A Big Client Wants a Company, Not You: Freelancer's Plan for Thailand

The core answer

A client's procurement team has said, "We can only pay a company." You have a deal, no company, and a deadline. The panic is common, and the fix is a sequence of steps, not one form.

The rule (Revenue Department). There is no law that forces a client to pay only companies. The tax rules do shape the choice. The Revenue Department states that a person who supplies goods or services in Thailand with annual turnover above 1.8 million baht is subject to VAT, and its withholding table lists service and professional fees at 3%. A corporate client usually wants a VAT-registered vendor so it can receive a full tax invoice and file withholding returns in a routine way.

Our practical view. Do not sign personally and hope to "move" the contract later. Find out exactly what the client's vendor form requires, start the company and bank account in parallel, and tell the client the real timeline now. Most procurement teams accept a short, honest delay. They do not accept a surprise.

1. Why do big clients ask for a company?

It is mostly internal process. Typical reasons:

• Their vendor database and approval workflow are built for registered entities.
• They need a tax invoice to claim input VAT, which requires a VAT-registered seller.
• Withholding tax filings, and the forms they file, are different for individuals and juristic persons (individuals are usually reported on PND3 and companies on PND53; confirm with the client's accounts team).
• Audit and anti-fraud rules prefer a payee whose identity and bank account are on a public register.
• Liability: they would rather contract with an entity that has its own balance sheet and insurance.

Ask whether the requirement is a hard rule or a preference. Some teams will onboard a sole trader with extra paperwork, and if the engagement is small, that may be cheaper than forming a company.

2. What does procurement usually ask for?

Every client differs, so ask for the vendor onboarding checklist before you do anything. Items we see most often:

Form names and what must be attached are set by each client, not by law. Treat the list as a guide to what to ask for.

3. What is a realistic order of steps?

The steps depend on each other, so the order matters.

1. Get the vendor checklist and the client's target start date.
2. Decide the company structure. For one person, the usual question is how many shareholders the company needs and who will be the director. Read company registration for Thai owners.
3. Register the company. Your registration agent or lawyer will give a current estimate; do not rely on a figure from the internet.
4. Open the company bank account. Banks have their own requirements and often want to see the registration papers, the shareholder list and the registered office.
5. Decide on VAT and register if needed (section 5 below).
6. Complete the client's vendor onboarding. This can take as long as steps 3 to 5 combined.
7. Sign the contract in the company's name and issue invoices from the company.

Budget the steps in the order the client will ask for them. For a list of start-up cost items to put on your budget, see company registration costs in the first year.

4. Who signs the contract during the gap?

This is where most freelancers get hurt. Three options, from safest to riskiest:

• Wait and sign as the company. The cleanest. Ask the client for a short, written confirmation that the engagement starts on the date the vendor onboarding is complete.
• Sign a short letter of intent or a purchase order that says the real contract will be made with your company once it exists. Make it clear what happens if the company is not ready by a stated date.
• Sign personally, and agree in writing to a novation. A novation replaces you with the company as the party. It needs the client's consent and it should carry over work done, the amount owed and who owns the work. If you start personally, put the transfer terms in the first contract. Our guide on moving a freelancer or agency business into a company explains what to include.

Avoid starting the work with no paper at all and hoping everything will be tidied up later. Also be careful about signing on behalf of a company that does not yet exist. Read pre-incorporation contracts and promoter liability first.

5. Should the company register for VAT?

Two questions: must you, and should you?

Must you. The Revenue Department states that a person who regularly supplies goods or services in Thailand with annual turnover above 1.8 million baht is subject to VAT. Under that level, registration is not automatic. The page we checked does not give the registration deadline or form name, so confirm both with the Revenue Department or your accountant before you rely on a date.

Should you. Even below the threshold, a corporate client may require a VAT invoice. If you register, you charge VAT on your invoices and file regular VAT returns, but you can generally claim VAT on your own business purchases. The trade-off is added paperwork and a price that may look higher to non-VAT clients. Run the numbers on your actual client mix with your accountant. For a tax comparison between an individual and a company, see moving an online seller to a company, which is written for sellers but covers the same tax logic.

6. What changes about withholding tax?

When a Thai company pays for services, it often withholds tax at source and sends it to the Revenue Department. The Revenue Department's table lists service and professional fees at 3%. You receive a withholding certificate and use it as a credit when you file your own tax return. Withholding is not an extra cost; it is an advance payment of your tax. It does affect cash flow, so plan for receiving slightly less than the invoice total.

The rate and the filing form can differ by type of service and by type of payee, so check your own work type with your accountant.

7. Can I negotiate payment terms?

Yes, and now is the best time. Points worth raising:

• Start date and fees for the gap. Who bears the cost of waiting?
• Payment period. Large clients often pay on long terms. Agree a due date in days, and what happens on late payment.
• Deposit or milestone payments, so you are not financing the client.
• Which invoice goes to which entity, if you will bill some work personally before the company starts.
• Termination and handover if the onboarding fails.

Put these in writing. For a model of a monthly service contract, see MSA and SLA for monthly service contracts.

8. Checklist before you start

• Asked for the vendor onboarding checklist and the client's deadline
• Asked whether a company is mandatory or only preferred
• Decided on shareholders, director and registered office
• Confirmed bank requirements before registration
• Decided on VAT with your accountant, using the 1.8 million baht threshold as the starting point
• Got written confirmation of the start date and payment terms
• Settled how the first contract will be signed and, if personal, how it will transfer
• Had the contract reviewed before signing (liability, IP, confidentiality, payment, termination)
• Planned for withholding tax in your cash flow

Further reading

• Company registration for Thai owners
• Company registration costs in the first year
• Moving a freelancer or agency business into a company
• Pre-incorporation contracts and promoter liability
• Moving an online seller to a company

A corporate client's company requirement is manageable if you learn its checklist first, build the company and bank account in order, and settle who signs and when before you start work.

We help freelancers and small businesses set up the company, review the client contract and plan the tax steps. Initial consultation is free — call +66 92 254 2045 or send us the details. See also company registration, contracts and documents and accounting and tax compliance.

This guide is published by Suwanvara Law Firm — a Khon Kaen law firm established in 1986. General information only, not legal advice on a specific matter.