🇰🇷 Annual Compliance — South Korea

Skipping the Foreign Investment Notification before incorporation

Fix: Foreign investors must file a Foreign Investment Notification with KOTRA or a designated foreign exchange bank before transferring capital and incorporating. Skipping this step can delay the incorporation and create issues with repatriating profits or qualifying for foreign-invested enterprise incentives.

Underestimating Korean labor law protections

Fix: Korean labor law strongly favors employees. Dismissals require "justifiable cause" and must follow prescribed procedures. Severance pay (one month per year of service) is mandatory for employees with one year or more of continuous service. Consult a Korean labor attorney before hiring, and ensure employment contracts comply with the Labor Standards Act.

Choosing a Chusik Hoesa when a Yuhan Hoesa is sufficient

Fix: If you are not planning to raise public equity or list on the KRX, a Yuhan Hoesa offers the same liability protection with lower setup and compliance costs. Many foreign subsidiaries in Korea operate as Yuhan Hoesa entities. Assess your capital-raising needs before selecting a structure.

Failing to register for the four mandatory social insurance programs

Fix: Employers must register for national pension, national health insurance, employment insurance, and industrial accident compensation insurance within the first month of hiring. Non-compliance results in penalties and back-payment obligations. Engage a Korean payroll provider to ensure timely registration and correct contribution calculations.