Step-by-Step Guide to Korea Business Setup: Structures, Registration & Incentives

Government Support and Incentives

The South Korean government actively encourages foreign investment through a range of incentives designed to attract and support businesses. These include tax exemptions or reductions for up to seven years, cash grants for job creation and R&D initiatives, and subsidized rental fees for office or industrial spaces. Additionally, Free Economic Zones (FEZs) and innovation centers provide streamlined administrative procedures, reduced regulatory burdens, and extra benefits for foreign companies. Programs such as KOREA INVESTMENT WEEK and Invest KOREA further highlight the government’s commitment to fostering a business-friendly environment.

Business Structures for Foreign Investors in Korea

Foreign investors can choose from several business entity types when setting up 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 approval.
• Limited Liability Partnership – A hybrid structure allowing both limited and unlimited liability partners, with limited partners restricted from daily management.
• Joint Stock Company – Liability is limited to shareholders' investment, with annual shareholder meetings required.
• Branch Office – Functions as an extension of the parent company without forming a separate legal entity in Korea.
• Representative Office – A fully foreign-owned entity that focuses on market research and promotional activities but cannot conduct direct sales.

Selecting the right structure is crucial for aligning with your business strategy and legal obligations.

Steps to Register a Business in Korea

1. Choose the Right Business Structure

   Determine the legal entity that best suits your operational needs and liability considerations.

2. Register a Company Name

   Select a unique business name that complies with local registration rules.

3. Prepare Articles of Association

   Outline key business details, including ownership structure, decision-making processes, and operational guidelines.

4. Submit Incorporation Documents

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

5. Obtain Business Licenses

   Acquire the required 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 meet tax and social security obligations.

7. Maintain Regulatory Compliance

   Ensure ongoing compliance with Korean regulations, such as annual filings and shareholder meetings.

Conclusion

With its strategic location, strong trade agreements, and business-friendly policies, South Korea presents excellent opportunities for companies looking to expand in Asia. Choosing the appropriate business structure and understanding the regulatory framework are key to a smooth market entry.

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