In recent years, more and more young people are determined to join the ranks of entrepreneurship and create a future of their own! According to the Business Registration Act, any person or company that operates continuously for 30 days, whether it is a physical store or an online business, must register with the Companies Commission. Let us share below, what types of companies are there in Malaysia?
Generally speaking, in Malaysia, new registrations are divided into three major types:
(A) Business registration Enterprise
1. Sole Proprietorship
Simply put, the boss is the company, and the company is the boss. There is only one boss, and all profits belong to him. Of course, losses must also be borne independently, and the boss is personally responsible for the company’s debts.
A sole proprietorship is easy to set up, requires less paperwork and costs very little (less than RM200). Because the boss has the final say in everything, it is more flexible and suitable for small businesses. However, if the boss cannot work for some reason, the company will not be able to operate. If he dies, the company will disappear. Therefore, investors are reluctant to invest, and banks are reluctant to lend money.
2. Partnership
Partnership has at least two partners and a maximum of 20 partners, and each member must share the company’s profits and losses. If one person makes a wrong decision and suffers losses and debts, everyone has to bear the responsibility. Partnership also has the same problems that sole proprietorships face.
(B) Private Limited Company
The difference between a limited company and the above is that it is independent and individual, with financial responsibilities separated from investors. Profits belong to the company, and losses and debts are limited to the funds invested and cannot be traced to investors. There are many procedures to open a limited company. The registration fee depends on the amount of authorized capital, ranging from RM1,000 to RM70,000. The annual expenses of opening a board of directors, filing accounts, etc. are relatively high.
But limited companies give customers, suppliers and banks a more reliable impression. Since the accounts are clear, it will be easy for new shareholders to join the company in the future. If you have long-term development plans, you should consider establishing a limited company.
(C) Limited Liability Partnership (LLP)
Malaysia has recently passed the LLP Act, which combines the benefits of partnership and private limited companies. Shareholders do not need to bear risks other than investment, nor do they need to pay high registration fees, nor do they need to file accounts every year, which is suitable for young companies with insufficient funds.
After deciding what type of company to register, it’s time to take action. Many people are afraid of red tape. Reading instructions and filling out forms seems to be a life-threatening task. In fact, it is not difficult. As long as you have a little patience and read the process carefully, setting up a company in Malaysia is more convenient than many countries. A sole proprietorship can even be completed in one day! If you want to set up a sole proprietorship, just bring your ID card and RM200 in cash to the SSM office to fill out the form or register online.
Establishing a limited company is relatively complicated and requires at least two shareholders, two directors and a company secretary, but the procedures are not difficult because the company secretary can handle the entire process from selecting a name to forming documents, and there is no need to go to SSM in person. If you want to find a company secretary, you can ask friends who have started a business to introduce you, or you can search for ‘Malaysia company secretary’ online. Registering a company is that simple.
Follow us at Bizlocate~ Let’s learn more about opening a store.
Facebook: https://www.facebook.com/people/BizLocate-Malaysia/100063665196432/
Instagram: https://www.instagram.com/bizlocatemalaysia/
YouTube: https ://www.youtube.com/channel/UCuiKYqOqkDhGLsuQ0Vnee5A