Business entities in South Korea in 2023
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.
- 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.
- 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|