Thailand like other countries acknowledges and accepts three types of business forms: sole proprietorship, partnership and private limited company. Each business form has its own set of registration requirements and compliance. And for foreigners desiring to set up a sole proprietor company in Thailand, it is best to consult with local or foreign lawyers with expertise in business setup and registration. The otherwise simple business registration process can turn tedious and complicated if you get lost on the procedures and requirements necessitated by such registration.
A business owned by one person with unlimited liability is known as sole proprietorship. Unlimited liability means that a proprietor’s personal assets and business are attached to the sole proprietor’s business that may be used to cover liabilities in the event of a legal action. For foreigners, sole proprietorship is only allowed if they are covered by the United States – Thailand Treaty of Amity and Economic Cooperation. Otherwise foreigners are not permitted to operate this type of business. To see other types of business a foreign investor can apply for, you can see it here.
But some foreigners who have stayed in Thailand for so long that they ended up marrying Thai nationals, they can register the business under sole proprietorship in the name of their local Thai spouse (wife or husband, as the case maybe), in which case the sole proprietor of the business legally will be the Thai spouse.
On the basis of the assumption that the foreigner registering a sole proprietorship business is qualified under the Amity Treaty which is an agreement signed between the two countries, Thailand and the USA in 1966, the following business registration requirements need to be complied with.
A sole proprietorship business can engage in any business so long as they are permitted by law. If engaged in auction sales, transportation, sale of goods, quasi-banking services, hotels, handicraft industries or money lending, the business should register their commercial activities at the local District Office. However, exempted from commercial registration are service-related occupations.
A taxpayer number and a VAT certificate is required if the business yields a yearly income of more than Baht 1,800,000. To register a sole proprietorship, there are certain documents required to be submitted together with the registration application. Such documents include:
- Copy of the house registration book of the business address signed by the owner of the property.
- A map of the business address.
- A letter of consent signed by the owner of the business address if not owned by the sole proprietor.
Sole proprietorship should be registered at the actual business place and the sole proprietor can own the property. It is restricted to a single trading name. However, in the event that a sole proprietor would like to have another trading name, an application for another sole proprietorship registration may be done but it has to be under a different subcategory of business. Sole proprietor carries full liability, as there is no other party to share liability with unlike in a limited company.