Entity Setup in Korea
How to Establish a Legal Hiring Base — 2025
For global companies looking to hire in Korea, understanding how to establish a legal presence is crucial. Whether you want to open a subsidiary, register a branch, or simply hire remote employees legally, this guide covers everything you need to know about entity setup, compliance, and alternatives.
1. Understanding Your Options
Foreign businesses can hire Korean talent in four main ways:
| Option | Legal Entity Required | Description | Best For |
|---|---|---|---|
| A. Local Subsidiary (현지 법인) | ✅ Yes | Independent Korean company under your ownership | Long-term operation & full-scale hiring |
| B. Branch Office (지점) | ✅ Yes | Legally part of the parent company, limited autonomy | Ongoing local business or client management |
| C. Representative Office (대표사무소) | ⚠️ Partial | Can conduct non-commercial activities (e.g. marketing, research) | Market entry research & pre-launch stage |
| D. EOR / PEO Model via Hire From Korea | ❌ No | Hire local employees through our legal entity | Testing Korean market without setup costs |
2. Local Subsidiary Setup (유한회사 / 주식회사)
Types of Corporations in Korea:
| Type | English | Typical Use |
|---|---|---|
| 주식회사 (Chusik Hoesa) | Corporation (Ltd.) | Most common for foreign subsidiaries |
| 유한회사 (Yuhan Hoesa) | Limited Liability Company | Simpler structure, used by smaller entities |
Requirements:
- Minimum 1 shareholder and 1 director (foreign nationals allowed)
- Registered office address in Korea
- Minimum capital: ₩100,000 (~$75)
- Korean company seal (도장) registration
- Business registration with National Tax Service (NTS)
Main Advantages:
- Full control of hiring, payroll, and invoicing
- Eligible for business visas (D-8)
- Can issue official tax invoices (세금계산서)
3. Branch Office Setup (지점)
A branch office operates as an extension of the parent company, not a separate legal entity. It can engage in commercial transactions and hire staff, but is legally tied to the head office.
Key Features:
- Must register with Seoul District Court and NTS
- Parent company bears full liability for local operations
- Requires at least one Korean resident representative
Pros:
- ✔ Easier repatriation of profits
- ✔ Lower maintenance costs than a subsidiary
Cons:
- ❌ Limited liability separation
- ❌ Requires detailed reporting to HQ
4. Representative Office Setup (대표사무소)
A representative office is not allowed to generate revenue or sign local contracts. It is used for market research, communication, or liaison activities.
Key Features:
- No tax registration required
- Must appoint a local representative
- Can hire employees for non-revenue functions (marketing, research)
- Cannot issue invoices or accept payments
Best For: Companies exploring Korea before making major investments.
5. EOR (Employer of Record) Solution – The Fastest Way
Hire From Korea can serve as your local Employer of Record (EOR). This means:
- You hire Korean talent legally without creating a company
- We handle payroll, tax, insurance, and contracts on your behalf
- You retain 100% of the employee's day-to-day management and project control
Benefits:
- ✅ Hire in days, not months
- ✅ No capital or registration needed
- ✅ Full compliance with Korean labor law
- ✅ Easy termination and renewal
Example: A U.S. startup can onboard a Korean designer under Hire From Korea's entity, pay monthly invoices in USD, and we handle salary, insurance, and taxes locally.
6. Tax and Compliance Obligations
Once registered, an entity in Korea must fulfill several ongoing obligations:
| Type | Description |
|---|---|
| Corporate Tax | 10–25% progressive rate depending on profit |
| Value Added Tax (VAT) | 10% on sales; quarterly filing |
| Payroll Taxes | Withholding of income, pension, health, and employment insurance |
| Accounting Audit | Annual financial reporting (required for most corporations) |
| Local Office Lease | Must maintain a valid local address for legal notices |
Hire From Korea partners with certified Korean tax firms to handle accounting and tax filings for foreign-owned entities.
7. Bank Account and Payment Setup
After company registration:
- Open a corporate bank account at a Korean bank (e.g. KEB Hana, Shinhan, Woori)
- Verify identity through corporate seal and representative ID
- Foreign remittance channels (USD/EUR/JPY) supported by all major banks
Hire From Korea can assist with:
- Bank account setup
- Monthly payroll transfers
- Tax invoice issuance and local bookkeeping
8. When to Transition from EOR to Entity
| Stage | Recommendation |
|---|---|
| 1–3 employees | Start with EOR to minimize cost and risk |
| 4–10 employees | Consider forming a local branch or subsidiary |
| 10+ employees | Full entity setup recommended for local management and branding |
We typically advise clients to switch once local operations reach a sustainable scale or regulatory threshold (e.g. large contracts or partnerships).
9. Entity Setup Support by Hire From Korea
Our business setup services include:
- Entity registration (LLC or Corporation)
- Local representative appointment
- Tax and payroll system integration
- EOR-to-Entity transition support
- Bilingual documentation and compliance management
Whether you're testing the Korean market or scaling full operations — we handle the legal foundation so you can focus on business.
10. Final Insight
Setting up an entity in Korea can open doors to Asia's fourth-largest economy and one of the world's most skilled workforces. With clear planning and local expertise, your company can hire confidently, comply fully, and scale sustainably.
Hire From Korea simplifies the process — from first hire to full incorporation.
11. Official References
National Tax Service (NTS):
https://www.nts.go.kr
Ministry of Justice (법무부):
https://www.moj.go.kr
Ministry of Employment and Labor:
https://www.moel.go.kr
Invest Korea (KOTRA):
https://www.investkorea.org
Ready to Establish Your Legal Presence in Korea?
Whether you need EOR services or full entity setup, we'll guide you through every step. Start hiring Korean talent the right way.
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