Getting down to business
Setting up your own business in Korea can be a daunting task and many variables that we cannot hope to cover here today can affect the process of establishing your business and then setting up your banking. It is best to speak with your teller directly about your unique situation and goals.
For today’s purposes, let’s talk about setting up your own small private business: a sole proprietorship. In Korea, a sole proprietorship is a business entity with no legal distinction between the individual owner and the business. This is very different from if you were setting up a corporation or a branch office or subsidiary of an already established global company.
The first thing you must consider is whether or not you are even eligible to simply register a business. If you’re not, you’ll need to make a foreign direct investment of 100 million won. So, for example, if you have an F-series visa and already have your start-up capital in Korea, the process to establish a business will be quite simple and straightforward. However, if you don’t already have a visa that allows you to start your own business, you must go through the FDI process before you can register your business.
You can refer to Invest Korea (www.investkorea.org) for more information about Korea’s FDI process.
Once you have registered your business with the National Tax Service you can open your self-employed bank account. You must bring your passport or Alien Registration Card and your Business License (issued by the NTS) with you to the bank to set up your business account.
Normally, employees set up a salary account where the employer will deposit their salary each month. As a small business owner, you are no longer eligible to open a salary account. As the owner of a sole proprietorship, you would set up a bank account for the self-employed. This is a very important distinction. In Korea, you are either self-employed or an employee — you cannot be considered both simultaneously by the bank. But you can open as many businesses as you want — and you can open a self-employed account for each one.
One factor to consider carefully when establishing your business is that if you decide to open your small private business with one or more partners, it will make the banking aspect quite a bit more complex. All bank accounts can be opened in only one person’s name. So, even though you are a partnership, only one of you can be the account holder. If you choose to just have one account for your business, only the account holder can visit the bank to make transactions and only the account holder will be able to close the account. However, the account holder can get two check cards and the other partner can use the second check card to view account balance and history at ATMs, withdraw cash at ATMs, make domestic transfers at ATMs and make purchases at retailers (online retailers, too).
Alternatively, you could choose to open two separate self-employed accounts. Then you would each manage your account separately. Some business owners are more comfortable with this solution, although it presents some challenges as well.
Of course, the specific features and benefits of your self-employed bank account will vary by bank. Most likely, the benefits you receive will depend on a combination of several factors, such as the average monthly balance in your account, your monthly check or credit card spending, or the amount of customer purchases using your bank’s credit or check cards at your place of business. The higher your monthly balance, check or credit card spending — or amount of purchases made at your place of business — the better rates, and lower fees you will enjoy.
Be sure to ask your teller to explain the benefit requirements when you sign up so you don’t end up paying fees that may have easily been avoided had you understood the requirements.
Customer Department. Please visit “Shinhan Expat Banking” on Facebook for more information. The banking information provided in this column is based on Shinhan Bank policies and may not be applicable to all banks in Korea. — Ed.