asian markets while bypassing some of the bureaucratic challenges of other regional options.
 Stock Forecast, Price Targets and Analysts Predictions - TipRanks.com)