By Rilind Elezaj | Going by the World Bank’s Ease of Doing Business Survey rankings from a couple of years ago, South Korea is among the top four nations with the best environment for business to thrive. That explains why this nation is a part of the four dragons or the four economic powerhouses of East Asia.
International companies are opening shops in South Korea and enjoying immense success. Many choose to partner with a Professional Employer Organization (PEO) so that they can handle your administrative responsibilities as you concentrate on the core aspects of your business.
You will have two options when you decide to do business in South Korea: form a legal entity of your own and then use it to anchor your business, or set up your business without creating an entity in the first place. If you opt for the latter, your hiring options may be limited because legally-speaking, you won’t be allowed to hire South Korean employees. That is one of the areas that a legally-registered PEO will help you with; the company will hire employees on your behalf.
The benefits of this are far more reaching than you would imagine. Some of them are:
Taking care of employees’ compensation and benefits
One of the hardest parts in handling employees is figuring out their compensation and benefits while keeping an eye on your available resources and profits. But that’s not all. You will also have to comply with a country’s employee protection laws that include mandatorily paid leaves, pension, and insurance, salary, among other benefits. Figuring this out on your own can even break your business in South Korea. That’s why you need a PEO to handle that for you.
In South Korea, you will hear of national holidays that aren’t there in other parts of the world, deal with irregular working hours, pay unfamiliar incentives or performance-based bonuses, among other things. All these differences are hard to address if you are new in the country.
Taxes and other monthly deductions
Just like with the benefits, your employees are eligible for taxation and other mandatory deductions per month. Failure to remit such deductions on time to the relevant authority, regardless of whether you understand the law or not, can lead to hefty penalties in South Korea.
Accounting, taxation, and bookkeeping
Improper filing of taxes will get you in trouble with South Korean authorities. The government will want to see records of your income as an individual and your business’ income as a corporate, as well as see the records of your compliance with VAT returns, business audits, withholding tax returns, etc.
Visas for non-local staff
As much as you will be hiring local talents to handle the day-to-day running of your business in South Korea, you may equally need the services of foreigners in handling the technical aspects of your business. For example, you may have to work with a manager or finance officers from your home country because you need people whom you can trust in such sensitive dockets.
Foreign workers must have visas, work permits, and residency cards before they are legally allowed to work in South Korea. The challenge comes in when you start sourcing for these vital documents as the process can take months or even years.
Handling part-time employees
Formulating contracts for part-timers in South Korea can be hectic because according to the country’s labor laws, all employees deserve the same treatment provided they work the same regular hours. A small error in the contract, particularly in regards to working hours and compensations can cost you significantly in the future. That is why you need the services of a PEO to come up with a workable contract in the local dialects so that neither you nor the employee gets lost in translation.
About the Author
Rilind Elezaj is enthusiastic about everything related to money and investing. He enjoys using what he’s learned from 10 years of doing business and helping others achieve financial growth. He is currently working with New Horizons Global Partners.