How to Register a Sole Proprietorship (사업자) in South Korea

Setting up as a sole proprietor—called 사업자 (sa-eob-ja) in South Korea—is one of the simplest and most flexible ways to run your own business. It’s especially attractive for freelancers and independent contractors who want to work on their own terms. The process is fairly straightforward, though foreign residents may face extra steps with visas, documentation, and language requirements.

The main benefits include full control, low barriers to entry, and direct access to your earnings. The main drawback is that your personal assets are not separated from your business obligations, so you carry unlimited liability.

Disclaimer: This article is for informational purposes only and is not a substitute for legal advice. Please always check official sources or seek professional guidance before taking action.

What is a sole proprietorship in South Korea?

Apart from the official term 사업자 (sa-eob-ja), in South Korea, a sole proprietorship may also be referred to as:

• Sole trader
• Self-employed worker
• Independent contractor

These terms all describe the same one-person business model operating without forming a separate legal entity.

How does a sole proprietorship (사업자) work in South Korea?

사업자 (Sa-eob-ja) vs. other business structures in South Korea

While the sole proprietorship is simple to establish, many entrepreneurs consider alternatives like corporations or LLCs (Yuhan Hoesa) for liability protection. Here’s how they compare:

Step-by-Step guide: How to register a sole proprietorship in South Korea

Step 1: Check your eligibility

Korean citizens and permanent residents can freely register as sole proprietors without visa restrictions, provided they have a valid Korean ID. Foreign nationals, on the other hand, must hold an appropriate work visa—such as an F-2, F-4, F-5, F-6, D-8-4 (Startup), or D-8 (Corporate Investment) visa—and also present an Alien Registration Card (ARC). Those who do not possess a qualifying visa cannot register directly and will usually need to appoint a lawyer or authorized agent to complete the process on their behalf.

Step 2: Choose your business name

You may operate under your personal name or choose a trade name. There isn’t a formal online name reservation system for sole proprietorships—just declare your preferred name during registration.

Step 3: Gather required documents

Documents typically required include:

• Alien Registration Card (ARC) or Korean ID
• Office lease agreement or proof of address (landlord approval if using residential address)
• Passport
• Any industry-specific documents or qualifications
• Completed business registration form (available at district tax offices)

Step 4: Register with the local tax office

Visit your local district tax office (an NTS office), submit the business registration form and required documents. You’ll receive a receipt confirming application submission. Once approved, you'll be notified to return and collect your business registration certificate (business license).

Step 5: Pay registration fees and contributions

There is no government fee charged for filing a sole proprietorship with the local tax office. The process itself is free of charge. However, you should budget for related administrative costs such as preparing documents, legal translations if needed, or using an agent’s services if you don’t speak Korean.

Step 6: Complete post-registration obligations

Your first priority as a registered 사업자 is invoicing and record-keeping. You must issue tax invoices for your services, ensure they meet NTS standards, and keep detailed records of all income and expenses. Proper invoices and documentation are essential for VAT filings and annual income tax returns.

Financial and tax obligations for sole proprietors in South Korea

You are responsible for:

• Income tax: South Korea applies progressive personal income tax rates ranging from 6% to 45%. Returns must be filed annually by May 31 with the NTS. Sole proprietors pay tax on their business profits as part of their personal return.
• Social security contributions: Sole proprietors must enroll in Korea’s social insurance schemes, which include the National Pension Service, National Health Insurance, and Employment Insurance. Contributions are calculated monthly, based on declared income. Unlike salaried employees, sole proprietors are responsible for paying the full contribution amount themselves.
• VAT: The standard VAT rate is 10%. Returns are generally filed every six months, in January and July. If annual income is below ₩104 million, simplified VAT rates between 1.5% and 4% may apply. VAT registration is handled through the local tax office of the NTS.
• Record-keeping: You must maintain accurate invoices, receipts, and accounting records. These documents are essential for completing VAT and income tax returns, and must be retained in case of an audit by the tax authorities.
• Invoicing: All tax invoices must meet NTS requirements, including sequential numbering, proper identification of the business and client, dates, descriptions of goods or services, and applicable VAT. Invoices should be issued electronically where possible and must be stored for your records.

Launch your contracting career and stay compliant with Deel

Registering a sole proprietorship gives you independence, but it also means handling taxes, invoices, and records on your own. Deel’s all-in-one platform helps you manage obligations without the stress. With Deel, you can:

• Automate invoicing and expense tracking with essential Bookkeeping tools
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• Keep accurate records for tax season
• Access expert tax advice and compliance support
• Get paid through multiple payment and withdrawal methods
• Spend your earnings in USD with the Deel Card
• Access funds early with Deel Advance
• Enjoy contractor perks from 150+ partners

Stay independent, without the admin overload. Sign up to Deel for free today.

FAQs

What is the minimum capital required to start a 사업자 in South Korea?
None. You can register with no minimum capital.

Do 사업자 need to register for VAT/GST?
Yes. VAT at 10% is filed every six months. Reduced rates may apply if income is under ₩104 million.

How much are the standard monthly or annual contributions?
Typically, contributions are made monthly to the National Pension Service, NHIS, Employment Insurance, and Worker's Accident Insurance—amounts vary based on income.

Can a 사업자 hire employees?
Yes, though doing so triggers employer responsibilities, including payroll tax and social contributions.

How long does it take to register as a 사업자?
Often, within a single day—you submit documents at the tax office, receive a receipt, and later collect your certificate.

Can foreign nationals register as 사업자 in South Korea?
Yes, if holding a valid work visa and an ARC. Foreigners without such a visa may need legal assistance. Registering at your home address is possible with your landlord’s permission.

Do 사업자 need a separate business bank account?
It is highly recommended, and often required by banks, for clarity and compliance.

What happens if I stop working as a 사업자?
You must deregister with the tax office by submitting a closure form and filing final tax returns.

Are there government incentives or reduced rates for new 사업자?
South Korea offers support through the Ministry of SMEs and Startups. Some industry-specific grants or startup incentives may apply.

Can I use Deel as a 사업자 to get paid by international clients?
Yes. Deel allows 사업자 and freelancers to receive payments from global clients in multiple currencies, with low fees and transparent exchange rates.

Does Deel generate compliant invoices for 사업자?
Absolutely. Deel automatically generates invoices that meet South Korean and international legal requirements.

Can Deel help me with taxes as a sole proprietor in South Korea?
Yes. Deel provides downloadable tax reports and payment records you can use when filing returns. While it doesn’t replace your accountant, it simplifies compliance.

Does Deel offer contracts for freelancers and 사업자?
Yes. Deel provides contract templates compliant with South Korean law, helping you work safely and professionally.

Can I access benefits through Deel as a 사업자?
Yes. Deel offers optional perks like health insurance, retirement savings, and other benefits usually reserved for employees.