Beginner’s Guide on Starting an IT Solutions Business in Malaysia
Are you passionate about technology? Want to bring your skills and passion to the next level? Look no further. We will be exploring all about starting an IT solutions business in Malaysia in this article. Discover what it takes to set up an IT business here and the procedures that entail. Also, we’ll be spilling on where you can find quality help if it all gets too much. Read our guide to company registration in Malaysia here.
An ever-expanding field, information technology (IT) is the priority of many countries, including Malaysia. Paired with modern infrastructures, functional connectivity and a skilful workforce, Malaysia offers a dynamic business environment. To top it off, Malaysia’s strategic location in Asia and the market-oriented economy has become an ideal destination for domestic and foreign corporations to set up their business here.
Malaysia aims to be a fully developed country by 2025. In conjunction with that, the Government introduced numerous initiatives to encourage companies everywhere to adopt more technology in their businesses. With the Industry Revolution 4.0 Policy released in 2018, the country looks onwards to digital transformation at every level. Significant focus areas include cloud technology, Internet of Things (IoT), Artificial Intelligence (AI), cybersecurity, data centre, e-commerce.
What is an IT-Solutions Business in Malaysia?
An IT solutions business refers to companies that sell, manage, service computer products and similar technologies. Generally, IT solutions is an umbrella term that covers almost everything computer-technology related, such as helpdesk supports, cloud services, computer training, network security, data backup, etc. With a combination of business skills, technical services and tech gadgets, you can help provide assistance for people in need of IT solutions.
IT solutions is a great business model for entrepreneurs and clients. However, on a bigger scale, IT solutions contribute heavily to the economy and government in many ways. These companies are responsible for coming up with new products and services that utilize machinery, computers, mechanization, robotics and applied science to make everyday life easier. The innovation and creation of these IT businesses drive the industry’s growth by allowing people to save time, increase productivity, and improve quality.
Essentially, an IT solutions company is an organization that buys, sells and invests in technologies. With a consistent focus on technology, the IT solutions industry provides employment for people everywhere, including fresh graduates and experts alike. Contrary to what most people would think, machines do not replace people, and IT solutions do not decrease job opportunities. Rather, it enhances the job market by creating a variety of jobs instead. Additionally, technological progress demands those in the IT field to upskill themselves.
With the rapid expansion of the IT field, the country’s technology literacy is also going to rise. Indirectly, growth and advancement in this industry enable the nation to develop a sustainable economic wealth that will benefit the citizens. As an entrepreneur, making good use of the various initiatives prepared by the Government can significantly improve your IT solutions business. If you are unsure where to start, consider choosing an excellent corporate service provider to assist you.
Business Registration Process for Starting an IT Solutions Business
In Malaysia, you will need to register your business with the Suruhanjaya Syarikat Malaysia (SSM). You may also refer to the organisation as the Companies Commission of Malaysia (CCM). It is the official body that regulates businesses in the country. When you register with SSM, the public will be able to see your business information. This creates more transparency for your audience and increases their confidence in dealing with your business as well.
To set up a business here, you will have a few options in business entities. The most common ones you can find in Malaysia are sole proprietorship, partnership and private limited companies. Unlike the first two options, foreigners can also own private limited companies. The business structures differ from multiple perspectives, such as taxation, ownership, debt and liabilities, etc. Remember, a business entity decision should not be taken lightly as it will affect almost every part of your business. Make your research and decide on what’s best for you.
After settling down on the type of business structure, you can move on to getting a registered business address. You need a registered address to receive official statements, documents and relevant mailings from the Government. Within 14 days of your business incorporation, update the SSM on your mailing address by submitting Form 44. Click here to download forms and samples of completed forms. On that note, you are also required to register your business with the Inland Revenue Board Of Malaysia, also known as Lembaga Hasil Dalam Negeri Malaysia (LHDN), applicable online.
As an entrepreneur or an investor, there are several laws pertaining to IT that you need to be aware of:
The Digital Signature Act 1997
This Act refers to electronic signatures, which is used to verify the sender’s message or documents. The Act regulates the use of digital signatures and safeguards people’s identities online.
The Computer Crime Act 1997
The Act is put into place to regulate computer crimes. Offences such as illegally accessing one’s computer materials with intent to modify contents in the computer, etc., are overseen by this Act. This cyber law prohibits unauthorized access to computers of both persons and legal entities.
The Copyright Act 1987
This Act protects artistic works such as literature, sound recordings and music creations from misuse or illegitimate reproduction. Having such an act in place allow the owner or creator to protect their work legally. The Act represents the framework regulation for copyrighted materials online.
The Communications & Multimedia Act 1998
The purpose of this Act is to regulate matters on converging communication and multimedia industries. It is regarded as one of the most vital acts in the IT industry, given how the Act provides perspective licenses that IT businesses would need.
The Telemedicine Act 1997
This Act controls the practice of medicine over the net. The Act covers several facets regarding this matter, such as who can practice telemedicine, and it sets the standards for how telemedicine should be carried out online.
Do I Need an MSC Malaysia Status for Starting an IT Solutions Business?
Local and foreign companies that integrate multimedia technologies in their products and services can get the MSC Malaysia Status. Nevertheless, there are several criteria you must fulfil prior to applying. Take a look at the conditions below:
- Provide, develop and be a heavy user multimedia products and services.
- Be compliant with the environmental guidelines.
- Must be a separate legal entity (for MSC qualifying activities).
- Able to add value propositions, detailing how the applicant company’s operations contribute to the growth of MSC in the country.
- Hire a certain number of experts to work in the company.
If you’re wondering whether or not you should pursue an MSC status, the answer is: definitely yes. Numerous benefits come with the status; a prime example would be the competitive financial advantages for your company. For example, companies with MSC status can get a tax exemption for statutory taxable income for ten years!
Not only that but you will also get Investment Tax Allowance (ITA) on qualifying expenditure. In other words, a certain amount of allowance will be allocated to your company for capital expenditure incurred during machinery purchases, constructions and provisions. Plus, you will be liable for duty-free importation as a part of the MSC Malaysia Bill of Guarantees initiative. This means that there will be no duties fee when you import multimedia equipment. As a start-up business, having an MSC status can be of crucial help.
In Malaysia, the licenses and permits you need may vary, depending on the state and city that you are in. Therefore, do call and speak to a local municipal office (also known as majlis perbandaran) to ensure that you have all the right licenses to operate. Company incorporation services in Malaysia can assist you in evaluating your business model and identifying relevant MSC status qualifying activities.
We Can Help You Get There
We get that starting an IT solutions business in Malaysia, all the more for the very first time, can be somewhat of a daunting task. There are many business procedures to go through and permits to apply before you can legally operate. Needless to say, setting up a business requires much of your time and focus to cover all the bases. But, what if you had a professional team to assist you step-by-step in your business incorporation journey?
That’s where 3E Accounting comes in. We are Malaysia’s leading accounting firm, ready to help your business take off the ground. Our expert team have extensive experience and expertise in navigating all sorts of business, legal and corporate affairs. We provide a full spectrum of business services and offer fully digitalized packages, all for a cost-effective rate. Contact 3E Accounting and learn how you can help to grow your business today!