The question most freelancers ask first is the wrong one
As soon as income starts climbing, the question comes up: should I register a company so I pay less tax? It is the question that leads to the most bad decisions, because incorporating is not a discount you switch on. It changes how your business works end to end — how you prove expenses, how you get money out of the business, and how much paperwork lives on your calendar every month for as long as the entity exists.
Two better questions replace it. First: what percentage of your revenue is genuine, documented cost? Second: how much profit each year do you not need to pull out for personal spending? Those two numbers answer almost the entire question. Everything else is secondary.
What you get for free as an individual — and lose the day you incorporate
If your freelance income is classified as Section 40(8) income, Thai law lets you deduct a flat 60% of gross revenue as expenses without producing a single receipt. Freelancers routinely underrate how large that benefit is. Most knowledge work — code, design, copywriting, photography, consulting — runs at real costs well below 60%. The gap between your actual cost and the 60% you are allowed to claim is untaxed profit, and it disappears the moment you become a company, because a company may only deduct expenses it can document.
Being an individual also means:
- You file twice a year: PND 94 at mid-year, PND 90 early the following year. That's it.
- No bookkeeper, no year-end closing, no auditor, no financial statements filed with the Department of Business Development (DBD).
- Money that lands in your account is yours. No board resolution, no paying yourself on paper.
- Progressive rates of 5–35%, with the first ฿150,000 of net income exempt.
One important exception: if your income is classified as Section 40(2) rather than 40(8), your deduction is 50% capped at ฿100,000 — dramatically narrower. Freelancers in that bucket hit the incorporation break-even far earlier. Before deciding anything about a company, know which category you are actually in.
What a company gives you, and what it takes
The attraction is the rate. A company or juristic partnership with paid-up registered capital of no more than ฿5 million and revenue from goods and services of no more than ฿30 million per accounting period qualifies for SME rates:
| Net profit | Rate |
|---|---|
| 0 – ฿300,000 | Exempt |
| ฿300,001 – ฿3,000,000 | 15% |
| Above ฿3,000,000 | 20% |
Fail either condition and you pay a flat 20% from the first baht.
Next to personal brackets that reach 25% above ฿1 million of net income and 35% above ฿5 million, that 15% looks compelling. Two conditions make the real picture different.
First, the 15% applies to provable net profit. No 60% flat deduction. Coffee-shop meetings with no receipt, a home electricity bill split between work and life, a friend you paid by direct transfer — without documentation, none of it is deductible.
Second, money in the company is not your money. Getting it out runs through two doors. Salary is Section 40(1) income: 50% deduction capped at ฿100,000, then normal progressive rates. Dividends carry 10% withholding tax, after which you either treat it as final tax or fold it into your annual return to claim the dividend tax credit. Either way, the same baht can be taxed at the corporate layer and again at the personal layer.
Two worked examples
Both use only the ฿60,000 personal allowance so the comparison stays readable. In real life, social security, insurance, RMF/SSF/Thai ESG and parental-support allowances push your personal tax lower still — which moves the break-even further out, not closer.
Case 1: ฿1.5 million revenue, low real costs
Revenue ฿1,500,000, genuine costs ฿200,000 (about 13% of revenue).
- As an individual under 40(8): flat 60% deduction of ฿900,000 leaves ฿600,000, less the ฿60,000 allowance gives ฿540,000 net income. Tax: ฿33,500.
- As a company, taking everything out as salary, after real costs and roughly ฿50,000 a year of compliance, personal tax lands near ฿137,500 — about ฿187,500 all-in. Tune the salary-versus-dividend split optimally and use the dividend tax credit and you can get down to roughly ฿140,000–150,000. Still several times worse.
The lesson is blunt: while your real costs sit well under 60% of revenue, the flat deduction wins, no matter how cleverly you structure the company.
Case 2: ฿4 million revenue, high real costs
Revenue ฿4,000,000, genuine costs ฿2,600,000 (65% — subcontractors, ad spend, studio rent, gear).
- As an individual, once real costs exceed 60% you should deduct actual expenses instead of the flat rate. Net income ฿1,340,000, tax roughly ฿200,000 (stubbornly using the 60% flat deduction would cost around ฿250,000).
- As a company, profit before your salary is ฿1,400,000. Pay yourself ฿720,000, leaving about ฿610,000 of net profit: ฿46,500 corporate tax plus ฿36,500 personal tax on salary — ฿83,000. But if you also distribute the remaining profit as dividends, add roughly ฿56,000 of withholding: about ฿139,000 of tax plus ฿70,000 of compliance cost, or roughly ฿209,000.
This is where most people are surprised. Even at ฿4 million of revenue with 65% real costs, if you extract every baht each year, incorporating is roughly a wash.
The real corporate advantage is the profit you don't take out
Go back to Case 2 and skip the dividend. Leave the ฿610,000 inside the company to buy equipment, hire, or hold as working capital, and that money is taxed at ฿46,500. As an individual, the same profit would sit in your 25% marginal band — roughly ฿152,500. The gap is about ฿100,000 a year, which survives the compliance cost and widens as income grows.
