Contents:
Step-by-step plan for starting your own business in Bali
First, let's figure out what types of companies exist in Bali and which one is better/can be used by a foreigner.
UD (Usaha Dagang)
This is similar to an individual entrepreneur (IE). If an Indonesian entrepreneur wants to open a small shop near their home, they don’t need to create a large company. It’s enough to register as an individual entrepreneur. Many Indonesians skip this requirement, especially when starting a local business like a small laundry, a warung (a small eatery) with 3-5 seats, or a shop run by an elderly parent. They just start their business without registering with the tax authorities.
This business form is limited in many ways (for instance, it can be challenging to open currency exchange services or obtain various licenses), and expansion options are also restricted. The founder (entrepreneur) is personally liable for all business obligations, meaning they are accountable with all their personal assets.
To open such a company, you need to:
Come up with a company name
Provide your personal identification number
Submit proof of residence in Indonesia with your address
Obtain a business license
CV (Commanditaire Vennootschap)
This is similar to a limited liability company (LLC). In Indonesia, there is technically no LLC as such, because this type of firm, like the previous one, does not exist as a separate legal entity and does not protect the assets of its partners. Each partner is liable for all their assets. However, it has the advantage of allowing multiple entrepreneurs to register together and pool their capital.
This is a great solution for those without a large starting capital who want to open a business in Bali. The downside for foreigners is that this type of enterprise is only available to locals. You cannot open a CV with a Russian passport, for example. However, it can be used for business purposes. I will explain below how you can utilize such a local company.
To open a CV, you need to:
Come up with a company name;
Have 2 founders (both must be Indonesian);
Prepare a notarized deed in Indonesian.
PT – Public Company for Local Shareholders
This is akin to a joint-stock company. In Indonesia, this is the only form of company that protects the assets of co-investors and is the most common for investing local and foreign money. The average registered capital for this type of public company is around $30,000, but the minimum required capital can be as low as $100.
In detail, this is the strongest form of business in Bali because it has no restrictions on types of activities, can obtain any license, and best protects the assets of co-investors. Its main disadvantage is that it can only be opened by Indonesians. Below, I will discuss the two most popular schemes for foreigners to utilize such a company without being actual founders, while still being able to operate in sectors where foreigners are not allowed to earn income. Be sure to read to the end of the article.
To open a PT, you need to:
Have one local director
Have two local shareholders
Have one local commissioner (the founders can also be directors)
Come up with a company name
Prepare a notarized deed in Indonesian
Provide a company address
Submit the identification numbers of the founders and directors
Provide email addresses, phone numbers, and physical addresses
Decide on the types of economic activities for the company
PT PMA - Company with Foreign Capital
This is the only option available for foreigners to open a business legally.
I will stop here in detail with a description of the OPENING SCHEME, PRICES and ADVANTAGES that such a company provides:
1 – Company with Foreign Participation (PT PMA) in Indonesia. The cost of opening this company is around $1,500 to $1,700. It must include at least 2 co-founders (usually husband and wife). This is a true joint-stock company (OAO) with foreign investments. According to Indonesian law, the minimum registered capital for such a company must be $700,000, which must be deposited within the first three years of the company's existence. However, there are schemes that allow you to bypass this requirement.
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To open a company, you will need the following documents:
Passports of all founders (2 to 5 founders allowed). The passport must be valid for at least 30 months at the time of submitting documents for company registration. This is necessary to later use the right to apply for a special visa – the investor visa.
Company Name: You need to come up with a name (it must be in Latin letters and consist of 3 words). For example, ours is BALI FOREIGN LEGAL. You cannot use more or fewer words, and the words must contain at least 3 letters.
Business Address: Determine where the business activities will take place (if there will be any). The address can be your actual residence in Indonesia, the address of your real office, or a virtual address.
Business Activities: Decide on the specific activities the company will engage in. Common choices include management, consulting, and development. Include activities that are allowed for this type of company in Indonesia.
Contact Information: Provide email addresses, phone numbers, and physical addresses (all within Indonesia) for each co-founder.
List of Documents You Receive with the Registered Company
Notarial deed company (Articles of Association in English and Indonesian.)
