Hello Hanguk

I still remember walking past that cozy café in Seongsu-dong last winter, watching the owner chat with regulars while snow piled up outside. The warm glow from inside made me wonder: what does it actually take for someone—especially a foreigner—to open a place like that in Korea? The romanticized vision of running a small shop here is one thing, but the practical reality of visas, paperwork, and tax obligations is something else entirely.

Korea's business environment can feel welcoming and bureaucratic at the same time. The country actively encourages foreign investment, yet the registration process involves multiple government offices, specific visa requirements, and ongoing compliance responsibilities. For anyone seriously considering opening a small shop—whether it's a café, boutique, or neighborhood convenience store—understanding these three pillars (visas, licensing, taxes) before you sign a lease can save months of confusion.

The Visa Reality Check

Before you do anything else, you need the legal right to operate a business in Korea. This isn't just a formality—immigration authorities take it seriously. Running a business on a tourist visa or teaching visa (E-2) will get you in trouble, potentially leading to deportation and a ban from re-entering the country.

The most common business-appropriate visas are the D-8 (Corporate Investment) and D-9 (Trade Management). There's also the F-2 (Residency) and F-5 (Permanent Residency) for those who qualify, which give you broader business freedoms without investment requirements. If you're already married to a Korean citizen and hold an F-6 visa, you're also allowed to operate a business without additional restrictions.

D-8 Investment Visa: The Standard Path

For most foreigners opening a small business, the D-8 visa is the realistic option. As of 2026, the minimum investment requirement is 100 million KRW (approximately $75,000–$80,000 USD, though exchange rates fluctuate). This isn't pocket money—it's a genuine capital commitment that must be deposited into a Korean business account and documented properly.

The D-8 visa application process has become stricter recently. Immigration authorities have noticed misuse cases, so they're scrutinizing applications more carefully and processing times have lengthened. Expect at least several weeks, sometimes months, depending on your situation and the completeness of your documentation.

What surprised me when researching this was how much the educational background matters. If you hold a bachelor's degree, you'll need at least 5 years of relevant career experience. A master's degree reduces that to 2 years, and a doctorate eliminates the experience requirement entirely. This scoring system means that opening a small café isn't just about having the money—your professional background plays a role too.

Choosing Your Business Structure

Korea offers two main business structures for small businesses: sole proprietorship (개인사업자) and private limited company (주식회사, often abbreviated as Co., Ltd.). The choice matters more than you might think, especially when it comes to visa eligibility and liability.

A sole proprietorship is simpler and cheaper to set up. You can register directly with the National Tax Service (NTS), often within a day if you have all documents ready. However, there's a catch for foreigners: sole proprietorships don't qualify for the D-8 investment visa. If you already have permanent residency (F-5) or are married to a Korean national (F-6), a sole proprietorship works fine. Otherwise, you'll need a corporation.

A private limited company (Yusahan or Co., Ltd.) is the standard corporate structure. It requires at least one shareholder and one director, with no nationality or residency restrictions. The incorporation process takes 2–3 weeks and involves court registration, but it's the only structure that supports a D-8 visa application. You'll also gain limited liability protection, meaning your personal assets are separated from business debts—not a small consideration if you're investing significant capital.

The Registration Process Step-by-Step

The business registration process in Korea is sequential—each step depends on completing the previous one. Rushing through or skipping steps will only create problems later. Here's the general flow, whether you're registering a sole proprietorship or corporation.

Step 1: Secure a business location. You'll need a physical address and lease agreement before registration. This is non-negotiable. Home-based businesses are possible in some cases, but many local districts restrict commercial activities in residential buildings. Check your lease terms and building regulations carefully—violating these can result in eviction or fines.

Step 2: Company name reservation (for corporations). If you're forming a corporation, reserve your company name through the Korean courts. The name must be unique within your industry and region. This typically takes a few days. Sole proprietorships don't require formal name reservation.

