Story of a Big Player from Gangnam

“I will see you later.”

“Enjoy your day.”

Gun-Ho liked this greeting that he exchanged with Young-Eun before he left for work. It made him feel warm and realized that he had a family.

That day, Gun-Ho started his morning with Young-Eun as usual and left home for work after having breakfast, leaving Young-Eun home alone. He got in his Bentley and headed to GH Building in Sinsa Town.

When he arrived at his office, Secretary Yeon-Soo Oh brought a cup of coffee and a morning paper for him. Gun-Ho crossed his legs on his sofa and started reading the newspaper while having his morning coffee. It was one of the happiest moments during that day for him.

At that moment, his phone began to ring. It was his sister.

“It’s me, Gun-Ho. Can we talk?”

“Yeah. What’s up?”

“Our office manager— Ms. Hyeong-Nam Eun— told me that all of the GH companies already gave their year-end financial report to you and the new year’s plan. But, we didn’t.”

“Hmm, you didn’t? Why don’t you then give me the year-end profit and loss over the phone?”

“Hold on. Give me one second. Let me bring the document. Bear with me, okay?”

After a moment, Gun-Ho’s sister came back and started making GH Logistics’ year-end financial report.

“GH Logistics made 1.4 billion won last year.”

“Hmm.”

“We spent 1 billion won in paying the truck drivers and maintaining the vehicles. Also, our general administrative cost was 200 million won.”

“I see.”

“I’m sometimes confused when categorizing some expenses under general and administrative expenses.”

“Why don’t you ask Ms. Hyeon-Nam Eun about it? She is handling the accounting work there, right?”

“I do ask her about it. Anyway, since GH Logistics has no debt with a bank, our ordinary income is simply 200 million won after deducting those expenses from our sales revenue.”

“Hmm, I see.”

“So, what am I supposed to do with this 200 million won?”

“The year-end financial document that you just told me about needs to be handed to a CPA. They will verify the numbers in the document to see if they are recorded accurately and fairly. That is called an external audit.”

“Yeah, I think I understand that procedure.”

“Once you receive an audit opinion from the CPA stating that everything looked correct as indicated in the company’s financial statement, you will have to file the tax, and you can either pay the corporate tax in advance or wait for the tax bill from the Tax Office and pay the tax then.”

“What about the leftover after paying the tax?”

“You said that the ordinary income would be 200 million won, right? If GH Logistics will fall into a tax bracket of 20% for its corporate tax, that will be about 40 million won.”

“That sounds correct.”

“However, if the profit is less than 200 million won, you are only required to pay 10% of corporate tax. You probably want to discuss this with the person in your office who is in charge of accounting or the tax accountant office who is handling the company’s tax.”

“I see what you mean.”

“Say, the ordinary income is 200 million won, and you paid 20% corporate tax. You will be left with 160 million won then. That amount is the net profit after tax. You distribute that amount to the shareholder.”

“Oh, I see. So, I need to send 160 million won to you, President Goo.”

“No, not the whole 160 million won. If you distribute the entire profit to the shareholder, you won’t have any cash in the reserve. You need to store some cash in the reserve in case you need money urgently in operating the business.”

“I see.”

“According to the commercial law, a company is supposed to reserve more than 10% of its profit. This is called a legal reserve requirement. Large companies like a conglomerate have an enormous amount of cash in their reserves.”

“10% of our profit— 160 million won— would be 16 million won. I need to subtract that amount from 160 million won. Let me bring the calculator.”

“You don’t need a calculator, sister. It’s 144 million won.”

“You are quick. So, I send this amount to the shareholder, huh?”

“Yeah.”

“I see.”

“Currently, I am the sole shareholder of GH Logistics. I own 100% of the company. A company can have several shareholders. That’s actually a basic idea to form a corporation where several shareholders come up with investment funds and establish a company together.”

“I think the whole concept became clear for me.”

“Let’s do this.”

“Do what?”

“I will give you 5% share to you, sister. That will make you one of GH Logistics’ shareholders too. You own 5% and I own 95%. Even though you didn’t put any investment fund into the company, you will still work harder after owning 5% share, so you could receive a dividend at the end of the year.”

“That’s true.”

“Well, when you have a CPA conduct an external audit, you need to tell him that there is a change in the ownership of the company. Tell him that Gun-Ho Goo owns 95% and Gun-Sook Goo owns 5% now. You will also have to report the change to the Tax Office as well. Since the company is already established, I will need to transfer part of my shares to you.”

“Are you serious about giving me 5% share?”

“You are not the only one who shares the ownership of GH companies. GH Mobile’s President Jang-Hwan Song, GH Media’s President Jeong-Sook Shin, and also GH Parts Company’s Min-Hyeok Kim in Suzhou City, China, they all own 5% of each company’s share.”

“Is that right?”

“That’s why they are all working hard, so they could make extra money in addition to their salary as they receive a dividend for their 5% share at the end of each year. Those companies show a high revenue growth rate. My share has been reduced by 5%, but the companies become larger and larger which allows me to make more money as a result.”

“I see.”

“Well, now you are a GH Logistics’ shareholder. Work hard, sister.”

“Okay. Thank you. I will do my best.”

When it was at the end of November, Artist Choi who was living in Yangpyeong District moved into Gun-Ho’s condo in TowerPalace. It was a temporary setting for Young-Eun who was expecting a baby anytime soon.

“Thank you so much, aunt. We truly appreciate your help.”

“Don’t mention it! I’m so glad that I could spend some time with Young-Eun while living together for a while.”

Gun-Ho felt relieved once Artist Choi moved in his condo to help Young-Eun, but there were things that Gun-Ho felt uncomfortable about. At first, he would no longer be able to stay in the living room in a very comfortable outfit. He now had to wear a shirt and pants at least. Artist Choi must be in the same situation as well.

There were, of course, pros in living with Artist Choi as well. At first, Gun-Ho could enjoy various dishes and nutrient-rich foods as Artist Choi prepared each meal most of the time. She was an excellent cook. Also, she was very quick in preparing meals. She set the table in the blink of an eye with delicious food such as a Pollack stew and pan-fried Zucchini. They were all very tasty.

“Oppa, my aunt cooks very well, right?”

“Yeah, these are all good.”

“She was actually thinking of opening a restaurant in Yangpyeong District, specializing in Korean traditional food. She planned to open a unique Korean restaurant where an artist is doing the cooking.”

“Hmm, that sounds very good.”

“People would have been intrigued when they heard of a restaurant where they could eat foods that were cooked by an artist, wouldn’t they?”

Gun-Ho looked at Artist Choi and said, “Aunt, why don’t you execute your plan, even now? ”

“Nah. I’m getting old and easily feeling tired. I don’t think I can do it anymore even though someone would pay me for it.”

“You can hire people who would do most of the work.”

“I now want a peaceful and calm life. I don’t want to start new things at this age. Moreover, I don’t need money. It’s not like I have a child who I want to pass on my wealth to.”

When Artist Choi mentioned that she had no child, Gun-Ho and Young-Eun felt sorry for her, and they kept their mouths shut.