Home Blog 4 Mistakes You Need to Avoid When Going Through Company Set Up in Indonesia Business Setup | Company Registration 4 Mistakes You Need to Avoid When Going Through Company Set Up in Indonesia InCorp Editorial Team 2 October 2017 3 minutes reading time Table of Contents Company Set Up in Indonesia in Indonesia: 5 Most Common Mistakes Company Set Up in Indonesia with Cekindo Running a business means treading the wrong paths. In some cases, that’s fine – that’s how you learn and become a more effective leader. However, a lot of them are not only costly but also ruin your business and personal reputation. They can even land you in hot legal water. When you’re going through a company set up in Indonesia, make sure you step away from these five common and outrageously dangerous mistakes. Company Set Up in Indonesia in Indonesia: 5 Most Common Mistakes 1. No Business Office One of the main requirements in company registration is a domicile letter, and the law says you cannot set up an office in a residence. In other words, you need to have a legitimate corporate office. Although the cost of office rent in Indonesia is lower than in some Asian countries such as Singapore and Hong Kong, it may still be impractical to certain businesses, such as startups or small teams. Cekindo offers various office setups for your business from virtual office to shared office space. Our packages are reasonably priced and flexible to accommodate your present needs and budget. Regardless of which one you choose, we will provide you with a domicile letter. Furthermore, one of our specialists will provide you with a FREE business consultation particularly on registering a company in Indonesia. Check the top 8 FAQs on Virtual Offices in Indonesia. 2. Failure to Hire a Local Worker While Indonesia doesn’t restrict you from hiring foreign workers, it has set conditions. In an effort to provide more jobs for its local citizens, the country imposes foreign companies to hire one Indonesian for every foreign worker hired. You will also need to pay certain fees and make sure expatriates have the correct visa and work permit. 3. Very Short Lead Time Indonesia is improving in terms of Ease of Doing Business, but that doesn’t mean red tape and bureaucracy are over. It can take as long as 10 weeks to process your company registration, and you need even more time for market analysis, selection of industry and business category, etc. Cekindo has a wide variety of business services, and we can support you by setting up a company to fill in the outsourcing of business functions. You can also look into buying a shelf company from us. 4. Very Small Capital The minimum capital for foreign companies (PT PMA) is IDR 10 billion, with a minimum of also IDR 10 billion in paid-up capital. It’s separate from all the other expenses you will incur while setting up and running your business at least within the next 6 months to a year. Company Set Up in Indonesia with Cekindo Indonesia has a fast-growing economy foreign investors can maximize. But first, you need to learn to follow the rules first and avoid committing errors that will force you to fold. With a team of experienced business incorporation specialists with the right knowledge and skills, Cekindo can provide professional guidance and assistance in setting up a company in Indonesia. Contact us now for a free consultation via the form below. Read Full Bio Verified by Ales Cina Consulting Manager at InCorp Indonesia Aleš manages solution delivery at InCorp Indonesia, optimizing incorporation processes and client relationships. His experience in internal auditing, retail, and sales offers valuable global insights. Aleš, with a degree in Economics and Finance from the Czech Republic, helps clients navigate cross-border business challenges, focusing on cultural and legal insights. Frequently Asked Questions How is the process of liquidating a PMA company in Indonesia, and how long does it take? The procedures for (voluntarily) liquidation typically involve the following steps: Conduct a general shareholder meeting to approve the liquidation and the liquidator’s nomination Notify the Ministry of Law and Human Rights as well as the creditors of the liquidation and the distribution plan for the assets by newspaper notice All business licenses and tax numbers should be canceled or revoked; the tax office will conduct a tax audit to revoke the tax number Make sure creditors are paid and that any liquidation funds are distributed to shareholders (if any) Conduct a general meeting of shareholders to approve the liquidator’s discharge and acquittal Notify the Ministry of Law and Human Rights of the liquidation’s outcome. After receiving the notification, the Ministry of Law and Human Rights will deregister the company’s status as a legal entity and remove its name from the Company Registry Release the liquidation’s outcome in a newspaper Completing the liquidation process can take around two years. What responsibilities does a PMA company have in terms of non-tax compliance? In Indonesia, a PMA company is typically required to submit various reports to relevant authorities, such as: Annual financial report Investment realisation report Manpower and employee welfare report Expatriate utilisation report Company loan repot Foreign exchange and prudential principles report However, depending on the business activities and classification relevant authority may require additional reports from a PMA company. Is having audited accounts mandatory? Audited financial statements are required for: Entities gathering funds from the public (e.g., banks, insurance companies) Entities issuing debt instruments Publicly listed companies State-owned enterprises Companies with assets and/or turnover exceeding IDR 50 billion Entities mandated by legislation Does a PMA company in Indonesia have to meet certain criteria before it can distribute dividends? Dividends can be distributed from company net profits after allocating reserves, depending on a positive profit balance. Approval from the general meeting of shareholders is necessary. Interim dividends may be distributed if specific requirements are met. Get in touch with us. 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Cekindo Business International (“InCorp Indonesia/ we”) for general purpose only and we make no representations or warranties of any kind. We do not act as an authorized government or non-government provider for official documents and services, which is issued by the Government of the Republic of Indonesia or its appointed officials. We do not promote any official government document or services of the Government of the Republic of Indonesia, including but not limited to, business identifiers, health and welfare assistance programs and benefits, unclaimed tax rebate, electronic travel visa and authorization, passports in this website. More on Business Setup How to Establish an Indonesian Association in the Form of a Legal Entity Read more How do You Register Your Business to DPMPTSP? Read more Company Registration Indonesia Update: Annual License Renewal is No Longer Needed Read more