Step 3: Deposit capital and get verification. For corporations, you'll need to deposit your capital into a temporary bank account opened with a Foreign Exchange Bank (FEB). The bank will verify the deposit, which you'll need for the next steps. Sole proprietorships skip this stage.

Step 4: Court registration (corporations only). Submit your articles of incorporation, shareholder agreements, and capital verification to the district court. This is the legal establishment of your company. Processing takes about 1–2 weeks. You'll receive a corporate registration certificate afterward.

Step 5: Register with the National Tax Service. Whether sole proprietor or corporation, you must register with the NTS within 20 days of starting business activities. This is where you get your business registration certificate (사업자등록증), which is essential for everything—opening bank accounts, signing vendor contracts, collecting VAT, issuing invoices. You can do this online if you're a Korean citizen, but most foreigners go in person to a local tax office with an interpreter or agent.

Step 6: Apply for special licenses (if applicable). Food businesses, retail alcohol sales, health-related services—these all require additional permits from district offices or the Ministry of Food and Drug Safety. We'll cover this more in the next section.

Special Licenses for Food and Retail

Not all businesses are created equal in Korea's regulatory system. If you're opening a café, restaurant, bakery, or any food-related business, you'll need a Food Business License (식품위생업허가) from your district office. This isn't automatic—it involves an inspection of your premises to ensure compliance with health and safety standards.

The inspection checks things like kitchen ventilation, food storage, sanitation facilities, and whether your space meets minimum requirements for your business type. For example, restaurants have stricter requirements than cafés that only serve pre-packaged items. The owner or manager also needs to complete a hygiene education program (typically a few hours, available in limited English or with Korean language requirements).

If you're planning to sell alcohol—even just beer and wine at a café—you'll need a separate liquor license. The requirements vary by region and business type, but generally involve demonstrating that you're located an appropriate distance from schools and religious institutions. Some districts have stricter rules than others.

Retail shops without food service face fewer licensing hurdles, but you still need to check industry-specific regulations. For instance, cosmetics retail has specific import and labeling requirements overseen by the Ministry of Food and Drug Safety (MFDS). Secondhand goods require registration under different rules. It's not one-size-fits-all.

Understanding Your Tax Obligations

Korean tax compliance is not optional, and penalties for mistakes or delays can be steep. The good news is that the system is relatively straightforward once you understand the main categories: corporate income tax (or personal income tax for sole proprietors), VAT, and local taxes.

Corporate Income Tax has been updated for 2026. The rates increased by 1 percentage point across all brackets: 10% on taxable income up to 200 million KRW, 20% on income between 200 million and 20 billion KRW, 22% on income between 20 billion and 300 billion KRW, and 25% above 300 billion KRW. For small businesses, you're almost certainly in that first bracket, meaning a 10% rate on net profits, plus a 1% local income surtax (so effectively 11% total).

If you operate as a sole proprietor, your business income is taxed as personal income under progressive rates ranging from 6% to 45%, depending on your total earnings. This can be advantageous for low-profit businesses but less so once income rises.

Value-Added Tax (VAT) in Korea is 10%, applied to most goods and services. If your business earns over a certain threshold (48 million KRW annually for some business types), you must register as a VAT-paying business and file returns every six months (or quarterly if you're a larger operation). You charge VAT on sales and can deduct VAT you've paid on business expenses. The net difference is what you remit to the government.

Small businesses sometimes qualify for simplified VAT treatment, where the calculation is less detailed. This can save accounting costs but may result in less favorable deductions. It's worth discussing with a tax advisor whether standard or simplified VAT makes more sense for your situation.

One thing that catches many new business owners off guard is the need to maintain proper accounting records and issue official tax invoices (세금계산서) for B2B transactions. Korea's National Tax Service is increasingly digitizing these systems, and many businesses now use electronic invoicing platforms. If you're selling to other businesses, getting this right from day one matters—not just for your own tax filings but because your customers need those invoices to claim their own VAT deductions.

What Makes Korea Different

Running a small business in Korea involves adapting to local norms and infrastructure that can feel unfamiliar if you're coming from other countries. These aren't just cultural quirks—they're practical realities that affect daily operations.

