Registering as a Sole Proprietor (개인사업자) in Korea: A Guide for Foreign Residents

Registering as a sole proprietor (개인사업자) in Korea takes about two business days. Whether you can register at all depends on your visa, and missing the 20-day deadline after you start operating costs you real money.

This guide covers who can register, how to do it, and what changes on your tax bill once you have a business registration number. For the 3.3% withholding system that applies to unregistered freelancers, see Seoulstart's freelancer 3.3% refund guide.

---

Who can register: visa eligibility

Your visa determines whether you can register, not your nationality or the type of business.

F-5 and F-6 holders

F-5 permanent residents (영주권) and F-6 marriage immigration visa holders can register as sole proprietors with no additional immigration step. Both statuses carry fully unrestricted business and work rights. Registration at the tax office (세무서) proceeds the same way it does for Korean citizens.

F-4 holders

F-4 overseas Korean visa (재외동포비자) holders can register as sole proprietors. You use your overseas Korean residence certificate (거소증) in place of an alien registration card.

The F-4 visa carries restrictions on simple manual labor and certain entertainment or gambling-adjacent businesses. These restrictions apply to employment, and the same logic applies to businesses you operate. Professional freelance services such as IT, design, translation, consulting, and tutoring are not restricted. For any industry adjacent to the restricted categories, call the immigration contact center at 1345 before you register.

As of February 12, 2026, Ministry of Justice Notice 2026-65호 expanded the list of occupations permitted to F-4 holders. See Seoulstart's F-4, F-5, and F-6 work rights guide for the current details.

F-2 holders

F-2 long-term resident (거주) visa holders are generally permitted to register as sole proprietors. F-2 has multiple sub-categories with different activity scopes. If your F-2 was issued on the basis of employment and you are moving to self-employment only, confirm your sub-category's rules with HiKorea or call 1345 before registering.

E-series visa holders

E-series visas (E-1, E-2, E-4, E-6, E-7, and others) are employer-sponsored and scoped to specific activities. An E-2 English-language instructor visa, for example, is tied to a specific employer and school site.

E-series holders who want to register a business generally need to do one of two things first:

1. Get an out-of-status activity permit (체류자격외활동허가) from the immigration office that covers the business activity, or
2. Change their visa status to a category that permits self-employment.

The NTS does not check immigration status at the moment of registration. If you register a business outside your visa's authorized scope, it is still an immigration violation, discoverable at renewal or during an audit. Confirm your eligibility with the immigration office before you register.

D-2 and D-10 holders

Student (D-2) and job-seeker (D-10) visa holders are generally restricted from business activities. Check HiKorea or call 1345 before registering.

---

Sole proprietor vs. unregistered freelancer: what changes

This is the most important decision for foreign residents who already earn income in Korea.

The 3.3% withholding system applies to unregistered freelancers. When you provide services to a Korean business client without a business registration number, the client withholds 3.3% of your payment (3% income tax plus 0.3% local surtax) before paying you. You receive 96.7% net. At the May comprehensive income tax filing, you reconcile the actual tax owed. If 3.3% withheld exceeded your real liability, you get a refund.

Under this system, you do not collect or remit VAT, you cannot issue tax invoices, and the client handles all the reporting.

Registering as a sole proprietor changes your tax position in four ways:

1. You exit the 3.3% withholding system. Registered businesses are not subject to 3.3% withholding.
2. You enter the VAT system. You collect VAT on your sales and remit it to the NTS on the schedule that applies to your taxpayer tier.
3. You can issue tax invoices (세금계산서). Business clients who need to claim input VAT on payments to you require a tax invoice. Without one, they cannot deduct the VAT they paid you.
4. You can deduct real business expenses. Rent, equipment, software, phone bills, and other legitimate expenses reduce your taxable income. Unregistered freelancers cannot deduct business expenses against their 3.3%-withheld income in the same way.

When registration makes sense:

• Your revenue is growing and business clients are asking for tax invoices.
• Your real business expenses would materially reduce your income tax bill.
• You need to open a business bank account or sign contracts as a registered entity.
• Your income has grown past the point where 3.3% withholding is efficient.

When staying unregistered is simpler:

• Your freelance income is occasional and low-volume.
• You have few deductible expenses.
• Your clients are individuals who do not need tax invoices.

---

How to register

Online via Hometax (홈택스)

The National Tax Service (NTS) online portal is at hometax.go.kr. You need a Korean public authentication certificate (공동인증서 or 금융인증서) to log in. Foreign residents can get one at major Korean banks, including KB Kookmin, Shinhan, and Woori, once they have an alien registration card (외국인등록증).

The Hometax interface is in Korean only. You upload scanned documents electronically and submit the application without visiting a tax office.

In person at any tax office (세무서)

Walk in to any tax office nationwide. You do not need to use the tax office closest to your home or business address. Bring the documents listed below.

