Starting a Business in Malaysia
Starting a business is a big step to take into a brave new world. Any aspiring Malaysian entrepreneurs should feel lucky as our country was ranked 12th in the World Bank’s Ease of Doing Business report in 2020.
However, that does not mean no planning needs to be included, in fact, without proper guidance, it’s just as easy to get lost in an unfamiliar world. So, how do you go about planning a business venture from scratch?
Like everywhere else, it is easy to just declare that you want to start a business in Malaysia. One of the most important things is to figure out your intention for doing so, only then can you work out some of the whats, hows, and wheres.
Now, start asking yourself: do you have any special skills? What is your business idea? How will you fund your business? How much capital do you need? Is there a market need in Malaysia for your business idea?
An idea can only get you so far, you need to pair it with a well-strategised business plan. The best way to start up a good business plan in Malaysia is to do thorough market research. Most importantly, find out what the current market is like, what are your potential competitors doing right and wrong, and what are the potential challenges you might face down the road.
Of course, there is also the small matter of money, you need to know how you’re going to fund your business. Your budget should include all expected inflows and outflows, especially your marketing cost. You would also leave some aside to continue living your life, and for any of your family members under your care.
Your Preferred Business Type
Local entrepreneurs can opt to set up their companies as a Sole Proprietorship, Limited Liability Partnership (LLP), or General Partnership, a Private Limited Company, or as a Public Limited Company.
- Sole proprietorships are easy to apply for and easy to manage, but the downside is that the sole proprietor is personally liable for all of the business’s debts. This means that if your business is in debt, you are in debt; legally, you and your business are the same entity.
- General partnerships are similar in nature to sole proprietorships but involve two or more individuals agreeing to share in all assets, profits, and financial and legal liabilities of a jointly-owned business.
- A private limited company (Sendirian Berhad) is its own entity separate from its owners, who hold limited liabilities over the business. For example, if your business is in trouble, you are not required by law to cover business debts with your personal assets. However, your control over the company has to be shared with other shareholders.
- A public limited company (Berhad) is a company whose securities are traded on a stock exchange and can be bought and sold by anyone. A PLC raises capital easily through the sale of stocks to the general public, but it is a form of company usually reserved for big corporations that the public believes will make money.
Name and Locate Your Baby
Your business name is the most visible part of your brand identity. A good name is the starting point of your marketing strategy.
To start and register a company name in Malaysia, first run a name check through the Companies Commission of Malaysia (SSM), each name submitted costs RM 30. After confirming the availability of your preferred business name, register the name with SSM to get approval.
Assuming you’re not running an online or remote business, you will then need to scout for a suitable business premise. Sometimes, no matter how great your offers or products are, business won’t come to you if you don’t pick the right location.
You can then either register your premise as your office address or pick out an office, every business in Malaysia requires a registered local office address.
When you’re done with the exciting parts, it’s time to go through the tedious processes involving bureaucracy and red tape. Here is a list of incorporation documents needed to be submitted to SSM. Further details to be found on SSM’s Official Website detailing the incorporation of a company.
- Memorandum and Article of Association / Constitution
- Statutory Declaration By A Director Or Promoter Before Appointment
- Declaration of Compliance
- Company name’s approval letter from SSM (one copy).
- Identity card of every director and company secretary (one copy each).
The incorporation documents need to be submitted within 3 months from the date your business name got approved, otherwise, you’d have to apply for a new name. With all the documents in place, you can pay your RM 1,000 company registration fee, and you will get your business Registration Certificate within one hour of payment.
Run Your Business!
When it’s all approved, it’s time to run your business!
Have you planned your marketing strategies? Do you have a general idea of what your finances will be like when it is up and running? How many employees will you be paying, how much you will be paying for overhead costs, to buy stocks?
These are exciting times, take on the task with enthusiasm and dedication. We wish you the best of luck, new business owner!
Need funding for your new business? Look into our i-SME Financing option to realise your entrepreneurial dreams!