Blogs

Please understand that as a Lessee of a business operated from a leased premise, and when you advertise your business for sale, the amount YOU want to receive for the sale of YOUR business is NOT called Key Money. What you want to receive is called the ASKING PRICE, or simply the price for the business. You ask this price, and expect to receive it (or something close to it – the price is normally negotiable) because you are selling your business. In exchange for this money, a buyer typically gets:

• The furnishings and equipment
• Basic Ready Use stock
• Goodwill
• Suppliers and Customers databases
• Online Accounts like Website, Facebook
• Business Chattels like cutlery, crockery, glassware, linen, kitchenware, etc
• Forward bookings (if applicable)
• Transition Assistance (hand-over, utilities, licenses, staff, etc)

If the business is trading in a company structure and that company is also being offered as part of the sale and included in the asking price, you get more.

If you refer to your asking price as key money, you will find it very hard to sell. In many countries key money is actually illegal – buyers contact us regularly and say they are ok to buy, but ‘no key money’.

Key money is money charged by a LANDLORD – sometimes once only, sometimes annually or upon each lease renewal, or annually on a fixed date, etc. Key money is not charged by all landlords, but it is reasonably common in the high-tourist and red-light areas of Bangkok, Pattaya and Phuket. More recently, because landlords have become aware that people think of key money as being illegal, they have come up with a new fee to replace it called a Contract Renewal Fee. For all intents and purposes, it’s the same.

Key Money in Thailand is NOT illegal. If a landlord offers rent under these conditions and you accept its fine. If your landlord issues you with an official receipt for the payment/s, you can claim it/them as expense against your business (just like you do for rent) and the landlord will declare it as income for taxation purposes – this is legal. What commonly happens though, is a landlord will not issue a receipt for the key money so there is no record of it for taxation purposes. You will not be able to claim it as an expense of your business. The landlord will typically not declare it as income (as there is no record of it) so this is the part of key money that is illegal.

If you are the business owner (not the Landlord) and you are just trying to sell your business – do yourself a favor and use the right words. Good luck with your sale.

To understand more about what Key Money is, please read our blog Key Money in Thailand.