How to Successfully Start a Business in Malaysia in 2025: A Complete Guide
Ranked first among Asia’s emerging and developing nations for overall investment, Malaysia has significantly outperformed the EMDE benchmark, according to The Milken Institute’s Global Opportunity Index 2024 report. Its strategic location in Southeast Asia, combined with a rich cultural landscape and abundant natural resources, make it an ideal hub for entrepreneurs and investors looking to start a business in Malaysia, whether through a private limited company (Sdn Bhd), partnership, or foreign-owned entity. This comprehensive guide walks you through everything you need to know about company incorporation in Malaysia, from legal requirements and business structure selection to post-registration compliance, grants, and running small or home-based businesses with confidence.
Planning and Preparation Before You Start a Business in Malaysia
The very first step of the journey is to find out “why do you want to start a business?” Though it sounds common and ordinary, it is a very important question before you start a business in Malaysia. It is because it helps you to sort out your intention and reason why you want to set up your business. Once you figure out the purpose, you can start by asking yourself:
- Do you have any special skills?
- How do you fund your business?
- How much capital do you need/have?
- What is your business idea?
- Have you carried out any market research?
How Do You Start a Business in Malaysia?
To successfully start a business in Malaysia, entrepreneurs must go beyond paperwork and develop a well-thought-out strategy. Malaysia’s economy is diverse and export-oriented, with strong sectors like manufacturing, digital economy, halal products, and financial services. The government offers a relatively straightforward company registration process, investor-friendly policies, and incentives for startups and SMEs. However, navigating the local market requires careful planning.
Before moving into business registration or company incorporation in Malaysia, it’s crucial to evaluate chance of success in Malaysia’s competitive and multicultural business landscape. Below are the essential first steps to get started on the right foot.
- Have a business plan in place
No matter what type of business you want to do, a business plan is one of the crucial steps. Think of it as the foundation that turns a great idea into a successful venture. It helps you understand the market, identify competitors, and anticipate challenges. - Conduct thorough market research
Analyse competitors, industry trends, and potential risks. A strong business plan not only clarifies your vision but also outlines the steps needed to sustain and grow your business. - Evaluate your finances
Determine how you’ll fund your business and cover initial expenses. Understanding your financial needs early on will help you choose the right funding options and ensure a smooth registration process in Malaysia.
What Are the Steps to Start a Business?
Decide on the business type
There are several different types of business entities available in Malaysia. Every business entity has its own compliance requirements, tax structure, etc.
Decide on the business type- If you are a local entrepreneur, you can opt to register your business as either a Sole Proprietor, Limited Liability Partnership (LLP), General Partnership or Company (Sdn. Bhd. or Berhad), as they are the common business entities available in Malaysia.
- If you are a foreign entrepreneur, there are two common business entities for foreign investors: a locally incorporated company or a foreign-owned company. Foreign investors can set up a sole proprietorship or a partnerships in Malaysia with the condition that they have permanent residency (“PR”) in Malaysia. Apart from the options above, foreign investors can also choose to register their business as either a private limited company, or a Labuan company, a representative office.
- Name your business
Every business needs a name. A good business is more than just a brand name – it is also part of your marketing strategy and brand identity. Run a name check after you have handpicked the business name:- Complete the request for the availability of the name form and submit to Suruhanjaya Syarikat Malaysia (“SSM”); and
- You need to pay a fee of RM30.00 for each name applied
After the name check, register the name with SSM to get approval for company formation in Malaysia.
- Scout for a business premise
Just like a good business name, a good business location is part of your marketing strategy. Choosing the right business location in Malaysia depends on industry needs, budget, accessibility, and compliance. Whether a retail space, office, or co-working hub, ensure it meets zoning laws, rental terms, and required permits for smooth operations. - Registered office address
In Malaysia, every business must have a legally registered local office address. The registered office shall be open and accessible to the public during ordinary business hours. The Registrar shall be notified of any change in the address of the registered office within fourteen (14) days of such change. - Prepare the incorporation documents
- Memorandum and Articles of Association / Constitution
- Statutory Declaration by a Director or Promoter Before Appointment
- Declaration of Compliance
- Company name’s approval letter from SSM (one copy).
- Identity card of every director and company secretary (one copy each).
- Incorporate your company
You must submit the incorporation documents to SSM within three months of SSM’s approval date for the company’s name. You will need to apply for a new name search if you fail to lodge your incorporation documents with SMM within 3 months. - Pay registration fees
To register a business in Malaysia, you must pay the SSM registration fees, which vary based on the business structure (e.g., Sdn Bhd, Sole Proprietorship, or Partnership). The company registration fee is RM1,000. Payments can be made online via MyCoID or at SSM offices upon submission of required documents. - Issuance of a Certificate of Registration
You will get your new business Registration Certificate within one hour of the registration fee payment transaction. - Open a Corporate Bank Account
Submit the required documents, such as the incorporation certificate, company constitution, and director identification, to open a business bank account in Malaysia. - Register for Taxes
Register for Sales and Services Tax (SST) and other applicable taxes while ensuring compliance with corporate tax regulations and filing procedures.
Compliance and Post-Incorporation Requirements in Malaysia
After successfully registering a business in Malaysia, ongoing compliance and post-incorporation requirements are essential to ensure smooth operations and adherence to legal regulations.
1. Annual Compliance & Financial Reporting
Businesses must file annual financial statements and tax returns, with mandatory audits conducted by certified professionals. These audits ensure transparency, financial health assessment, and regulatory compliance while helping businesses identify potential areas for improvement. Maintaining accurate records is crucial for smoother audits, investor confidence, and strategic decision-making.
