Starting a business or forming a company in South Korea is accessible to most foreign individuals and entities.
At SMA Lawfirm, our team of certified Korean attorneys ensures a seamless experience — from choosing the right business structure to registration, tax compliance, and post-incorporation support.
Table of contents
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Key Steps for Foreign Investors
1. Choosing the Right Business Structure
Foreign entrepreneurs must first decide on the most suitable legal entity:
| Business Type | Overview | Minimum Capital | Ideal For |
|---|---|---|---|
| Local Corporation (Chusik-hoesa / Yuhan-hoesa) | Most common structure for domestic and foreign investors | None (for domestic LLC); JSC has flexible requirements | Startups, SMEs, long-term operations |
| Joint Stock Company (JSC) | Allows issuance of shares; suitable for fundraising or future listing | No strict minimum, but practical capital advised | Larger enterprises |
| Limited Liability Company (LLC) | Up to 50 shareholders; liability limited to share capital | Flexible | Smaller businesses or closely-held firms |
| Foreign Direct Investment (FDI) Company | Local corp with foreign ownership; may qualify for incentives | ₩100M minimum investment | Investors seeking legal benefits |
| Branch Office | Legally part of foreign HQ; subject to local taxes | N/A | Companies expanding without creating separate entity |
| Liaison Office | For non-commercial activities (research, marketing) | N/A | Market research, representation |
2. Naming the Company
- Select a unique name in Hangul (Korean characters) that complies with local naming rules.
- Verify availability via the Supreme Court’s corporate registry search.
3. Business Registration Number
- Submit the application to the Korean Trade Register (or KIPO).
- Obtain the official Business Registration Number.
4. Corporate Seal
- Acquire a corporate seal from a licensed seal maker in Korea.
- This seal is mandatory for signing contracts, opening bank accounts, and legal filings.
5. Tax Registration
- Register with the National Tax Service (NTS) for corporate income tax and VAT.
- Secure a tax ID and digital certificate for electronic filings.
Once completed, foreign investors can officially begin operations in Korea.
Labor Laws & Employment Compliance
Compliance with Korean labor law is essential to avoid legal risk and maintain a positive work environment.
Key Considerations:
- Employment Contracts: Must include job duties, compensation, working hours, termination terms.
- Working Hours: Comply with the statutory 52-hour workweek and provide at least one rest day per week.
- Minimum Wage: As of 2023, ₩9,160 per hour.
- Employment Visas: Secure proper visas (D-8, E-series) for foreign executives and staff.
- Labor Unions: Respect employees’ right to unionize under the Labor Standards Act.
Tax Regulations & Investment Incentives
South Korea actively encourages foreign investment through incentives and streamlined processes.
- Tax Incentives: Corporate tax reductions, income tax holidays, R&D credits.
- Investment Incentives: Access to land subsidies, financial support, and government-backed guarantees.
- Free Trade Agreements (FTAs): Enjoy tariff reductions and market access benefits.
- FIPA (Foreign Investment Promotion Act): Simplified procedures and government support.
- Special Economic Zones (SEZs): Tax breaks, regulatory flexibility, and infrastructure support.
Navigating Korean Business Culture
Understanding Korean corporate culture is crucial to building strong relationships.
Effective Strategies:
- Build Trust: Personal relationships matter — invest in networking.
- Respect Hierarchy: Use appropriate titles and formal language.
- Be Patient: Trust develops gradually; persistence pays off.
- Negotiate Thoroughly: Prepare detailed proposals and anticipate counteroffers.
- Learn Basic Korean: Even simple phrases can improve rapport.
Conclusion & SMA Lawfirm Services
At SMA Lawfirm, we provide end-to-end legal support for foreign investors:
- Advising on optimal business structure
- Drafting Articles of Incorporation and other required documents
- Assisting with bank account setup, seal registration, and tax filings
- Supporting visa applications for foreign executives
- Offering post-incorporation compliance and tax advisory services
📩 Get Started Today – Contact SMA Lawfirm for a consultation and launch your business in Korea with confidence.