Starting a startup in Malaysia involves several key steps, from planning your business idea to registering your company and complying with local regulations. Here’s a detailed guide to help you through the process:
Step-by-Step Guide to Starting a Startup in Malaysia
1. Develop a Business Plan
- Idea Validation: Validate your business idea by researching the market, potential customers, and competitors.
- Business Plan: Create a detailed business plan that includes your business model, target market, marketing strategy, financial projections, and operational plan.
2. Choose Your Business Structure
- Types of Business Entities:
- Decide on the legal structure of your business. Common options include:
- Sole Proprietorship: Owned and run by one individual.
- Partnership: Owned by two or more individuals.
- Private Limited Company (Sdn. Bhd.): Limited liability company with at least one director and one shareholder.
- Limited Liability Partnership (LLP): Combination of partnership and company benefits.
3. Register Your Business Name
- Choose a Unique Name: Select a unique name that complies with the Companies Commission of Malaysia (Suruhanjaya Syarikat Malaysia, SSM) naming guidelines.
- Name Search and Reservation: Conduct a name search on the SSM online portal to ensure the name is available and reserve it if necessary.
4. Register Your Business
- For Sole Proprietorship and Partnership:
- Register with SSM by submitting the relevant forms and documents.
- For Private Limited Company (Sdn. Bhd.):
- Prepare the necessary incorporation documents, including the company’s constitution (formerly known as Memorandum and Articles of Association), and submit them to SSM.
- Appoint at least one director and one shareholder, both of whom must be natural persons.
- Visit here to register your Business
5. Obtain Necessary Licenses and Permits
- Industry-Specific Licenses: Depending on your business activity, you may need additional licenses or permits from relevant government agencies. Examples include:
- Manufacturing license from the Ministry of International Trade and Industry (MITI).
- Food handling and safety permits from the Ministry of Health (MOH).
6. Open a Corporate Bank Account
- Choose a Bank: Select a bank in Malaysia and open a corporate bank account.
- Required Documents: Provide necessary documents such as the certificate of incorporation, business registration certificate, company constitution, and identification documents of directors and shareholders.
7. Register for Taxes
- Income Tax Registration: Register your business with the Inland Revenue Board of Malaysia (Lembaga Hasil Dalam Negeri, LHDN) for income tax purposes.
- Goods and Services Tax (GST) Registration: If your annual taxable turnover exceeds the threshold, register for GST with the Royal Malaysian Customs Department.
8. Set Up Your Business Operations
- Office Space: Secure a suitable location for your business operations.
- Staffing: Hire employees and ensure compliance with Malaysian labor laws, including employment contracts, EPF (Employee Provident Fund), and SOCSO (Social Security Organization) contributions.
- Marketing and Branding: Develop your marketing strategy, create a website, and establish your brand presence.
9. Comply with Regulatory Requirements
- Annual Filings: Ensure timely submission of annual returns and financial statements to SSM.
- Audit Requirements: For a private limited company, appoint an auditor and conduct annual audits as required by law.
Summary of Required Documents
For Business Registration:
- Completed registration forms.
- Identity proof of owners/directors/shareholders.
- Business plan and company constitution (for Sdn. Bhd.).
For Opening a Corporate Bank Account:
- Certificate of incorporation.
- Business registration certificate.
- Company constitution.
- Identification documents of directors and shareholders.
For Tax Registration:
- Business registration certificate.
- Identification documents of directors/shareholders.
- Income tax registration forms.
Business Structures Available to Foreigners
- Private Limited Company (Sdn. Bhd.):
- This is the most common and preferred structure for foreign investors.
- It allows for 100% foreign ownership, depending on the nature of the business.
- Requires at least one director who ordinarily resides in Malaysia.
- Labuan International Company:
- Suitable for businesses that engage in international trade, investment holding, insurance, and banking.
- Offers tax incentives and easier regulatory requirements.
- Branch Office:
- Allows foreign companies to conduct business in Malaysia without incorporating a separate legal entity.
- The parent company is fully responsible for the branch’s liabilities.
- Representative Office:
- Not allowed to engage in commercial activities.
- Used primarily for market research and feasibility studies.
Steps to Start a Business in Malaysia as a Foreigner
1. Business Structure and Planning
- Choose Business Structure: Decide whether to establish a Private Limited Company (Sdn. Bhd.), Labuan International Company, Branch Office, or Representative Office.
- Develop Business Plan: Create a detailed business plan outlining your business objectives, market analysis, financial projections, and operational strategies.
2. Name Search and Reservation
- Company Name: Select a unique name for your business and conduct a name search through the Companies Commission of Malaysia (SSM) to ensure availability.
- Name Reservation: Reserve the business name with SSM.
3. Company Incorporation
- Prepare Documents: Gather required documents, including:
- Proposed company name.
- Business activities.
- Details of directors and shareholders.
- Registered office address in Malaysia.
- Memorandum and Articles of Association (Constitution) for Sdn. Bhd.
- Submit to SSM: Submit incorporation documents to SSM for approval.
4. Appoint a Local Director
- Local Director Requirement: Appoint at least one director who ordinarily resides in Malaysia. This can be a Malaysian citizen or a foreigner with a permanent resident status or a work permit.
5. Open a Corporate Bank Account
- Choose a Bank: Select a bank in Malaysia that suits your business needs.
- Submit Documents: Provide necessary incorporation documents, director and shareholder identification, and company resolution to open the account.
6. Obtain Necessary Licenses and Permits
- Business Licenses: Depending on the nature of your business, apply for relevant licenses and permits from the appropriate government agencies.
- Sector-Specific Licenses: For sectors like manufacturing, food and beverage, or import/export, additional licenses may be required.
7. Register for Taxes
- Income Tax: Register with the Inland Revenue Board of Malaysia (Lembaga Hasil Dalam Negeri, LHDN).
- Goods and Services Tax (GST): If applicable, register with the Royal Malaysian Customs Department.
8. Immigration and Work Permits
- Employment Pass: Apply for an Employment Pass for yourself and key foreign staff, allowing them to live and work in Malaysia.
- Dependent Pass: For family members of the Employment Pass holder.
How to Start a Small Business in Malaysia as a Foreigner? Starting a Business in Malaysia