Hold onto this principle: a company is a tool for money you are not spending yet, not a discount on money you were going to spend anyway. A freelancer who consumes their income every month gets almost nothing from the 15% rate.
The costs nobody puts in the pitch
- Registration: government fees of roughly ฿5,000–6,000, plus a service fee if an accounting firm handles it.
- Monthly bookkeeping: from roughly ฿2,500–3,000 per month for a small entity with modest document volume — ฿30,000–36,000 a year.
- Annual audit: about ฿6,000 for a dormant entity, around ฿8,000 under ฿1 million of revenue, ฿12,000–15,000 in the ฿3–5 million range.
- Your time: PND 3/53 every time you pay a contractor, PND 51 within two months of the half-year point, PND 50 within 150 days of year-end, and financial statements filed with the DBD within five months of closing the books. File the statements late and both the entity and its directors face fines.
Call it ฿40,000–80,000 a year to be a company — a fixed cost, whether or not the work shows up.
Five signals it's time
- Real costs have exceeded 60% of revenue two years running — not one year with a big equipment purchase.
- You end the year with several hundred thousand baht of profit you genuinely don't need personally, and you intend to reinvest it.
- You've started paying a team — subcontractors or staff — withholding tax on their behalf, and you want liability separated from yourself.
- Enterprise or government clients require a juristic-person counterparty, or their vendor registration only accepts one.
- Your income is Section 40(2), where the deduction caps out at ฿100,000. This group crosses over much sooner.
Signals it isn't
- Income swings hard — ฿2 million this year, ฿800,000 next. Fixed compliance costs bite hardest in the bad year.
- You've never kept receipts systematically. A company has no flat deduction to forgive missing paperwork.
- Your only reason is looking credible. A commercial registration (ทะเบียนพาณิชย์) as an individual costs tens of baht and doesn't change your tax status at all.
- You plan to keep receiving payments in your personal account. Company money running through a personal account is an accounting and audit problem that costs more than the tax it saves.
VAT registration is not company registration
These get conflated constantly. Individuals can register for VAT, and anyone — individual or company — must register within 30 days of crossing ฿1.8 million in annual revenue. VAT does not force you into a corporate structure.
There is one real connection, though. Once you're VAT-registered you already issue tax invoices, keep input tax invoices, and file PP 30 monthly. The heaviest part of the document discipline is already built, so the marginal cost of becoming a company is lower than it would have been before.
The middle option people forget
If you want juristic-person status but fear the running cost, look at a small limited partnership. A registered partnership meeting all three tests — registered capital not over ฿5 million, total assets not over ฿30 million, and total revenue not over ฿30 million — can have its accounts audited and certified by a Tax Auditor (TA) rather than a Certified Public Accountant (CPA), which a limited company requires in every case. TA fees are typically lower. The trade-off is perception: some clients still read "Co., Ltd." as more substantial.
If you decide to go ahead, the order matters
- Reserve the name at reserve.dbd.go.th, with two or three backups.
- Line up at least two promoters — the law dropped the minimum from three to two in 2023 — each holding at least one share.
- File the memorandum of association and the company registration, which can be done together on the same day. Since 1 July 2026 the DBD accepts these filings only through the DBD Biz Regist system nationwide, so everyone involved needs identity verification and e-signature via ThaiD ready.
- Open a bank account in the company's name, register for Revenue Department e-Filing, and pass the board resolution setting your own salary in month one.
- Engage a bookkeeper and an auditor before the first month, not before the year-end close. Reconstructing twelve months of documents is the number one reason accounting bills blow up.
Do these three things for a year first
Separate your business bank account from your personal one. You can do this today without registering anything. If you can't live with separate accounts for a year, you won't survive a company account.
Keep every receipt as if you were already a company. This is the rehearsal, and by year-end it hands you the single most important number in this article: your real cost as a percentage of revenue. Under 60%, the answer to incorporating is "not yet."
Pay yourself a fixed salary every month. One transfer, same amount, business account to personal account — then live on it. What's left over is your "profit you don't need to take out," the number that decides whether a 15% rate is worth tens of thousands of baht in annual compliance.
MANA gets you both numbers without waiting for year-end: income, expenses, quotations, invoices, receipts, e-tax invoices and withholding tax sit in one place, so profit per project and true annual cost ratio are visible any day of the year. And when you do incorporate, that record is the first thing your bookkeeper asks for.
The short version
Don't incorporate because revenue grew. Incorporate because your real costs have outgrown the flat deduction, and because there is profit you will genuinely leave in the business. Until both are true, being a well-documented individual is the cheaper and far lighter structure.
This is general information meant to help you ask the right questions, not advice for your specific situation. Before you commit, put your own numbers in front of a bookkeeper or tax adviser.