Before taking the leap into business ownership, it is crucial to carefully consider various factors including shareholders, business scope, time of establishment, business address, and capital. Among these, understanding the nuances of capital in business is particularly important. This article aims to address common questions on this subject and provide valuable insights for those navigating the complexities of starting a business in Taiwan.
Key Takeaways
Q: Is there a capital requirement to start a business in Taiwan?
Generally, there is no minimum capital limit for setting up a company in Taiwan, except for certain industries. However, if your primary goal is to apply for a Work Permit and ARC through the investment, the minimum capital amount is TWD 500,000.
Q: What is the recommended capital amount?
The recommended initial capital amount is 6 months to 1 year of operating costs, covering expenses such as business setup fees, office rent, decoration, equipment, and employee salaries.
Q: Can the capital be used or transferred?
Yes, the capital can be utilized for necessary business expenses, including office rent, accountant services, raw materials, and employee salaries. However, it should not be used for personal purposes by shareholders without proper authorization.
What is the Capital Amount in Business?
The capital amount can be defined as the initial funds required to kickstart a business. Essentially, it reflects the size of the company. In simpler terms, it is the amount of capital you plan to invest at the start of your business. This fund covers the costs of initial operating assets such as office rent, utilities, production equipment, and other essential expenses necessary for the normal operation of your business.
What is the Minimum Capital Requirement?
Historically, the Company Law set minimum capital requirements at TWD 500,000 for Co., Ltd. (Company Limited) and TWD 250,000 for Ltd. (limited companies). However, the 2009 amendment abolished these minimum limits. Except for certain industries like construction, finance, freight, forwarding, and customs brokerage, there is no longer a mandated minimum capital limit for companies.
Can Capital be Used or Transferred After Company Incorporation?
Yes, the capital can be utilized for all necessary business expenses after obtaining a balance deposit certificate.
Once the company is established, the capital must be deposited in a bank for a minimum of two days before any withdrawals can be made. The process involves opening a temporary company account, depositing capital for one day, and obtaining a balance deposit certificate the next day. It's essential to adhere to the specific regulations of each bank, as some may impose minimum waiting periods for withdrawing the full amount of capital.
Note: Avoid withdrawing the entire capital immediately after verification, as this could lead to serious consequences during audits. Insufficient documentation to support fund usage may be deemed as a false representation of the capital amount, resulting in severe penalties.
This information is written for those who are navigating the complexities of starting a business in Taiwan. For further guidance tailored to your specific situation, consult with our CPA team.
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