So you want to do business in Korea? There is a lot of paperwork involved, but it is not impossible. While until just a few years ago, foreign investors had to have a Korean partner in whose name the business was, this is no longer the case. If you have the capital and the dream, you too can own your own company in Korea. The following is a rough guide on starting up a sole trader business here.

In principle, a visa from a Korean embassy required before you enter Korea. However, a national of a country with which Korea has concluded a bilateral visa exemption agreement or for which Korea has made a special designation may enter the country for up to 6 months (depending upon country of origin) without any visa. The condition is that you do not perform any income earning activities. This visa free entry is ideal for fact-finding and going through the process of starting a company and obtaining an investor visa. For more information about visiting Korea without a visa, click here.

Once you have decided you would like to conduct business in Korea, it is necessary to start your business and obtain a visa before you can legally make any money. To start a new company in Korea as a sole trader, you need to invest a minimum of 50 million won from outside Korea. This money must come into an account in your name at a Korean branch from an account in your name overseas. The accompanying instruction or comment on the remittance form must state that the money is for the purpose of investment in Korea. (To open an account you just need a passport, but to get an ATM card an Alien Registration Card is needed. This is something you will get once you have your visa.)

When the money has all arrived (it should come in one lump sum or there may be difficulties), your Korean bank will issue you certain important documents that you need to start your business. The initial investment of 50 million won entitles you to a D-8 type visa issued by the Korean government.

Depending on what kind of business you wish to start, you may need a permit from the local ‘gu' (district) or ‘dong' office. Assuming you do not need permission, you now need to secure a place of business. To do that, you need to get a rental contract for an office or ‘officetel.' Depending on the ‘gu,' the type of building your office is in, and the type of business you wish to engage in, it may or may not be possible to register your domicile and business address at the same place. If this is important to you, check before you hand over a large deposit to your landlord or real estate agent.

With your real estate contract and bank foreign direct investment papers, you are ready to register your business. Think of a name for your business. One interesting thing is that all business names in Korea must be registered in hangeul, the Korean alphabet. So regardless of what you put on the sign in front of your business, or on your business cards, when it comes to registering your business at the local government offices, you (or a Korean assisting you) must write it in Hangeul for official purposes. This is even true for Starbucks and IBM, to give but two examples.

Visit the local gu office and find the business registry section. Fill in a form to register a new business name, hand over the forms and pay the fees. It can often be completed for you while you wait, or you may have to come back on the next business day. Make sure you get back your original documents, as you will need them at the next stage.)

With your company name registered, now you need a tax payment registration certificate. This document is very important, and you must give out a photocopy of this document to every client it bills, and every time your company remits any funds overseas. The local ‘gu' tax office issues these. Take all the documents you have to the ‘gu' office with your passport. Fill in the form requesting a tax registration certificate. You will be issued a certificate with your name on it as the company “representative.” This means you have final authority and responsibility over your business.

You must also go and apply for your D-8 visa – this can be done before or after the issuance of a tax certificate. This visa is available for people who bring an investment of 50 million won or more into Korea. It is often given for an initial 6-month period, after which it may be extended upon proof that you are in fact engaged in legitimate business (by providing receipts and invoices, and by showing that you are paying the relevant taxes).

Before you apply, you will need to nominate a tax agent – someone who will make sure your taxes are paid on time in case you are traveling overseas. Find a Korean taxation accountant and nominate that person as your tax agent. He or she will fill in a form for you that you will need to submit to the immigration authorities. At the immigration office you will find an application form for a foreign investor in Korea. Present all the documentation you have gathered so far as well as your passport and a bankbook, pay the appropriate fees (50,000 won for the visa itself and 10,000 won for the Alien Registration Card), and wait. If all goes well you will be issued with your Alien Registration Card. This is your official ID in Korea, and it is often necessary to produce this, so always keep it with you.

The above information is given as a rough guide, and is not intended to be an exhaustive explanation of all the regulations surrounding business establishment as a soul trader and visa issuance. For more detailed information, visit the Immigration Office website  or the Invest Korea website. The offices of both KOTRA (the Korea Trade Promotion Agency) and the Seoul Global Center have trained staff on hand to walk you through this process if you have difficulties.


By Jacco Zwetsloot and James Ro
Korea.net Staff Writers