How to Start Up a Business in Malaysia 2024

Malaysia, ranked 24th in the World Bank's Ease of Doing Business in 2018, and has emerged as a vibrant hub for business opportunities. However, navigating through the process of setting up a business requires careful planning and understanding of the legal and regulatory environment.

Starting up a business in Malaysia involves a structured approach catering to local and foreign entrepreneurs. Below is an informative guide on how to start up a business in Malaysia, incorporating essential steps and practical advice.

Planning and Preparation

Before diving into the business world in Malaysia, consider the following steps:

Define Your Business Idea and Plan: Identify your target market, understand the problem you're solving, and conduct a SWOT analysis (strengths, weaknesses, opportunities, threats). Ensure you have a solid business plan in place, considering factors such as funding, capital needs, and market research.

Naming Your Business: Choose a unique and memorable name that aligns with your business type. Check for domain name availability and conduct an official business name search through Suruhanjaya Syarikat Malaysia (SSM).

Find a Business Location: For physical stores or specific business types requiring space, select an appropriate location. Home-based businesses can bypass this step.

Registration and Licensing

Starting a business in Malaysia involves a three-step process, each crucial for ensuring your business is legally compliant and set up for success. Here's a simplified and structured guide with key points highlighted:

Step 1: Preparation for Registration
 

Selecting a business structure: Choose the most suitable form for your business. Options include sole proprietorship, partnership, limited liability partnership, private limited company, public limited company, branch office, representative office, or subsidiary company. The foreign companies have additional considerations.

Choosing a company name: Acclime can assist in conducting a name search. Ensure the name follows Malaysian guidelines - proper language use, no offensive or religious elements, and compliance with specific naming rules.

Appointing key officials: Decide on your company's directors (minimum one, natural person, aged 18 or above), shareholders (minimum one, can be an individual or a body corporate), and a company secretary (a member of a professional body or licensed by the SSM).

Registered office address: Choose a legitimate office address for receiving formal communication; P.O. boxes aren’t permitted.

Share capital requirements: Determine your share capital, with a minimum requirement of RM1.
 

Step 2: Registration

Company registration with SSM: Register your company name with the SSM, which, once approved, is reserved for 30 days (extendable for another 30 days for a fee).

Required documentation: Prepare and submit necessary documents, including the Constitution (optional), Declaration by a director or promoter, Declaration of compliance, and copies of directors' identity cards.

Step 3: Post-Registration

Opening a corporate bank account: Choose from various local and international banks like Maybank, CIMB Bank, etc. Required documents include completed application forms, possibly a letter of introduction, company’s rubber stamp, photocopies of directors’ IDs, and board resolutions.

Obtaining business licenses and permits: Secure general, sector/industry-specific, and activity-specific licenses. General licenses include company registration, tax registrations, EPF, PERKESO, and others.

Determining tax obligations: Understand your company's tax obligations, which vary depending on several factors. Malaysia has specific tax rates for residents and non-residents.

Appointing auditors: Necessary for all companies, with specific timelines for newly incorporated entities.

Registering for employee provident fund: This includes registration for both, employers and employees, with specific documentation required.

Key government agencies and organizations offering support to businesses

In Malaysia, several key government agencies and organizations offer support and resources to businesses, especially those in the start-up phase. These entities provide a range of services, including registration, financial assistance, training, and more. Here's a list of some of the most significant agencies:

Suruhanjaya Syarikat Malaysia (SSM): SSM regulates companies and businesses, handles new registrations, and provides compliance guidelines.

Malaysian Investment Development Authority (MIDA): As the government's main agency for industrial development, MIDA advises on investment opportunities and assists companies investing in Malaysia.

Companies Commission of Malaysia (CCM): CCM is crucial for business registration and incorporation, offering services like registration, renewal, and compliance support.

Small and Medium Enterprises Corporation Malaysia (SME Corp. Malaysia): Under the Ministry of Entrepreneur Development, SME Corp. Malaysia formulates policies for SMEs and coordinates development programme.

Malaysia External Trade Development Corporation (MATRADE): MATRADE, the national trade promotion agency, assists in developing external trade, with a focus on export promotion.

Ministry of Entrepreneur Development and Cooperatives (MEDAC): MEDAC aids entrepreneurs and cooperatives through training, financial assistance, and advisory services.

Human Resources Development Fund (HRDF): Part of the Human Resources Ministry, HRDF focuses on developing the local workforce, aligning with Malaysia's economic goals.

Pertubuhan Keselamatan Sosial (PERKESO): PERKESO provides social security protection for work-related accidents or diseases.

Conclusion

Starting a business in Malaysia involves several critical steps, from understanding the right business structure to ensuring compliance with various governmental agencies. Navigating this process can be complex, but with the right support and guidance, it becomes manageable and rewarding. Agencies like Suruhanjaya Syarikat Malaysia (SSM) and the Malaysian Investment Development Authority (MIDA) play significant roles in this journey, offering necessary resources and regulatory frameworks.

To simplify this process, ClearTax offers an efficient and user-friendly solution, making the task of setting up a business in Malaysia much easier. By leveraging ClearTax's expertise, entrepreneurs can seamlessly navigate through the intricacies of business registration, compliance, and other essential aspects, allowing them to focus more on growing their business in the dynamic Malaysian market.