Building Rent Document (Lease agreement for the building/office)
Legal Company (NIB) (Legal number for company activities)
Tax ID Company (Company tax number)
OSS login and password (Access data for the activity control system)
2 – After all company documents are issued, a special investor visa (S314) is applied for.
Your passport must be valid for at least 30 months at the time of submitting the visa application. This visa costs approximately $1,300 to $1,500 per founder and allows you to conduct business activities in Indonesia, granting you 2 years of legal residency status (similar to a residence permit).
Besides the passport, you will need:
A passport-style photo for the visa
A valid vaccination certificate
The visa allows you to enter the country as the founder of your own company. This visa is issued with a 90-day activation period, meaning you have 90 days to enter Indonesia and get your passport stamped. If you are already in Indonesia, you need to do a visa run (enter and exit) for at least one day.
3 – Once you activate the visa, you must submit your passport with the border stamp to the immigration service. Don’t delay; it’s best to do this the day after your arrival. Indonesia allows you only 30 days to obtain a KITAS based on this visa.
4 – Approximately two weeks after all your documents are submitted for KITAS activation, you will receive a call from the immigration service for an interview. The immigration officer will ask about the purpose of opening the company, how long you have been in Indonesia, take your fingerprints, smile, and that’s it. The interview will be over.
5 – About a week later, you will receive your KITAS – a document that allows you to engage in business activities and operate a business in Indonesia. You can conduct business as an investor.
6 – Only after receiving the KITAS can you, as a director, open a business bank account, hire employees, enter into contracts, officially accept payments, and start bookkeeping and tax accounting.
Cost Breakdown of the Process:
1 - Opening a Company: $1,500
2 - Obtaining a KITAS: $1,500 per person
Total for 2 family members/co-founders: $4,500
Companies sometimes offer discounts on such packages. For example, our package for 2 KITAS + the company costs $3,500. This breaks down to a monthly payment (similar to a regular visa) of only $145 for both or just over $70 per person per month, while a regular visa costs about $130 per month for one family member (data is accurate at the time of writing this article).
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We also offer the opportunity to consult on the types of activities/businesses you want to pursue. Many people ask:
Which KITAS is best to apply for and why?
If I open a company, what expenses might I incur to maintain it?
Which type of business is best to choose for my company?
What types of taxes need to be paid in Indonesia?
How can I legally work and earn money in Indonesia?
What can you do as a company director, and what is better to avoid?
What portion of income should be declared, and what can be hidden?
What can be done legally, and what processes require additional permits?
I want to engage in... how should I properly start this activity?
How can local companies be utilized for your business goals?
SCHEME 1: Nominal Founders
If you need to open a company in Indonesia but want to enter a market segment that is restricted for foreigners, such as:
Massages and Spas
Currency Exchange Activities
Tour Organization, etc.
You can use two nominal founders among your trusted Indonesian acquaintances. They will hold management positions in the company, obtain the necessary licenses for you, and manage all operations. You will invest money in the company through a loan agreement, specifying the financial obligations of the nominal Indonesian founders. This scheme is RELIABLE BUT NOT 100% SAFE, as it involves the concept of "trust," which cannot be objectively assessed.
SCHEME 2: Service Transfer
For the same business purposes, you can use a more advanced scheme – service transfer. A nominal Indonesian company, such as a CV (let's call it Company 2), is established, which has the full right to provide the services you need. You then open an additional company with foreign capital (Company 1), which receives payments and controls the financial flows for the services of Company 2.
A contract is established between Company 1 and Company 2, detailing the specific activities for which payment for the service is transferred. For example, if you want to provide accounting services in Indonesia but cannot do this directly:
You receive a payment of 3,000,000 IDR for the service into your bank account and pay the provider (Company 2) 1,500,000 IDR for the accounting services rendered to the client. The remaining commission of 1,500,000 IDR is the profit of your company, which stays in the PT PMA bank account.
To open your business in Indonesia, or for any questions related to starting and running a business in Bali, CONTACT US via TELEGRAM или WHATSAPP.
Together, we will make life on the island comfortable.
