Amidst this pandemic, a lot of people might be rethinking their career paths in life. If starting a company is one of your life goals, you are on the right page. There are certain rules and limitations for foreigners to start a company in Malaysia. Foreigners are only allowed to start a Labuan company or a Sendirian Berhad. In this article, we will be discussing how to start a company in Malaysia as a foreigner.
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Business Model And Type
Before starting your own company, you must evaluate your desired business model and the type of business that you are going to register. There are 8 types of business models that you can register in Malaysia. With the many types of business models, it is recommended to consult a corporate lawyer to better understand the business models. They would be able to advise and guide you through your business registration process.
Name Search And Reservation
Without a doubt, every company has to have its own name and brand. A company’s name helps the public to differentiate each company. You can check whether the name that you are considering is available or not by filling up Form 13A. Each name search would cost you RM50 and if the name is available, you would be able to reserve it for up to 30 days.
Before you start a company, you must have thought of an address for the company. Whether it would be a home office or at a building that you rented. It is also possible to register a company with a virtual office if the company is run online. This would help you to save cost.
There are a few documents and information that you would need to prepare before registering a Sendirian Berhad, Joint venture Sendirian Berhad or a Labuan Company. These documents include the company’s constitution, a declaration from the director of the company stating that they are free of bankruptcy, an agreement to the Companies Act, and an identity card of the directors of the company.
To start a joint venture, one must submit the documents pertaining to the company name approval from SSM. The company incorporation document must be submitted within 3 months of the approval from SSM, otherwise, the company’s chosen name would be deemed void.
The registration fees to start a Labuan company in Malaysia ranges from RM 1,000 up to RM 5,000. The registration fees for a Labuan company differ according to the value of the company’s share capital.
For a Sendirian Berhad company, otherwise known as a private limited company, there is a fixed rate of RM 1,000 to register the company.
Setting Up The Company Bank Account
After a successful register and approval from the authorities, the next step to start a company is to set up the company’s own bank account. It is highly recommended to separate your personal bank account from the company’s bank account to better track the company’s expenses and income.
Foreigners may open a bank account in Malaysia with a tourist visa, business visa, or a working visa. As with all businesses, you will be required to register your tax ID. Use the registered bank account for the company to receive your Sales and Service Tax number.
The company is not allowed to start its operations before the Sales and Service Tax number is registered.
After the company has received a Sales and Service Tax number, the company should apply for its operating license before it can officially start business operations. Although not all companies are required to apply for an operating license.
The companies that require an operating license are those in the food and beverage sector, land transportation, and tourism.
As mentioned above, all companies are required to pay tax. The company would have to prepare a few documents to apply for tax. To apply as a taxpayer, the company must submit three forms in total.
First and foremost, the company must already have a certificate of incorporation and fill up Form 9. The Inland Board of Revenue would also require one to submit the information of the company’s shareholders, managers, and secretaries to complete Form 49. Lastly, information on shareholders must also be submitted through Form 24 to the Inland Revenue Board of Malaysia.
Employee Provident Fund
Upon hiring an employee, an employee provident fund must be registered to the authorities. This must be done within one week of hiring the company’s first employee. The company would have to submit Form KWSP 1, Form 49, and copies of the director’s identity card, the first paycheck of the employee, and a copy of the company’s Certificate of Registration.
As you may have noticed, a lot of documents and forms are required to start a company in Malaysia. As a foreigner, you might be unfamiliar with the corporate laws in Malaysia. A lot of detail goes into the legal process to register a company. If you are ever in doubt, contact Sim & Rahman for professional advice and guidance with our lawyers.