Malaysia is a land that comes up with immense business opportunities. Every year thousands of investors gather in Malaysia with a single enquiry, and that is ‘how to register a company in Malaysia’. Just like any other countries, Malaysia also follows few business platforms. It is compulsory that a new entrepreneur must choose a single business form to progress with his/her company in Malaysia. Most expatriates choose limited liability company as starter in Malaysia; however, some choose partnership company and Malaysian residences often seem to prefer sole proprietorship business as per their own preference.
While most corporate people prefer limited liability for their company type, which comes with many facilities such as limitations in company liabilities if the business goes through unfortunate bankruptcy or debts, sole proprietorship in Malaysia is quite different from it. This type of company has some limitations along with a set of advantages that beats other company forms. Before getting deep into advantages and disadvantages of sole proprietorship business, lets get a clear concept of the term sole proprietorship itself first.
What is a Sole Proprietorship Company?
Sole proprietorship company is the simplest form of business structure that demands a single ownership. This type of business is valid in Malaysia and is open for all local residents of Malaysia only, who are planning to do business in Malaysia. This type of business is not open for foreign investors, until the applicant has residency permissions of Malaysia. This specific structure of sole proprietorship business is monitored and authenticated by the company commission of Malaysia (CCM), also known as Suruhanjaya Syarikat Malaysia (SSM) in local Malay language. This is also governed by Malaysian company registration Act 1956.
As the term suggest, sole proprietorship company in Malaysia is owned by a single Malaysian resident. However, if the company is in a stable form, the owner can transform this sole proprietorship status into a limited liability company or even partnership company with the availability of interested partner or partners ready to join the venture.
How to Register for Sole Proprietorship company?
To start a sole proprietorship company in Malaysia, an individual need to fulfill several terms and conditions. Most of these conditions are implied by the government of this nation. The eligibility requirements for setting up this type of company are listed below:
- The interested individual has to be a citizen of Malaysia or he/she must have a permanent residency of Malaysia.
- He/she has to come up with the name and valid identification card.
- The owner must visit personally to the nearest SSM or company commission of Malaysia office to conduct the sole proprietorship business registration process.
- SSM authority will cross check the availability of your proposed company name.
- Once every goes accordingly and SSM approves your documents, you need to pay the annual fees which include RM60 for trade name, RM5 for any branches if opened under your company.
- In about an hour of the payment cleared out, the company registration certificate will be issued by SSM.
Check out the full guideline about sole proprietorship registration in Malaysia
What are the Documents you Need for the Registration Process?
To complete the registration process of sole proprietorship company an applicant has to be ready with several documents and paperwork. This paperwork needs to be delivered to the SSM authority when asked. These are the information papers you have to make available as per SSM requirements:
- Valid Identity card of the individual company owner
- Trade name proposal document
- Drafted form that mentions nature of the company
- Completed form of business detail and addresses
- Letter of approval from government body if recommended
Disadvantages for this type of company
Although there are many advantages when you plan and setup a sole proprietorship company in Malaysia, but along with facilities, there are some level of risk factors that you have to count as well. Here are some risk factors that might hit you when you are owning a sole proprietorship company in this country.
- The first and the biggest risk factor is that, if the company faces bankruptcy or debts, being an individual owner, you have to bear all these debts and drawbacks
- As there is a single owner available for this type of company, creditors can easily sue for sudden company shut down or bankruptcy.
- Personal assets and capitals may go under risk due to debts if this type of company shut down at the middle.
- You have to handle each and every aspect of your company single handedly and will get less to no support for your acts in the business.
Advantages of setting up a sole proprietorship company in Malaysia
Along with some disadvantages that has already been mentioned, you will enjoy several advantages of setting up this type of business in Malaysia. Here we have made a table to assist you through the positive sides of starting a sole proprietorship company in Malaysia:
|Ownership status||Sole proprietorship means that a single owner will have full control over his company. He/she is the sole decision maker and will enjoy the profit of the company individually.|
|Taxation||As the company is not recognize as legal entity, there is no business tax in this type of company. The owner just needs to pay regular income tax and that is all it needs.|
|Low cost per year||Compare to other types of companies available, this company consumes lowers maintenance cost per year.|
|Convenience during company closed down||Less formalities are required if sole proprietorship company need to shut down. It can be done in two ways. You can either request SSM to shut it down or simply stop giving the annual fees and the company will ultimately close down.|
|Minimum eligibility requirements||Less eligibility is needed for opening a sole proprietorship. The owner just has to be the resident of Malaysia or need to have a permanent residency of this country. Another requirement is that the owner has to be present physically in SSM office during company registration process.|
|Less business regulations||Sole proprietorship asks for less business requirements. As the company consist of a small to medium size business there has no complicated business processes such as annual audit or secretarial activities. This ultimately make business activities under this company type way less complicated.|
Things you must remember
There are few tricks to make the simple registration process of sole proprietorship company in Malaysia even simpler.
For instance, the naming of the company has to be short and small. This will keep the brand name convenient and rememberable among clients.
The next tips for starting any company implies on the owner. The owner must avoid any illegal means of trade. Doing so will end up the business at stake sooner or later.
Keeping check of the SSM requirements and regular income tax submission is the next trick to go fair with the company in Malaysia.
Lastly, when starting a sole proprietorship company in Malaysia, the owner must be mentally strong enough to deal with all ups and downs occurs in the company. A strong mind can end up providing stable decisions for the company, which is an all-time necessity for any type of business advisory in Malaysia.
No, sole proprietorship company can have one owner at maximum. You can however convert the company type to limited liability company for more than one ownership.
No, Only Malaysian citizen, or any individual who has permanent residency in Malaysia is eligible for sole proprietorship company.
You can submit all your papers and get registered with business registration certificate from the company commission of Malaysia or SSM office nearest to your place in Malaysia.
Accountant is not necessary for sole proprietorship company in Malaysia. However, if your company demands, you can always hire one.