The sole proprietorship in Thailand is the simplest business form. It is owned and operated by a single individual, the proprietor, who enters the business with all of his assets. This is a recommended option to all businessmen who wish to enter the market and begin their business activities by operating a small one-man business.
The sole trader has a number of advantages but also some precautions because of its unlimited liability characteristics. Our specialists in company registration in Thailand can provide you with suitable information in this matter, in order for you to start a business.
We invite you to watch the following video on the main traits of the sole trader:
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A sole trader or a sole proprietor is a simple business form with lighter taxation, accounting and reporting requirements than partnership or corporations. However, investors should be well aware of the liability implications.
Our team of Thai company formation agents highlights the main characteristics of the sole trader in the list below:
The sole trader or sole proprietorship may seem advantageous to many investors because of the reduced business costs. However, its main trait, the fact that there is no distinction between the individual and his business, is an issue that should be taken into consideration by all investors. The unlimited liability is the most important trait of the sole trader and, in some cases, it is the reason why investors choose to change the business form when the business evolves and the liability rate increases.
A sole proprietorship is also subject to lighter accounting and control requirements because it is a small business that will, in most cases, drive a smaller annual turnover compared to other business forms. This means that the owner will need to impose a good financial control policy and manage the inbound and outbound payments accordingly so that the business will not accumulate debt. When needed, entrepreneurs can also use the aid of a debt collector.
Company formation in Thailand can be perceived as easier in case of the sole trader, however, in general, this business form will face more challenges in terms of raising capital. Unlike in a private limited liability company, in which the founders contribute to the business, the sole trader will have only one founder who cannot take another partner, for example, in the case of the partnership. Both the partnership and the private limited liability company are examples of how other business forms can raise capital easier than the sole trader. Moreover, the sole trader will not be perceived in a similar manner as the private limited liability company, making it more difficult in most cases to obtain a bank loan.
The sole trader is more popular among Thai nationals compared to foreign investors because for the latter, the Foreign Business Act regulates ownership for this business form. In practice, foreigners will also be required to handle all of the legal issues that refer to lawfully working in the country based on a valid work permit.
Our company registration agents in Thailand are able to offer the necessary information and guidance, in order for you to properly open a company in Thailand.
First of all, overseas businessmen who wish to establish a sole proprietorship in Thailand need to obtain a work permit, according to the Immigration and Labor Law in the country. Our team of Thai company formation agents can provide investors with detailed information about the requirements set forth by the Thai Ministry of Labor.
American citizens who wish to do business in Thailand have the right to 100% ownership, due to the US – Thailand Treaty of Amity and Economic Cooperation signed in 1968.
It is good to know that our experts in company registration in Thailand can offer detailed information on this matter. In order to properly function, the commercial activities of a sole proprietorship in Thailand need to be registered at the local District Office, and the following documents are necessary:
• a signed copy of the house registration book of the business address;
• the map of the business address;
• the taxpayer number;
• the VAT certificate;
• the registration application form.
The sole trader is just one of the business forms that are available for incorporation in Thailand. Foreign investors will often choose the more popular private liability company for their business activities, however, they can also establish partnerships together with a Thai national, especially if the business is small. In all cases, we recommend that individuals who wish to open a company in Thailand reflect on the characteristics of each business form and, as needed, request a specialized consultation with one of our agents for a more comprehensive understanding of the liabilities, especially in case of the sole trader.
The Foreign Business Act defines a foreign company is a legal entity registered in Thailand in which half or more of the shares are owned by foreigners. These types of companies are restricted from engaging in certain types of activities unless obtaining a special approval or license from the relevant Thai authorities. Entrepreneurs who wish to know more about these restrictions can reach out to our team of Thai company formation agents. For the purpose of the Act, a foreigner is any natural person whose nationality is not Thai.
Thailand encourages foreign investment and has an Investment Promotion Act that expressly encourages investments through tax and non-tax incentives. Some of these include the following:
A sole trader is a business form that is suitable for those investors interested in opening a small business. In many situations, these investors may find that the business grows in time and they will need to change the business form so that it will suit the needs of their now small to medium-sized business. In Thailand, the number of small and medium-sized enterprises is growing, as highlighted in the following statistics for the year 2017:
The sole trader can be a popular business form among Thai entrepreneurs. Non-Thai individuals who are married to a Thai national can open a sole trader in their name. one of our agents can give you more information about the advantages of opening a sole trader and can offer you complete advice regarding the most suitable business form for your needs.
If you have questions about the sole proprietorship or about the company registration procedure in Thailand, you are invited to contact us.