Before Starting Your Business in South Korea
Before you do anything, make sure you have a really good product or service that people in a specific target market are willing to pay you money for. My first successful business was based on what some people thought I was good at, which was teaching English. I had pretty decent credentials and had good experience, so it was a no-brainer for me to start an English Gyosoopso business in Seoul, South Korea. I personally didn’t have any customers who made a commitment to attend my English gyosoopso before it existed, but I was very confident in my credentials, my ability to hustle, and I had a small network I could leverage.
Honestly, I was impatient and I should have done lots of tutoring in the area before I went and signed a lease on the business space we used. But everything worked out in the end because my wife and I worked super hard to make everything work. Besides, I just like throwing myself into things so I wouldn’t have done things differently anyways. Though it is important to provide a product or a service people are willing to pay for, I believe it is even more important to know yourself and understand what type of risk you are willing to take, and to believe in yourself.
*The above is a photo of some random small businesses. These businesses are most likely under the category 개인 사업 (Sole Proprietorship) and sub category 일반과세자 (General Taxable Business Owner).
Can You Even Start a Business in Korea?
The first thing you need to figure out is if you have a visa (or can get a visa) that will allow you to operate a business in Korea. Generally, if you have any visa that starts with an “F,” like an F2, F3, F4, F5 or F6 visa, you can register a business under your name. There is also the D8 Visa (Corporate Investor), the D-10-2 Visa (Business Startup), and the D-8-4 Visa (Startup – OASIS). The D-8-4 visa can be obtained by getting enough points.
Another great resource is the Seoul Global Center. You can visit the center and get a free consultation with a representative who will tell you what you need to do to obtain the right visa.
*By the time you read the information on this page, there may be new visas that the government has introduced to make it easier for non-Koreans to start a business in Korea. The best thing is to visit the Seoul Global Center for up to date information.
There are two main categories of businesses that you will be able to start in South Korea:
1. 개인 사업 (Sole Proprietorship)
2. 법인 사업 (Corporate Business)
In legal documents and in general, people in Korea usually refer to the person who is the owner of the type of business as oppose to the type of business. So you would be the owner (or one of the owners) of the Sole Proprietorship or Corporate Business. And you would be referred to as either a 개인 사업자 or a 법인 사업자.
*사업자 (Business Person), 사업 (Business), 자 (Suffix added to words to indicate a person)
So these are the two main business types, but there are three subcategories that you can fall under when you register your business. And the three main sub-categories have to do with taxes, so the subcategories are super important.
The three main sub-categories are as followed:
1. 면세사업자 (Non-Taxable Business Owner)
2. 일반과세자 (General Taxable Business Owner)
3. *간이과세자 (Undetermined / Simplified Taxable Business Owner)
*간이과세자 (Undetermined / Simplified Taxable Business Owner) is only applicable to a 개인 사업 (Sole Proprietorship)
When you register yourself as the owner of a particular business, you will technically have two titles.
Let Me Use Myself as an Example
*The above photo is a selfie I took in the main classroom of my English Gyosoopso business which was located in Seocho-gu, Seoul South Korea.
Example 1: I was considered a 개인 사업자 and a 면세사업자 when I was the owner of IGL English. My business was a sole proprietorship and a Non-Taxable Business Owner because I was the only owner and I didn’t pay any Value Added Taxes (VAT) to the government because my business was not allowed to charge our clients taxes for the educational services their children received. You see, the main difference between a 면세사업자 and a 일반과세자 is that a 면세사업자 cannot legally charge taxes on the products or services they provide. Generally, a 면세사업자 will be the owner of a service type business. But not all service type businesses are like that because transportation/delivery type businesses charge taxes on the services they provide.
Example 2: Flower Gift Korea was the business my wife and I started before we sold it. Flower Gift Korea was not a typical flower shop because we not only sold flowers, we sold cakes, stuffed toys, and a bunch of other things. If we only sold flowers and plants, then we would have been considered a 면세사업자 because you technically cannot legally charge taxes on flowers and plants in Korea. But since we sold other taxable items, we had our business registered as a 일반과세자.
*The above image is of Flower Gift Korea. We started it as an online side business from our home while we were running IGL English. Once it started to do well, we decided to focus our time and energy on Flower Gift Korea and created the flower shop aspect of the business.
Flower Gift Korea charged taxes on certain products, but we included them in the price, a lot like how convenience stores just include the tax cost into the prices of most of their items. So on paper Flower Gift Korea was a 일반과세자, but we were technically a *겸업 because we were also considered a 면세사업자 in some regards.
*The word 겸업 is a noun that refers to being two business types. The word can also refer to having two different jobs.
What Legal/Tax Type Business Will Your Business Be?
It is important to note that the process to start a corporate business is more costly and more complicated than starting a sole proprietorship, so it may be in your best interest (and may be your only choice) to start a sole proprietorship. If you are trying to start a large company or already have a large company and want to open up an office in South Korea, you should definitely contact a certified accountant and/or a lawyer to help you with the process.
And don’t let these terms scare you, they are simply just terms. If you do not know what category you fall under, that’s totally okay. When I registered all of my businesses at the tax office, I had no idea what business type I was and which subcategory I fell under. I just knew that I wanted to open up an English Gyosoopso, or a Flowers and Gifts business, or a Trade Business, and the people at the tax office automatically put me in appropriate categories.
The purpose of this section was to give you a little background information. And if you didn’t understand anything in this section, it doesn’t mean the tax office will not register your business. I actually didn’t know most of the information on this page till after I ran a small business in Korea for a couple of years. As long as you have the right visa, a good plan, and the willingness to do whatever it takes to make it succeed, you got a great chance of starting and building a successful business in Korea, because the people at the tax office will tell you what you need to do to qualify for the business you want to start.
The next thing you need to do is to get the right mindset. Of course you can start a business! Anyone can do it. Brainstorm ideas, do some research, create a plan, and take action. There’s obviously a lot more things you can do to prepare yourself, but taking small steps will get you closer and closer to that lifestyle you and I both know you can create for yourself.