How to Open Enterprise or Partnership Company
Opening a business in Malaysia has become easier in recent years due to government initiatives to encourage entrepreneurship and investments. The most common business structures for enterprises and partnerships in Malaysia are Sole Proprietorships, Partnerships, and Private Limited Companies. If you're looking to turn your business idea or online business into reality in Malaysia, choosing the right company types and company structure is key. The first step to setting up your business in Malaysia is to choose the right type of business entity - will you be a sole proprietorship, partnership ?
What is an Enterprise and a Partnership ?
Enterprise: A business venture or organization established for commercial purposes and involving financial risk and accountability. It can be a company, firm, business or other legal entity engaged in commercial activities.
Partnership: A formal business association between two or more people who share ownership, control, profits and losses of the business. It is governed by a partnership agreement between partners.
What is a Sole Proprietorship (Enterprise) ?
A sole proprietorship is the simplest and most common business structure adopted in Malaysia for small business owners. It is a business owned and run by only one individual.
Registering a sole proprietorship in Malaysia is straightforward:
- No formal registration is required under the ROB for the entity itself
- The business owner however must have a valid business license and permits for the nature of operations
- A company name search is advisable to set up a business bank account
In accordance with the Register of Business Act 1956 and Register of Business Act Rules 1957. There are two (2) sorts of enterprises.
Sole proprietorship: A business that is entirely owned by a single person and operates under his or her using personal name as indicated on his or her identification car.
Partnership: A business owned by two or more people, but not more than twenty. The name on your identity card cannot be used as a business name.
Advantages of Sole Proprietorship (Enterprise)
- Full Control Over Business
As sole owner, you have complete authority over every aspect of the company without needing consensus from partners or shareholders. You can freely implement ideas, pivot offerings and allocate profits without external approvals.
- Simple Registration Process
Only require registering for a trade license and permits. You can avoid complex company and shareholder compliance formalities associated with other structures. Quick setup lets you focus on operations faster.
- Low Startup Costs
With no requirements for paid-up capital or audited accounts, launching has lower startup costs. Minimal legal paperwork also reduces administrative expenses. This enables bootstrapping your venture initially.
- Tax advantages
As earnings directly pass to your personal income tax returns, overall tax obligations can be lower, especially in earlier years if profits are reinvested into the business. You also avoid double taxation scenarios seen in other structures.
- Flexibility & Freedom
This format gives you flexibility in evolving the business over time to suit changing personal and commercial priorities. Closing the proprietorship if needed is also easier with no investor interests or statutory closures.
What is General Partnership ?
A partnership refers to two or more persons carrying on a business together with the goal of making a profit. The Partnership Act 1961 governs partnership forms and laws in Malaysia. Partnerships in Malaysia enable entrepreneurs to pursue commercial goals collaboratively by combining skills, capital and networks under a joint venture structure agreed upon through a partnership deed.
General Partnerships – Partners jointly run the business and share unlimited liability based on percentage holdings. It is an unincorporated entity.
Partnership in Malaysia must be registered under the ROB Act by submitting details of their business partnership with the Companies Commission of Malaysia (SSM).
Advantages of General Partnership
If you're an entrepreneur assessing business structures in Malaysia, partnerships present notable advantages over sole proprietorships. While proprietorships maximize ownership control, considerations like shared capital, expertise and long-term continuity make partnerships buiness a more resilient option.
The advantages as below:
- Greater Access to Capital
Partners collectively contribute equity capital and share personal assets to raise larger startup funding. More capital gives partnerships better operational capacity from the outset. Partners’ joint creditworthiness also unlocks increased borrowing potential.
- Broader Professional Expertise
A partnership allows combining the different skills, industry connections and practical experiences partners have amassed into a more capable leadership team. This diversity of expertise leads to better-informed decisions.
- Longevity and Continuity
Unexpected accidents or retirement impact continuity as responsibilities rest solely upon one person. Partners can distribute management and succession planning, making partnerships more durable for the long run.
