A lot of startup companies in Malaysia don’t last for long because most new business owners are not prepared for it. There are many reasons why they failed as companies and business owners:
- Cash flow problems – pretty much speaks for itself as there are insufficient funds to keep up the overhead
- Innovation – it wasn’t the lack of innovation thereof but rather too many innovations that don’t work or not work long-term. In essence, you can say that startups are testing grounds for new techs, products, services, and markets. Again, these areas may not work or function long-term, which spells out loss of money, time, and effort spent in the area.
- “Growth” isn’t exactly growth – This is a painful area for many business owners to come to terms with. As mentioned before, startups are testing grounds for new technologies among many other things. If it doesn’t work out, the test can be abandoned just like that. It’s growth by learning how and what works and what don’t. It’s more of an exponential growth rather than a linear growth.
There are many reasons why a business or a start-up can fail. However, that does not mean every start-up business is subject to such problems. In this article, we will cover 9 important steps in setting up a business in Malaysia.
9 Steps to a Successful Business Startup in Malaysia
Find out how to start a successful business in Malaysia here.
1. Look for help and advice from local professionals
It’s easy and possible to do everything on your own. Perhaps you’re the type of business owner who prefers to run your company on a 1-man-show kind of structure. However, there will be applications and jobs that you simply do not have the application to do on your own. You will need to hire or approach a professional to help you out on the matter.
Hiring a professional is definitely a beneficial thing for your company. It’s not just limited to HR, but you will find that you will need the expertise of accountants, auditors, tax agents, lawyers, property agents, etc., to help you along your business journey. It can be proven valuable and saves you a lot of time and money in the ling run.
2. Licensing and requirements by specific industries
In recent years Malaysia may have softened its grips on certain industries within the country. You can see foreign participation in many sectors across the country in the last 10-20years or so. It’s common to see expatriates working in oil and gas industries, wholesale and retail trade, and many more.
As a business owner, you will need to know what kind of licenses or conditions when you wish to venture into these industries. It’s a lot of research you need to do before going into the industry.
3. Opening a bank account just for your business
This is a common mistake made by many business owners: not opening a business bank account for the company. Your business bank account is used for many things, of which the most common areas are:
- Pay for insurance
- Pay employee salaries
- Company insurance
- To receive any profits or to pay clients
Setting up a business bank account in Malaysia isn’t very hard. All you need to do is to find out and submit the relevant information and you’re good to go.
4. Register your company as a legitimate incorporated business
Register your company as a legitimate company in Malaysia under Companies Act 2016 (submit application here). The most common type of business registration in Malaysia is Private Limited (Sdn Bhd). You can register for your company individually or through a professional to help you. The process can take up to 3 working days, and can be longer depending on the submission volume.
5. Secure an address and premise just for your business
One of the important steps in setting up your business is registering a business address for your company. You can (and are allowed to) register your home address as your business address. However, we’d strongly advise against it for privacy reasons. If you have a physical address, then it would have been a better address to put instead.
If you are not in Malaysia or from Malaysia, you can opt to subscribe for a virtual address. It works too.
6. Immigration permits and visas
This is an optional step only because not every businesses will hire foreigners. If you are an MNC, it’s quite likely that you will hire foreigners as one of the key persons in your company. If that’s the case, make sure that you have the right visas and permits for the foreigner you are planning to hire.
- Human resource and employment laws
Malaysia is home to quite a sizable educated talent pool. A lot of potential people in the talent pool are able to speak multiple languages and can work for affordable salaries. Having said all of that, you will need a human resources department or person to be able to find the best talent within this said talent pool. As soon as someone is hired, your human resource exec will have to start contributing for the employees’ statutory deductions.
The Malaysian labor law is perceived to favor the employees more, which means as employers you are more prone to getting reported and sued for ignorance and breach of labor laws. Having a well-trained human resources exec is great for the company because this said department can advise the company what steps to take.
8. Intellectual property searches and registrations
Malaysia has a relatively tough legal framework and an affordable system for registration and protection for intellectual property. This framework can assist you to search and see if your business registration name is already taken or not.
Taxes are something that you should consider when you are planning your initial startup of your company. It should not be an afterthought. The most common types of taxes Malaysian companies have to deal with are income tax, withholding tax, real property profit taxes, and stamp duty, among many others.
The bottom line is that make sure you do extra and substantial research on ways to set up a business before really setting up your business. There are a few obstacles you will have to follow, but it should not be an issue if you follow the rules.