2. Employer Responsibilities
Employers must comply with mandatory employee contributions to:
- Employees Provident Fund (EPF) – Retirement savings contributions
- Social Security Organisation (SOCSO) – Workplace injury and disability protection
- Employment Insurance System (EIS) – Unemployment benefits scheme
Employers should also adhere to labour laws, employee welfare regulations, and timely payroll tax submissions.
3. Ongoing Tax Compliance
Businesses must register for and comply with Malaysia’s tax regulations, including:
- Corporate tax filings – Ensuring timely submission and payment
- Sales and Services Tax (SST) – If applicable, businesses must register and report SST accurately
- Withholding tax obligations – For payments to non-residents
Regular tax reviews help prevent errors, ensure deductions are accurately applied, and avoid penalties. Staying updated on regulatory changes ensures smooth tax compliance and good standing with Malaysian authorities.
4. Post-Registration Essentials
- Opening a Corporate Bank Account – Businesses should select a local or international bank (e.g., Maybank, CIMB, HSBC) and provide the necessary documentation, including company incorporation details, director IDs, and board resolutions.
- Obtaining Business Licenses & Permits – Depending on the industry, companies may require general, sector-specific, or activity-specific licenses for legal operation.
- Appointing Auditors – Newly incorporated companies must appoint an approved auditor within the specified regulatory timeline.
- Employee Provident Fund Registration – Employers must register their company and employees for EPF, SOCSO, and EIS to comply with statutory employment regulations.
Ensuring ongoing compliance not only fulfils legal obligations but also strengthens business credibility, financial stability, and long-term success in Malaysia.
Are There Any Business Grants Available for businesses in Malaysia?
Many people are unaware that the Malaysian government offers financing schemes to support entrepreneurs and SMEs in starting and growing their businesses. In addition to these funding options, the government also provides grants to help businesses expand, innovate, and thrive in the competitive market.
- Ministry of Energy, Science, Technology, Environment & Climate Change (“MESTECC”)
- Bioeconomy Transformation Programme (BTP) (by Malaysian Biotechnology Corporation (“MBC”))
- Business Growth Fund (by Malaysian Technology Development Corporation Sdn Bhd (“MTDC”))
- Commercialisation of Research and Development Fund (by Malaysian Technology Development Corporation Sdn Bhd (“MTDC”))
- Ministry of Finance (“MOF”)
- Cradle Investment Program Catalyst (CIP 500) (by Cradle Fund Sdn Bhd (“Cradle”))
- Cradle Investment Programme 300 (CIP300) (by Cradle Fund Sdn Bhd (“Cradle”))
- Cradle Seed Ventures Fund 1 (CSVF1) (by Cradle Fund Sdn Bhd (“Cradle”))
- Ministry of Communications and Multimedia (“KKMM”)
- Creative Industry Development Fund (CIDF-SKMM) (by Suruhanjaya CommunicAsia dan Multimedia Malaysia (“SKMM”))
- Product Development and Commercialisation Fund (PCF) (by Multimedia Development Corporation Sdn Bhd (“MDeC”))
How to Start a Small Business in Malaysia?
Many people aim big when it comes to starting their own business, while some people prefer a small business. The intentions of starting a small business vary from individual to individual. Some people want to have more quality time with family; some people want to venture into the journey as an entrepreneur; and some people want to have more flexibility in their working life.
Like many other countries, a lot of aspiring entrepreneurs want to set up a small business in the country. From fashion businesses and e-commerce stores to affiliate marketing, Malaysians are venturing into the opportunities and possibilities of small businesses. Foreigners, too, can opt to start their small business in Malaysia.
- No matter if you are a local entrepreneur or a foreign investor, you can start a small business in Malaysia.
- First, you need a well-thought-out business plan, together with your budget and marketing plan, before you move to the next step – incorporate your business.
- The following steps include:
a. Name your business (always remember to do a name check)
b. Look for a suitable and strategic office location - Company incorporation:
a. A Company is the standard business entity for small businesses and professional bodies.
How to Start a Business from Home?
A home-based business, as the name suggests, is a business where the primary office is located in the business owner’s home. Many Malaysians are exploring the niche market of home-based businesses. While the idea of working from home or starting a home-based business sounds fascinating, not everyone knows how to start a business from home or how to start a small business at home in Malaysia.
- Figure out what kind of home-based business you want to do:
First things first, find out what kind of home-based business you want to do (below are the popular home-based business options):- Home Care Business (for children aged 12 and below)
- Home Child Care
- Elderly Care
- Home-based Accountant and Bookkeeper
- Consultants
- Online Business
- Website Design
- Professional Blogging
- Home-based bakery
- Home-based tutor
- Nail parlour
- Gadget Repair Business
- Pet care
- Virtual assistant
- Laundry business.
- Home Care Business (for children aged 12 and below)
- Get down to business
Then, draft a home-based business plan together with your marketing strategy and financing solution. While you need not scout for a business premise, you should name your business and incorporate it. - Incorporate your home-based business
In Malaysia, you can incorporate your home-based business as a Company.
How Can 3E Accounting Help You Start a Business in Malaysia?
You can choose to do it on your own, or engage a professional company registration company to help you start your business. 3E Accounting Malaysia is always at your assistance! Do contact us to find out more about our company incorporation services as well as our affordable company registration packages!