- Risk Mitigation
While partners do share personal liability, the ability to diversify losses based on partnership shares cushions the blow. Partners also assume joint responsibility for business debts which banks view favorably for financing.
By segregating ownership and liability across partner shares, losses don't impact one individual completely. This prudent separation makes partnerships a more solid structure.
Requirements of Register Enterprise and Partnership
Here are the key requirements for registering an enterprise under the Registration of Businesses (ROB) Act in Malaysia under a personal name or trade name as business name:
A) Registration under Personal Name
- Sole proprietor must be a Malaysian citizen or permanent resident
- Submit copy of proprietor's Identity Card for Malaysians or passport for non-citizens
- Indicate proposed nature of business activities
- Apply for relevant business licenses and permits
- Pay registration fees - RM 30
- Receive ROB certificate with proprietor's name as per registered business
- Conduct a trade name search to ensure availability
- Submit Form A application for trade name along with fees
- Receive approval letter authorizing use of proposed trade name
- Apply for ROB registration listing the approved trade name
- Submit copy of Identity card (IC)/passport, expected business activities
- Pay registration fees - RM 60
- Receive ROB certificate with registered trade name
Steps to Register under the Registration of Businesses (ROB) Act in Malaysia
- Determine Business Structure Decide if your enterprise will be a sole proprietorship, partnership or limited liability partnership (LLP). Suitable business name can be used for you company after been approved.
- Check Availability of Business Name Search the Suruhanjaya Syarikat Malaysia (SSM) database to ensure your proposed business name is available for ROB registration.
- Prepare Partnership Agreement.
For partnerships, have a partnership deed executed by all partners outlining capital contribution, profit sharing and other mutually agreed terms.
- Fill in ROB Forms Fill in the ROB registration application form with details of all partners, proposed business activities, all the information required and submit to ezbiz online services or ssm counter.
- Submit Signed ROB Application Submit duly completed and signed application forms along with NRIC copies of all partners, signed partnership form agreement.
- Receive Business Registration Certificate If approved, you will receive a Certificate of Registration along with a registered business number from Companies Commission of Malaysia (SSM)
- Renew ROB Annually.
You must renew ROB registration yearly by filing annual returns and paying renewal fees without fail.
Following these steps systematically will ensure your enterprise is formally registered under Malaysia's Registration of Businesses route or can register with Altomate for easy startup business. Click here for more info https://altomate.io/my/landingpage/Register-Enterprise-or-Partnership-With-Altomate/
What Are The Registration Costs For Setting Up A Company In Malaysia?
- Sole proprietorship under personal name per NRIC/passport: RM30
- Sole proprietorship or partnership under unique trade name: RM60
- Registration fee for each additional branch outlet: RM5 per branch
- Business information print-out documents: RM10
- The Business Registration Certificate is issued within 1 hour of payment completion. The entire registration process typically takes one hour to two hours from start to finish.
Setting up a legal business in Malaysia can seem challenging but is a worthwhile endeavor for ambitious entrepreneurs. With helpful resources, you can navigate business structure options, name approvals, incorporation paperwork, investment requirements and regulatory obligations systematically. The key is choosing the right business format aligned to your commercial objectives and risk appetite. Seeking specialist guidance from company secretary, tax agent, accountant can steer you through key steps like registration formalities, minimum capital requirements, taxation frameworks and post-incorporation compliance essentials
GETTING DOWN TO BUSINESS
If you're looking to form a Company such as Sdn. Bhd., Enterprise, Partnership, in Malaysia, company secretarial services or have any other questions on starting your business, contact the team at Altomate.
We're here to answer any questions, provide resources, and give you the exact answers you need to get your business to the next level. We thank you for reading this article and hope it gave you some new thoughts and business ideas to move forward with. Click here for common questions in Company Incorporation FAQ