How to Set Up an Entity in South Korea

South Korea is one of Asia’s most advanced and globally connected economies, known for its strong technology sector, skilled workforce, and transparent legal framework. For international companies, setting up a local entity in South Korea can unlock direct access to a sophisticated consumer market and key regional supply chains, while enhancing credibility with customers, partners, and regulators.

That said, entity setup in South Korea is relatively structured and documentation-heavy. Foreign investors must navigate multiple registrations across corporate, tax, and employment authorities, often in Korean. The main challenges include coordinating filings with different government bodies, understanding tax and labor compliance, and meeting banking and notarization requirements. The benefits, however, are significant: full operational autonomy, direct hiring capabilities, and long-term scalability in one of Asia’s most stable business environments.

Disclaimer: This content is for informational purposes only and does not constitute legal, tax, or financial advice. Always consult official sources before acting.

What does “opening an entity” mean in South Korea?

Opening an entity in South Korea means legally incorporating a business with the national commercial registry, obtaining tax and employer registrations, and becoming fully authorized to conduct business locally. This process grants the company separate legal personality under Korean law and allows it to hire employees, open bank accounts, and enter into contracts. Common options include a locally incorporated subsidiary or a registered branch of a foreign company.

Entity overview in South Korea

Here is a summary of the key features of company formation in South Korea:

Step-by-step guide: How to open an entity in South Korea

Step 1: Choose the right structure

Foreign companies typically choose between a wholly owned subsidiary (most commonly a joint stock company) and a branch office. A subsidiary is a separate legal entity with limited liability and is often preferred for hiring employees and long-term operations. A branch is not a separate legal entity and remains legally tied to the foreign parent.

Step 2: Verify business name availability

Business names must be unique and compliant with Korean naming rules. Name availability is checked through the commercial registry under the Supreme Court of Korea. Names must be in Korean, though an English trade name may be registered for branding purposes.

Step 3: Prepare incorporation documents

Incorporation requires formal documentation, some of which may need notarization and apostilles for foreign parent companies. Commonly required documents include:

• Articles of incorporation
• Shareholder and director details and resolutions
• Proof of registered office address in South Korea
• Certificate of incorporation and bylaws of the foreign parent (for subsidiaries or branches)

Step 4: Register with the Commercial Registry

Incorporation filings are submitted to the competent commercial court registry, either electronically or in person, depending on the case. Upon approval, the company receives a corporate registration certificate and registration number, which legally establishes the entity.

Step 5: Register for tax and social security

After incorporation, the company must register with the National Tax Service to obtain a business registration number and VAT registration. Employers must also register with the National Pension Service, National Health Insurance, Employment Insurance, and Industrial Accident Compensation Insurance systems.

Step 6: Open a corporate bank account

A local corporate bank account is required to operate and pay employees. Banks apply strict KYC and AML checks, often requiring in-person verification by directors or authorized signatories. Account opening typically takes one to three weeks.

Step 7: Set up payroll and employment compliance

Before hiring, companies must set up compliant payroll processes, register as an employer with social insurance agencies, and prepare locally compliant employment contracts in line with the Labor Standards Act. Payroll reporting and social contributions must be handled monthly.

Discover how Elemental Enzymes accelerated regulatory approvals and market entry with Deel.

Post-registration obligations

After incorporation, companies in South Korea must stay compliant with local governance, tax, and employment laws. Typical requirements include:

• Tax and financial reporting: File corporate income tax returns, VAT filings, and financial statements according to the schedule set by the National Tax Service, generally quarterly for VAT and annually for corporate tax
• Corporate registers: Maintain up-to-date records of directors, shareholders, and beneficial owners and report changes to the commercial registry within the legally required timeframe
• Compliance tracking: Monitor all tax, licensing, and corporate filing deadlines through a compliance calendar or professional service provider to avoid penalties
• Licenses and renewals: Renew any sector-specific business licenses or permits with the relevant ministry or local authority as required
  Recordkeeping: Retain accounting, payroll, HR, and transaction records for at least five years, ensuring accessibility for audits or inspections
• Employment law compliance: Adhere to labor, benefits, social security, and data-protection regulations, including compliant employment contracts, payroll reporting, statutory benefits contributions, and mandatory insurance coverage, as overseen by the Ministry of Employment and Labor

Taxes and financial considerations

Key ongoing obligations include:

• Corporate income tax: Progressive national rates of 9%–24%, plus a local surtax, paid annually with interim prepayments
• VAT/GST: 10% VAT, with quarterly filings for most businesses
• Payroll/social contributions: Mandatory employer and employee contributions to national pension, health insurance, and employment insurance, plus employer-only contributions to industrial accident compensation insurance
• Accounting standards: Korean GAAP applies, with K-IFRS required for listed companies and certain large entities

Discover how Climate-KIC navigated complex restructuring with Deel.

Expand internationally with Deel

Whether you’re hiring through an EOR or establishing your own local entity, Deel’s all-in-one platform gives you everything you need to expand into the United Kingdom—quickly, compliantly, and with confidence. From market entry to ongoing operations, Deel helps you hire, onboard, and manage teams seamlessly from day one.

With Deel, you can:

• Test new regions using Deel’s local entities through our Employer of Record service—hire employees compliantly, delegate payroll and taxes, and access localized employment contracts.
• Open entities with Deel Entity Setup, where our team manages everything—from incorporation and tax registration to coordination with local experts.
• Centralize your compliance and records with Deel Entity Management, including automated filings, calendar reminders, and visibility across all entities.
• Integrate with Deel Payroll and Deel HR for compliant payments, benefits, and workforce oversight—all in one platform.

For companies transitioning from the EOR model to owned entities, Deel ensures a smooth handover and consistent compliance every step of the way. Enter new markets, onboard talent, and manage your global workforce—all through one unified platform.

FAQs

How long does it take to open an entity in South Korea?
Typically, 4–8 weeks. Find out how long setup takes with our Entity Setup Calculator.

What is the minimum capital required?
There is no statutory minimum capital requirement for most entity types.

Can foreign companies own 100 % of an entity in South Korea?
Yes, in most sectors, foreign companies can own 100% of a South Korean entity, subject to limited industry-specific restrictions.

Do I need a local director or representative?
There is no general requirement for directors to be Korean residents, but a local representative is often needed for banking and regulatory communications.

How much does it cost to register an entity?
Government fees, notary costs, and setup expenses typically range from KRW 3,000,000 to 6,000,000 (≈ USD 2,200–4,400). Find out the setup cost with our Entity Setup Calculator.

Can I hire employees before the entity is fully registered?
Typically, no. However, Deel’s Employer of Record (EOR) lets you hire and pay talent immediately while your entity setup is in progress.

Can Deel help me open an entity in South Korea?
Yes. Deel Entity Setup manages the end-to-end process — from registration to payroll compliance—in over 100 countries. Deel’s local experts handle documentation, filings, and legal requirements on your behalf.

Does Deel offer ongoing compliance and payroll support?

Yes. Deel offers both managed services and self-service tools to help you stay compliant.

If you’re using Deel Entity Management, Maintenance, EOR, or Payroll, our team handles payroll, benefits, filings, and compliance obligations on your behalf.

For teams managing their own entities, Deel Compliance Hub makes staying compliant simple by providing real-time regulatory updates, risk alerts, and workforce insights across 150+ countries. Proactively manage compliance with our Compliance Monitor, Workforce Insights, and an AI-powered Worker Classifier, staying ahead of changing employment laws.

Can I switch from Deel EOR to my own entity later?
Yes. Deel supports seamless transitions when you’re ready.