Documents required

For foreign residents:

Processing time and the 20-day deadline

The NTS issues the business registration certificate (사업자등록증) within two business days of a complete application. The timeline can extend to up to five days if the NTS requires a physical inspection of your business premises.

You must apply within 20 days of your business start date (사업개시일). The start date is when you actually begin operating, not the date you decide to register. Pre-registration before the start date is also permitted.

The cost of missing the deadline

Missing the 20-day window is not a minor paperwork issue.

For general taxpayers: the NTS levies a surcharge of 1% of your total supply value (공급가액) from the business start date to the day before registration.

For simplified taxpayers: registering late can trigger a penalty and the loss of input-VAT credit for the pre-registration period. The general-taxpayer surcharge is 1% of supply value. Verify the current simplified-taxpayer penalty rules at easylaw.go.kr or nts.go.kr before relying on any specific figures, as penalty schedules can change with annual tax law amendments (as of 2026).

On top of any surcharge, you lose the right to claim input VAT credits on expenses incurred before you registered. This means VAT you paid on equipment, rent, and supplies before your registration date cannot be offset against future VAT you collect.

---

General taxpayer vs. simplified taxpayer: which tier applies to you

When you register, the NTS assigns you to one of two VAT tiers based on your expected annual supply value (annual revenue).

The threshold (as of July 1, 2024)

The ₩104 million threshold was raised from ₩80 million effective July 1, 2024. Verify at korea.kr or nts.go.kr that this figure has not been revised again before filing (as of July 2024).

One exception: real estate rental businesses and taxed entertainment establishments retain a lower threshold. Confirm at nts.go.kr if your business falls into either category.

General taxpayer (일반과세자)

• VAT rate: 10% of supply value.
• Files twice per year: January 1–25 for the prior July–December period, and July 1–25 for the prior January–June period. Two interim payment notices arrive in April and October, each requiring roughly 50% of the prior period's VAT liability.
• Can issue tax invoices (세금계산서) and claim full input VAT deductions.
• Converts to this tier automatically if your revenue crosses ₩104 million during the year, starting from January 1 of the following year.

Simplified taxpayer (간이과세자)

• VAT rate: lower effective rates by industry, calculated as: revenue × industry value-added rate (부가가치율) × 10%. The current effective rates range from 1.5% to 4% depending on your industry. Check the NTS VAT rates page (nts.go.kr, page ID cntntsId=7696) for the current industry-specific rates before filing, as the rate table can be revised by the VAT Act Enforcement Decree.
• Files once per year: January 1–25 for the entire prior calendar year.
• Tax invoice issuance: ability to issue tax invoices depends on your revenue level within the simplified tier. Check the current NTS rules on this, as a revenue sub-threshold applies. Simplified taxpayers below that sub-threshold issue regular receipts or cash receipts, not tax invoices. Business clients who require tax invoices to claim input VAT cannot use a regular receipt for that purpose.
• VAT payment exemption: simplified taxpayers below a certain revenue level are exempt from paying VAT but must still file the annual return. Verify the current exemption threshold at nts.go.kr.

Which tier is better for you?

If your clients are businesses that need tax invoices, being a general taxpayer matters. A client cannot claim input VAT from a receipt. If your clients are individuals or your revenue is low, the simplified tier's lower effective rate and once-yearly filing are simpler.

You cannot choose your tier freely: it is determined by your expected revenue when you register. If you expect revenue below ₩104 million, you start as a simplified taxpayer. If your revenue grows above the threshold during the year, the NTS reclassifies you as a general taxpayer from January 1 of the following year.

---

Income tax as a sole proprietor

Comprehensive income tax (종합소득세)

Every registered sole proprietor must file comprehensive income tax (종합소득세) each May for the prior calendar year's business income. This is separate from VAT.

The filing window runs May 1 to May 31. If May 31 falls on a weekend or public holiday, the deadline extends to the next business day. For 2025 income, the deadline was June 1, 2026.

You file via Hometax or the NTS mobile app (손택스, Sontax). The NTS "Moducharum" service (모두채움) auto-populates returns for eligible simple filers.

Progressive tax brackets

Sole proprietors pay income tax at Korea's progressive rates. The comprehensive income tax brackets (roughly 6% to 45% progressive) are published by the National Tax Service; check the current schedule at nts.go.kr or hometax.go.kr before you file, as brackets can change with annual tax reform.

The brackets below are a reference point from the 2023 reform as reported by tax professionals, but you must verify the current schedule at nts.go.kr or law.go.kr before filing.

A local income surtax (지방소득세) of 10% of your national income tax liability is filed and paid separately to your local government. The effective top combined rate is 49.5% at the top bracket.

The flat rate for employment income does not apply to business income

Some foreign workers on employment visas can elect a flat rate for employment income. This option does not apply to sole proprietor business income. Business income is taxed at the progressive bracket schedule above. Verify the current rules for any flat-rate election at nts.go.kr before you file.

