Starting an Online Business in Korea Pt. 1

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Have you ever thought about starting your own online business in Korea? As an F Visa holder, you certainly can but what kind of business could you start? Should you have the business in your name, or should it be in your spouse’s name? What about taxes? As a foreigner what are the tax rules when it comes to online businesses? There are many questions to answer before you jump in.

First and foremost, what possible online business could you, as a foreigner in Korea, start up–what hasn’t been done already? What about a shopping site where you could market some goods from your home country and import here? What about your own jobs website? There are many ideas in everyone’s head. However, in Korea there are many things to consider even after you’ve come up with your great idea.

1. Should I get a “.co.kr” website address or a “.com”?

If you get a domain name with a .co.kr address you will have to abide by strict Korean internet commerce laws. All the laws are geared toward taxes, namely in that you don’t skip out on paying them! First, you will need a business licence. This is the easy part and with a .co.kr web address, it’s required by law. With a .com, if you don’t have a business licence, you might be evading taxes and that’s called ‘tax evasion’ :-). But it’s not required by Korean law to have your business number at the bottom of your site if you have a .com address. (There’s a catch though, and that’s coming up later.)

a. Go to your local ‘Gu’ office and get a certificate of residence (bring your Korean spouse for all paperwork!)

b. With your residence certificate, passport, and F Visa ARC, go to your local tax office and get a business licence. This is as easy as filling out a few forms, waiting in line, and sitting down with the clerk for a few minutes. Your spouse may or may not have to co-sign but it will be in your name.

You will receive the white piece of paper you’ve all seen hanging up in restaurants, and other businesses. You have to name your business of course, and explain what it is to the clerk. He or she will decide which category it falls under and you’re taxed based on the category. For example, if you’re selling educational materials, there’s no tax. If you’re in some kind of service industry such as web design or the like, it’s 10%. They will print your licence on the spot, and congratulations, you’re licenced.

Now, if you want a .co.kr web address, it’s back to the ‘Gu’ Office again. You’ll need a ‘communications licence’. At least this is what was needed back in 2010 in my case. Things may have changed but I doubt it. To get this communications licence, you have to have a brick and mortar address where your business is located. You may or may not be able to list your home address, most likely not. Are you sure you want a .co.kr address still? There’s more.

To have a .co.kr address, you will most likely have to use a Korean host. A web host is where the site lives. (Maybe you’ve seen the female race car driver Danica Patrick–she is sponsored by ‘Go Daddy Go’ a web host 🙂 There’s only one Korean web host with English support as far as I know: jarfar.net or look up ‘Internet Brothers Korea.‘ When I first joined with them they didn’t even have a ‘cpanel’, a commonly used system for English websites. They do now, however. In addition, they are twice as expensive as other hosts in the US.

Are you STILL interested in a .co.kr address? Jeeze! Well Ok, I’ll continue. After you sign up with your web host, they will help you get your co.kr address. However, you will receive a phone call from the governmental agency that hands out these addresses asking you what you plan to do with the site. Actually the web host will ask you this as well, naming off types of businesses that are not allowed.

None of the above is required with a “.com” address. Case Closed.

“Oh,” you may say, “But I don’t think my site will be recognized by Koreans if it’s not a .co.kr”. Not true. If you have a Korean or bilingual site you can list it on Google for free or pay to have it listed on Naver, it will be found.

Payment Gateways

Taking payments online. Welcome to payment gateway hell! In any other world, you’d simply set up your site with a few clicks to start accepting payments through PayPal, Authorize.net, or the like. You’d be up and running within hours. Whether you have a .co.kr or a .com address, taking payments online is an issue.

In Korea, we all know that paying for anything online is a major pain, but imagine what it’s like for the website developers…it’s just as much of a pain to implement that system as it is to use it! DON’T GIVE UP FOLKS, it will get better, the government has promised. In the meantime, unless you want a custom-coded, $3000-$10,000 site, only hosted in Korea, and only with a $400 payment gateway system, you’re stuck with PayPal and Bank Transfer. Yes, PayPal works in Korea.

PayPal

PayPal works in Korea, but here’s the catch I mentioned above, you’ll need a business licence for it to work properly as the Foreigner’s ID numbers don’t work inside PayPal’s signup forms. Business numbers do, however.

In part II we’ll go over how to use PayPal in Korea, as well as how to set up a website with a shopping cart which in addition to PayPal, has Korean bank transfer already set up and ready to go. Stay Tuned!

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