7 Actions To Take After Incorporating Your Business

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7 Actions To Take After Incorporating Your Business

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Much has been written about incorporating a new business in Indonesia, including advice on how to incorporate and what business structure to pick. However, we have found that new business owners can have just as many questions after incorporating or forming a limited liability company, especially for if said company in question is a Foreign Direct Investment Company (FDI Company), otherwise known as Perusahaan Modal Asing.

As you can imagine, there are some essential differences between running a corporation and running a sole proprietorship, so it is important to get all your legal ducks in a row as early as possible.

If you have recently incorporated or formed a FDI Company in Indonesia, here are 7 (seven) items to check off your list.

A. Get a Taxpayer Identification Number (NPWP) from The Tax Office (KPP)
A corporation is a separate entity and needs its own Taxpayer Identification Number, otherwise known as Nomor Pokok Wajib Pajak or NPWP in Indonesia. Application to acquire a Taxpayer Identification Number shall be submitted to the Tax Office which presides over the domicile where your company is located.

The Taxpayer Identification Number (NPWP) must be obtained whether you plan on hiring any employees or not. This should be one of your first steps after forming a FDI Company in Indonesia. Without a Tax ID Number, you will not be able to open a bank account for your business or file your business’s tax returns.

TIP: If you already had a NPWP for your business when it was operating as a sole proprietorship or partnership, you will need to get a new NPWP for your corporation. You cannot transfer the number from one business entity to another. Also note that personal NPWP are different from a corporate NPWP, and some business activities require you to have both.

B. Apply for Business License

Forming a corporation or a FDI Company forms the legal foundation for your business – it is what turns your business into a legal entity. But you still need to get a business license in order to legally operate your business. Contact your local government and the Investment Coordinating Board (Badan Koordinasi Penanaman Modal— BKPM) to find out what kinds of permits and licenses are necessary for your business type. Failure to do so can result in fines, or you can even be forced to shut down your business altogether.

C. Meet with Tax and Legal Advisor

While this step is not mandatory, it is a good idea. A brief meeting with a tax advisor can give you valuable insight into how you should file your taxes as a corporation or FDI Company. You can discuss what kind of tax treatment shall be structured for your corporation, and if whether there are tax deductions available to you.

A legal consultant in Jakarta can give you the lowdown into the obligations and requirements your corporation faces under the Indonesian laws and regulations, thereby minimizing any legal. Some also offer their services in providing support to fulfill those requirements, including securing the licenses necessary for you to commence your business activities in Indonesia.

D. Open A Business Bank Account

After your corporation has secure all business licenses, you can open a bank account for your business. This allows you to accept checks and payments in your business’ name. In addition, you are legally required to keep your personal and business finances separated once you incorporate or form a company.

At this point, it may also be a good idea to open a credit card for your business. This helps streamline your recordkeeping for business expenses, as well as helps start building credit history for your business.

E. Register Your Company in the National Health System

You must register the employees working in your company under the National Health System in Indonesia. Applications are submitted to BPJS (Badan Penyelenggara Jaminan Sosial). There are 2 (two) types of BPJS, Manpower BPJS and Healthcare BPJS. It is mandatory for you to register for your employees the Manpower BPJS, as some business licenses require your company to have a registered and paid Manpower BPJS as the requirement to acquire the license.

After registration, you are obliged to pay a monthly fee for Manpower BPJS. Also important to note is that you have to pay your employees at the regional Minimum Wage nett (Upah Minimum Regional— UMR) in order to obtain an approval for the BPJS.

F. Protect Your Name with A Trademark

When you create a corporation or FDI Company, your company name is approved by the Minister of Law and Human Rights, and it is registered under the Company Certificate of Registration. However, this in not enough to protect your brand. You must register a trademark for brand. The process of registering a trademark in Indonesia takes quite a long time to complete. Therefore it is advised to appoint Indonesian corporate legal services or IP consultant to check whether your brand can be registered or not.

G. Stay Compliant

One of the chief reasons to incorporate or form a FDI Company is to limit your personal liability. However, if you fail to keep your business in good standing, then you can lose this liability protection. Make sure you understand exactly what is needed to keep your business compliant each year. Typically, this involves filing an annual financial report each year, keeping up with your taxes, and keeping your personal and business finances separate. Companies will also need to hold an annual shareholder’s meeting as stipulated in their Articles of Associations. You must also keep track with your license documents and when they will expire, as those documents are crucial for your business to continue operating, and failure to extend and/or renew them can cost you business opportunities.

Forming a FDI Company or corporation is the important first step to formalizing your new business in Indonesia. Best wishes on your new venture, and don’t forget to follow up with your other legal obligations. These are easy ways and will keep your business compliant and protected for years to come.

HOW CAN SMART LEGAL CONSULTING HELP YOU?

SMART Legal Consulting has extensive experience in assisting Foreign Investors to establish FDI Company in Indonesia, securing business licenses and maintaining their establishment after incorporation.

If you need immediate assistance, please contact the SMART Help Desk at:
E: info@smartcolaw.com
H: +62821-1234-1235

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