Korea Business Formation: How to Set Up a Company in South Korea

Strategic Location in Northeast Asia

Located at the crossroads of Northeast Asia, South Korea serves as a key gateway to major global economies, including China, Japan, and Southeast Asia. Its close proximity to these markets enables businesses to expand effortlessly, reaching a combined consumer base of over 1.5 billion people. Additionally, Korea’s extensive network of free trade agreements (FTAs) with over 50 countries—including the United States, the European Union, and ASEAN nations—helps reduce trade barriers and grants preferential access to vital markets. This advantageous location, combined with Korea’s strong trade infrastructure, positions it as an ideal hub for both regional and global business operations.

Key Requirements for Company Incorporation in Korea

Setting up a company in Korea involves several essential steps:

1. Capital Allocation

Determine the required initial capital based on your company’s legal structure and industry. Ensuring access to sufficient funds or securing appropriate financing is crucial.

2. Business Proposal

Prepare a detailed business plan outlining your company’s objectives, market strategy, target audience, and financial projections.

3. Identification Documents

Gather identification documents, such as passports or national IDs, for all stakeholders. Foreign nationals may also need additional paperwork, such as visas or Alien Registration Cards (ARCs).

4. Office Registration

Every company must have a registered office in Korea. This can be a physical location or a virtual office that provides an official business address and support services.

Business Structures Available in Korea

Foreign investors can choose from several business entity types when establishing a company in Korea:

• Limited Company: The most common structure, offering limited liability to shareholders.
• General Partnership: Partners share unlimited liability and joint responsibility for debts. Ownership transfers require unanimous consent.
• Limited Liability Partnership: Combines limited and unlimited liability options for partners, with limited partners restricted from daily operations.
• Joint Stock Company: Shareholders’ liability is limited to their investment, and annual shareholder meetings are mandatory.
• Branch Office: Operates as an extension of the parent company without forming a separate legal entity in Korea.
• Representative Office: A fully foreign-owned entity that conducts market research and promotional activities but cannot engage in direct sales.

Choosing the right structure is essential for aligning with your business strategy and legal requirements.

Steps to Register a Business in Korea

1. Select the Appropriate Business Structure

   Choose a legal entity that best fits your operational and liability needs.

2. Choose and Register a Company Name

   Select a unique name that aligns with your brand and complies with local registration guidelines.

3. Draft Articles of Association

   Document key business details, including ownership rights, decision-making processes, and operational guidelines.

4. Submit Incorporation Documents

   File the required paperwork with the appropriate government authorities, including the certificate of incorporation and registration fees.

5. Obtain a Business License

   Secure the necessary permits and licenses to legally operate in Korea.

6. Register for Tax and Social Security

   Enroll with the National Tax Service and National Pension Service to fulfill tax and social security obligations.

7. Ensure Ongoing Compliance

   Maintain compliance with Korean regulations, including annual filings and shareholder meetings.

Conclusion

With its strategic location, strong trade agreements, and pro-business environment, South Korea offers excellent opportunities for companies looking to expand in the region. Choosing the right business structure and understanding regulatory requirements are key to a successful market entry.

At Pearson & Partners Korea, we specialize in company incorporation, tax compliance, and regulatory support. Our expert team is here to guide you through every step of the process. Contact us today to start your business journey in Korea!