Deducting business expenses

Registered sole proprietors can deduct legitimate business expenses against taxable income. Rent for business premises, equipment, software subscriptions, internet and phone bills used for the business, and similar costs can reduce your taxable income before the brackets apply. Unregistered freelancers operating under the 3.3% withholding system cannot claim these deductions in the same way.

Keep receipts and bank transfer records. The NTS can request documentation during an audit.

Interim tax payments

General taxpayer sole proprietors may receive an interim assessment notice (중간예납) in November, requiring payment of approximately 50% of the prior year's income tax liability. Confirm the current mechanics for first-year sole proprietors at nts.go.kr before your first November.

For a full breakdown of the May income tax filing, see Seoulstart's Korea income tax guide for foreign residents.

---

After you register: practical steps

Get your certificate. Once issued, the business registration certificate (사업자등록증) is the document you use for opening a business bank account, signing contracts as a business entity, and setting up business invoicing.

Set up a business bank account. Korean banks will open a business account once you have your registration certificate, business seal (사업자 도장), and alien registration card. Keeping business and personal finances separate simplifies both VAT filing and annual income tax.

Track your revenue from day one. The general vs. simplified taxpayer threshold applies to your annual supply value. If you are near ₩104 million, you need to know your position well before the year ends so you are not caught off guard by the tier change.

Get a Korean authentication certificate for Hometax. If you do not already have one, get a public authentication certificate (공동인증서) through your bank. You will use Hometax for VAT filings, income tax filings, and reading official NTS notices.

Consider hiring a tax agent. A licensed Korean tax agent (세무사) charges a monthly fee for bookkeeping and filing services. For sole proprietors with growing revenue or complex expense structures, the cost is often less than the tax savings from correct expense deductions and on-time filings.

---

Where to verify before you act

NTS Hometax (hometax.go.kr): Online registration, VAT filings, income tax filings, and official NTS correspondence.

NTS phone line: Call 126 from inside Korea for general NTS questions. The NTS English helpline for individual taxpayers is 1588-0560.

EasyLaw (easylaw.go.kr): Government plain-language legal information on the business registration process and penalty rules. Korean-language only.

Immigration contact center: Call 1345 from inside Korea for questions about whether your visa permits business registration. Call before you register if you are on any non-F-series or non-F-2 visa.

HiKorea (hikorea.go.kr): The immigration portal for online visa and residence card applications. Use it to confirm the current rules for your specific visa sub-category.

---

FAQ

Can I register as a sole proprietor on a D-9 trade management visa?

D-9 (무역경영) visa holders are generally permitted to register a business. D-9 does not require the foreign investment registration that D-8 requires, making it procedurally closer to the F-series self-employment path. Confirm the current scope of your D-9 at HiKorea or by calling 1345, as activity scope can differ by sub-type and approval conditions.

What is my business industry code (업종코드) and how do I find it?

Every registered business is assigned an industry code (업종코드) that determines your tax treatment, including which simplified taxpayer value-added rate applies. The NTS maintains a full list at hometax.go.kr. Select the code that most accurately describes your primary business activity. If you are unsure, the tax office can advise you at the time of registration.

Can I register a business at my home address?

Yes. Many sole proprietors, particularly freelancers and consultants, register at their home address. You will need a copy of your lease agreement. If you rent and your lease does not mention business use, some landlords require a separate agreement or a written consent letter. Check with your landlord before using your home address for registration.

Do I need to re-register if I move or change my business type?

You must report changes to your registration, including your address and business type, to the NTS within 20 days of the change. Use Hometax or visit your local tax office. Failure to update your registration can create issues at filing time.

What is the difference between a sole proprietor (개인사업자) and a corporation (법인)?

A sole proprietor is a natural person running a business. There is no separate legal entity. You are personally liable for business debts and obligations. A corporation (법인) is a separate legal entity registered with the court. Corporations face different tax rules, higher setup costs, and more ongoing administrative requirements. Most foreign residents starting a small business or freelance operation begin as a sole proprietor.

If I close my business, what do I need to do?

You must file a business closure report (폐업신고) with the NTS. Do this through Hometax or at a tax office. After closing, you must still file a final VAT return for the period up to the closure date and a comprehensive income tax return for the full year in May. Hold on to your accounting records for at least five years after closure, as the NTS has an audit window.

@misc{seoulstart-korea-sole-proprietor-guide,
  author = {{Seoulstart Editorial Team}},
  title = {{Registering as a Sole Proprietor (개인사업자) in Korea: A Guide for Foreign Residents (2026)}},
  year = {2026},
  publisher = {Seoulstart},
  url = {https://seoulstart.com/guides/korea-sole-proprietor-guide},
  note = {Last updated July 24, 2026}
}