| Also see Business Set Up
If
you are working in Korea and on an E2, F2or E1 visa, (for example), you may have
an idea about starting and running your own business here, e.g, a hagwon. The
following assumes you have done the math and the business venture is a viable
proposition, and more so, you have plans in hand as to what to do with the business
should you leave Korea. If you wish to start a business in Korea, please contact Korean Business Recruiters (KBR) (Korea) who can help you establish your business and support you and act as your legal partner while you do the work inside of your existing visa.
General
Observations -
Some beginning observations. If you are here on an E1 or E2 visa, you cannot work
work a second job per se. However, some ventures are Internet related, and this
raises complex legal issues of just where the business is being run from. To date
we have not received a satisfactory answer from any Korean authority as the legitimacy
of running an Internet business. This relates to the complex issues of the isp
being in another country, where the Internet work is 'actually' taking place,
and the role of accepting income in Korea for your foreign registered Internet
business. Clearly the laws have not kept pace with the complexities of technology.
We will pursue answers and post them as and when they are received, however, as
noted under Immigration, it appears that most offices will grant permission to
run this type of business. Of course, if it generates income, you may have to
declare this income pursuant to Korean Taxation Laws, or in your home country,
depending upon applicable tax laws.
- Occasionally
a foreigner comes into Korea on a tourist visa, and whilst here gains employment,
and neither the Employer nor the Employee follow up with the legal requirements
of the Korean Immigration Act. These foreigners stay here on a 90 day tourist
visa, leave the country for brief trip to Japan, etc, then come back on a further
90 day Tourist visa and continue working. This is breaking numerous Korean Laws,
and if caught, the foreigner is liable to a substantial fine and or imprisonment
before deportation. We can only stress the importance of complying with Korean
laws, for working illegally is inviting problems.
- Foreigners
can establish and run a business in Korea. The easiest way to establish a business
is to register your own (native home) business here. However there are limitations
as to what you can do. The more expensive alternative is to establish a company
in Korea. Law firms have pro-forma documents which are easily completed and lodged
with the appropriate government departments. Incorporating a company is both permitted
now and relatively easy. Though the law requires a 50,000,000 ($U.S. 43,000.00)
deposit guarantee, viable ventures will find companies similar to bail bondsmen
who will post that money for you. If you wish to contact Korean Business Recruiters with your idea, KBR can often bring your business plan into reality via unique legal partnership system
- In
Korea there are 4 kinds of Companies pursuant to the Commercial Code. They are;
Partnership Companies ("hapmyong-hoesa"), Limited Partnership Companies
("hapcha-hoesa"), Stock Companies ("chusik-hoesa"), and Limited
Companies ("yuhan-hoesa"). N.B. Many teachers have asked about establishing
a Non Profit company. In Korea this takes a lot of time, a lot of paper work,
a lot of money ($6,000) and will probably not be accepted.
E.
Owning and Establishing Your Own School.
It is possible for a foreign national to operate a
language school in Korea. To start it, you have to get a license from a Local
Education agency;
Hagwon
Types:
Sole Owner:
Registered
in one person's name. A Korean national. He is the owner/director/boss. He can
be declared bankrupt, yet the school carry on work the next day under the name
of a family member. You may have no-one to 'chase' in this case. There are thousands
of these legal entities in Korea. Partnership:
Two
or more Koreans. Incorporated
company:
Articles of Incorporation are prepared, which, inter alia, list the
Directors, shares issued and value, rules for meetings. Similar in nature to western
concepts. Franchise:
There
are some well known franchises in Korea. They are Ewha A.L.S, YBM Education Inc
ECC Division, ECY, etc.
FDI
See Setting up a foreign owned school
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Hagwon
Owner's Ancillary Obligations: Owners
must process the business registration papers as in any jurisdiction and lodge
certain documents with various government departments. All schools are obliged
under the law to Register their school with their Local Board of Education Office.
Each POE District Office has a Register maintained that records; the school's
name, address, staff members names working there, and the fees charged by the
school to its students. School fees have a maximum limit that may be charged.
There are 5 categories of hogwons, the fifth category relating to owner/teacher
and confined to music/sport/ dancing instruction. In this category, the owner
is the sole teacher. Of the other four categories, the category depends upon the
size of the hagwon, ranging from 1000 square meters or above, (b) 500-1000 (c)
300-500 (d) 100-300. The owner lodges with the District Office of Education various
documents, ranging from his business registration certificate, a copy of the building
lease if leased, etc. Depending upon which category the business falls under,
the owner must pay certain fees. (view the doc) After a hogwon owner lodges the
documents with the appropriate District Education Office, an Inspector from that
Office will inspect the hagwon and then issue a Certificate to the owner. Another
obligation of the owner, if his school employs 5 or more staff, is to pay contributions
to Korean Labor Welfare Organization, pursuant to Article 2 of the Enforcement
Decree of Employment Insurance Act. Payments can either be a lump sum yearly,
or paid quarterly. The categories of payment are:- Unemployment Benefit, 0.6%
shared equally by employer/employee, Employment Security, 0.3% paid by the Employer
only, and Vocational Ability Development calculated at 0.1% premium paid by the
employer only. A
copy of the license shall accompany the application for tax registration certification
to be submitted to the district tax office, in addition to a photocopy of your
passport or residence card, a lease agreement for the language school and a report
of the tax agent in charge of your tax liabilities. The tax office may ask for
some more documents such as copy of your investment certificate.
An investment
certificate is issued by a foreign exchange bank when foreign currency equivalent
to 50 million won or more is physically remitted into Korea. Visa
status shall also be converted from your current E-2, working visa, to D-8. For
this conversion, you are expected to personally visit and submit to the immigration
office an application form, a copy of tax registration certificate, foreigner's
investment certificate and other documents, which may be requested by the immigration
officer. You
may ask a law firm or an accounting firm to establish the business on your behalf.
Otherwise, you may do it yourself with help from a Korean interpreter, if available.
The
income tax rate on businesses is progressive, from 9.9 percent through 39.6 percent,
including the local resident tax |