The importance of location infrastructure. Korean consumers expect convenience, which means your business location needs to fit into the existing infrastructure ecosystem. Is there parking? Is it near a subway station? Can delivery motorcycles easily access it? These aren't minor details—they directly affect foot traffic and your ability to participate in Korea's massive delivery app economy (Coupang Eats, Baemin, Yogiyo). Many cafés and restaurants now earn 30–50% of revenue through delivery platforms, which take significant commissions but provide access to customers who rarely dine out.

Seasonal rhythms matter. Korean business cycles follow predictable seasonal patterns tied to holidays (Chuseok, Lunar New Year), school schedules, and even monsoon season. Retail and food businesses see sharp spikes around gift-giving holidays and dramatic slowdowns during certain months. If you open a café near a university, expect ghost-town conditions during summer and winter breaks. Planning cash flow around these rhythms is essential.

Labor expectations and costs. Korean labor law is employee-protective, with strict requirements around minimum wage, severance pay (one month's salary for every year worked after one year of employment), mandatory health insurance, and pension contributions. Hiring even part-time staff means navigating these obligations. The minimum wage as of 2026 is around 10,030 KRW per hour (subject to annual adjustments), and enforcement is taken seriously.

Many small businesses operate with minimal staff partly because labor costs are high relative to revenue, especially for businesses with thin margins like convenience stores or small cafés. This won't apply to everyone, but it's worth calculating whether your business model can actually support paid employees or if you'll be working solo (or with family) for a significant period.

Common Mistakes to Avoid

After reading through dozens of experiences from foreign business owners in Korea, certain mistakes come up repeatedly. Here are the ones that cause the most headaches and are also the most preventable.

Perhaps the biggest mistake is assuming that because you've successfully run a business in another country, the transition to Korea will be straightforward. The regulatory environment, customer expectations, and market dynamics are different enough that even experienced entrepreneurs face a learning curve. Humility and willingness to ask for help (from lawyers, accountants, or other foreign business owners) go a long way.

FAQ

Can I open a business in Korea on a tourist visa?

No. Operating a business on a tourist visa or any non-business visa (like E-2 teaching visa) is illegal and can result in deportation, fines, and a ban from re-entering Korea. You must have an appropriate visa such as D-8, D-9, F-2, F-5, or F-6 before starting business activities.

How much does it cost to start a small business in Korea?

If you need a D-8 visa, the minimum investment is 100 million KRW (~$75,000–$80,000 USD). Beyond that, expect additional costs for lease deposits (key money), interior build-out, equipment, initial inventory, legal/accounting fees, and working capital. Realistically, most small cafés or shops require 150–300 million KRW all-in to get started properly.

Do I need to speak Korean to run a business in Korea?

While it's not technically required, practical Korean language skills make everything easier—dealing with landlords, suppliers, government offices, and customers. Many successful foreign business owners either study Korean seriously or partner with someone fluent. Relying entirely on translation apps or intermediaries becomes expensive and limits your ability to manage day-to-day operations.

Can I hire a Korean partner to help with visa and registration issues?

Yes, many foreigners form partnerships with Korean co-founders or hire local business services firms to handle registration and compliance. Just make sure any partnership is formalized legally with clear agreements about ownership, responsibilities, and profit-sharing. Informal arrangements often lead to disputes later.

What happens if I need to close my business?

You must officially close your business registration with the NTS and settle all tax obligations. If you're on a D-8 visa, closing your business affects your visa status, so you'll need to either find alternative employment/sponsorship or leave Korea. Dissolving a corporation also requires court procedures. Don't just stop operating and walk away—that creates legal and financial complications.

Are there tax benefits for small businesses or startups?

Yes, Korea offers various tax credits and deductions for SMEs (small and medium enterprises), particularly for R&D investment, job creation, and certain industries. The specifics change annually and depend on your business type and size. Consult with a Korean tax advisor to identify which incentives you might qualify for—many foreign business owners leave money on the table by not claiming available benefits.