Guide to Registration of a Sole Proprietorship or Partnership in Malaysia for Malaysian Citizens or PR
A sole proprietorship or partnership are two types of business entity options available for company incorporation in Malaysia. The registration of a sole proprietorship and partnership in Malaysia is an option available to Malaysian Citizens or Malaysian Permanent Resident holders only. You must be at least 18-years and above to be eligible for this option. This guide provides information about Sole Proprietorship Registration in Malaysia or Partnership Registration in Malaysia
To start or register a sole proprietorship or partnership in Malaysia, your business must be registered with the Companies Commission of Malaysia (SSM). It is now easier than ever to register a business in Malaysia, and it can easily be done within an hour either by visiting the nearest SSM office or registering your business online.
A sole proprietorship entity is generally run by only one person as the owner, while a partnership entity generally involves two or more individuals in the agreement. The benefits or a sole proprietorship or partnership business in Malaysia is that you can easily get your business registered quickly and it does not cost much to start your company.
How to Register a Sole Proprietorship or Partnership in Malaysia
To start the registration process in Malaysia for either a sole proprietorship or partnership, you will need to prepare and provide the following documentation:
- A photocopy of your Identity Card (IC). In the case of a partnership, you must provide a copy of your partner’s IC as well.
- Prepare the required registration fee of RM60-RM100 (cash).
- A sole proprietorship which uses the same personal name that is stated on your IC requires a registration fee of RM30
- A sole proprietorship using a trading name has a registration fee of RM60
- Registration of branches are an additional RM5 per branch
- Printout of your business information RM10
- Copy of your permit, approval, license or any other supporting documentation or letters for the type of business you intend to operate if required by the Registrar of Business.
- Details of your business name and activity.
Registering Your Business Using a Personal or Trade Name
Registration of your sole proprietorship or partnership business entity in Malaysia can be done either using a trading name or your own personal name. If you are proceeding with the trade name option, you must obtain prior approval from the Registrar of Business before you can use that name.
You will be required to complete the Business Name Approval Form (Form PNA.42) and submit three proposed business names which will be approved based on priority. These must be attached to the New Business Registration Form (Form A) and submitted at the counter.
Your Business Registration Form A must be completed with the information and details below:
- Name of your business
- Type of business
- The commencement date of your business
- The primary address of your business
- Address branch of your business (if applicable)
- Information about owners and partners
In the case of a partnership, each partner will be required to sign the completed form. The completed application form for your sole proprietorship or partnership registration must then be submitted to the SSM either over the counter, or online through the SSM e-Lodgement Services available on the SSM’s website.
Once approved, your Business Registration Certificate will be available for collection within 1 hour after payment has been made. It is important to note that even though your business may be registered legally with SSM, you will still be responsible for obtaining any relevant permits or business licenses which may be required depending on the nature of your business.
The Disadvantages of a Sole Proprietorship or Partnership Registration
While there are several advantages and benefits that come with these two entity options, there are also disadvantages that every entrepreneur should be made aware of. Among the disadvantages of registering a sole proprietorship or partnership in Malaysia include:
- You will be personally liable for the debts incurred in the business.
- Sole proprietorships will generally have to cease operations once the owner is deceased.
- Any acts carried out the partner in the partnership entity option will be considered the responsibility of all the other partners as well.
The penalty in Malaysia for Not Registering Your Sole Proprietorship or Partnership
It is an offence to carry out business in Malaysia without the proper registration under the ROBA1956. If found guilty, you may be fined with an amount not exceeding RM50,000, or face jail time not exceeding a period of 2-years or both.