Do you have a great idea for a new business? Or, perhaps you’re just ready to strike out on your own instead of working for someone else. Either way, launching your entrepreneurial journey is definitely an exciting time! But you may not be exactly sure how to start a business in Malaysia.
That’s why we’ve created this guide. It includes the necessary steps everyone will need to follow to get their business up and running. By the end of the article, you’ll have a much clearer understanding of how to start your own business. Hopefully, you’ll soon be forging your own path as an entrepreneur!
Editor’s note: Are you ready to buy a domain name for your business website now? If so, head over here. Otherwise, read on!
Here are the steps to starting your own small or midsize enterprise (SME) in Malaysia:
1. Narrow down your business idea
Before you do anything else, spend some time focusing on your idea. What is your product or service and is there a demand for it? Who is your target customer? What about competition? Is there room in the market for your business? And how will you differentiate your product or service from the rest?
This is a great time to do market research to figure out if your idea is worth pursuing. And while you can write an entire business plan, you may not need it unless you’ll be seeking outside funding. However, you should at least create a simple one-page business plan to help solidify your concept.
Things to include in a one-page business plan:
- What your product or service is
- Your target market for your product or service
- The problem you’re solving for them
- SWOT analysis (strengths, weaknesses, opportunities, threats)
- Who will own and run the business
- How you will help your target market find out about your business
- How you will fund the launch of your business and sustain your operations
Get feedback on your business idea from friends and family. Just keep in mind that they likely won’t be your target customer. So, their opinions should be taken with a grain of salt.
If you can, look for opportunities to test your product or service before you launch. An example would be to try selling your goods at a farmers’ market (if you were a baker or candy-maker, for instance.) Find out what real customers think of your products. Then, use any feedback you gather to improve your product or service.
This is also a great time to brainstorm business name ideas. Once you have a short list of ideas, do a quick online search to see if the matching domain names are available. You’ll do an official business name search in the next step, but doing this first can save you time and money later.
Your business name should be unique, memorable and fitting with your type of business.
2. Find a place to operate your business
If you’re starting a home-based business, you won’t need retail, commercial or industrial space. But if you’re launching a physical store, food and beverage outlet, or any business requiring more space, you’ll need to lease or buy a location to use.
3. Name your business and register with SSM
Once you’re ready to make your business official, you’ll need to register the name and business with the authorities.
Start by doing a name search to ensure it’s available to use. This is done through SSM (Suruhanjaya Syarikat Malaysia) for RM30 per search.
Choose a business registration type
Next, you’ll need to choose which type of business to form. The basic types to choose from are sole proprietor, partnership and company.
One of the biggest differences between these is that the first two don’t offer you any protections if something were to go wrong.
However, registering a company can protect you from some personal liability, should your business end up owing money. If in doubt, an experienced lawyer will be able to guide you to the right form of business for your needs.
This means that you alone will be running your business. You can use your own name or operate under a trade name such as ABC Enterprises, etc. The fee to register under your name is RM30/year, or RM60/year for a trade name.
Registering as a partnership can be appropriate if you’re partnering with one or more people in the venture. In the case of a partnership, the risks and rewards of business ownership are shared. The registration fee is RM60/year.
Registering a private or public limited company is the more complicated process out of these options.
Private limited companies are the most common form of company in Malaysia and are known locally as Sdn Bhd or Sendirian Berhad. Registration starts at RM1,000 but there may be other fees depending on your industry and other factors. You can ask an SSM officer for help or work with a lawyer who specializes in company formation.
4. Open a bank account
You’ll need to open a bank account for your business. Thankfully, there are many local banks to choose from, such as Maybank, CIMB, Public Bank Berhad, RHB, etc.
The documents you’ll need to open an account will vary depending on what form of business you’ve registered. You can find a list of Maybank’s requirements on their website.
5. Obtain necessary business licenses and permits
Proper licensing is required to operate any business in Malaysia. These can include:
- Business premise licenses
- Signage advertisement licenses
- Industry- or activity-specific licenses
For information on obtaining the licenses you need, head over to the Ministry Of Entrepreneur Development BLESS licensing page here.
6. Register your business with SOCSO, LHDN, EPF and HRDF
Depending on how many employees (if any) you plan to hire, you’ll need to register with some or all of these agencies:
SOCSO (Social Security Organisation), also known as PERKESO (Pertubuhan Keselamatan Sosial), is the government agency responsible for employee social security. You’ll need to register with SOCSO within 30 days if you hire one or more employees earning less than RM3,000 per month.
LHDN (The Inland Revenue Board). This is the agency responsible for collecting business taxes. All businesses must register an Income Tax File with the Inland Revenue Board.
EPF (Employees Provident Fund) manages retirement funds for private-sector workers. You’ll need to register with EPF within seven days of hiring an employee.
HRDF – Registration with the Human Resources Development Fund is required if you’re employing 10 or more Malaysian workers.
7. Build out your business!
Now that you’ve taken care of all the official requirements, it’s time to actually build out your business.
If you’re opening a cafe, this would involve purchasing all of your food and beverage equipment, interior decor, signage, hiring staff, choosing suppliers and building your website, etc.
If you’re at this point and haven’t yet purchased the domain for your website, head here to secure it now. You can also use our powerful website builder to create a professional-looking website, even if you need e-commerce features.
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8. Promote your business!
Now that everything is all set up, it’s time to tell the world about your new business! Marketing and promotion is a big topic, but essentially it means getting your business in front of people who are likely to want your product or service.
This should include a well-designed website (including SEO), an email list, social media outreach (Facebook, Instagram, etc.), and possibly advertising (Google Ads, Facebook Ads, and local newspaper or magazine ads).
Learn more about promoting your venture by reading Four effective ways to get more customers.
And that, my friend, is how you start a business in Malaysia
As you can see, there are quite a few important steps to go through! To recap how to start a business in Malaysia, you’ll need to:
- Narrow down your business idea
- Search for a commercial space (if needed)
- Name and register your business with SSM
- Open a bank account for your business
- Get any required licenses and permits
- Register with the proper agencies
- Build out your business (buy equipment, hire staff, get your product or service ready, and launch your website)
- Finally, promote your business to customers
Keep in mind that every other business in Malaysia has gone through this process already, so rest assured that you can do it too! If you have any questions along the way, representatives from each agency can help you figure out what to do for each step. You may also consider seeking help from an experienced business lawyer or accountant.
Learning how to start your own business is exciting but can seem a bit complicated at first. It can also be one of the most rewarding endeavors you’ll undertake. Hopefully, this guide helped to answer many of your questions about how to start a business in Malaysia!
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