Compliance

How to Register a Sole Proprietorship in Malaysia

Back to blog
November 18, 2020
Contents
Hiring independent contractors on Deel
Hiring full-time employees on Deel
How do payments happen on Deel?
Deel is free for contractors
Deel pricing for companies
See Deel in action
You pay for Deel now, yes?
Try Deel
Back to blog


Malaysia is a country in Southeast Asia comprising 13 states. In the last 50 years, Malaysian GDP grew averagely 6.5% per year. Malaysia has a newly industrialized market economy, ranked third largest in Southeast Asia, and 33rd-largest in the world. This data proves that Malaysia is a great country to start a business. In this article, we will take you through the process of registering as a sole proprietor.

Disclaimer: Be aware that this article is not a substitute for legal advice. Please always check official websites or seek legal advice before you take action.

Sole proprietorship in Malaysia

Owners of sole proprietorships have unlimited liability, and they are the only ones responsible for the business’s capital and profits. Being a sole proprietor in Malaysia has its benefits:

  • It requires less paperwork and fewer additional legal formalities
  • The cost of incorporation is much lower
  • The registration process is fairly straightforward
  • The Malaysian government exempts sole proprietorship from certain audits

How to register a sole proprietorship

The registration of your new business should not last more than 30 days. It can be done in person at the Companies Commission of Malaysia (SSM) or online. The next step would be completing Form A, with the following requirements:

  • Business name 
  • The commencement date of business
  • Principal place of business
  • The address of the branch of business (if any) 
  •  Information of owner
  • Type of business carried out

Choosing a business name

The business may be registered using a personal name or using a trading name. You can choose to operate under your legal name, as stated in your legal documents. If you opt for trading under a separate name, you should complete the approval name form. When choosing a business name, make sure the name is following the Rules of Business Registration. When you fill the approval name for and Form A, you should submit both forms to the SSM head office. The annual fee for registering under the personal name is RM 30, and for registering trade name RM 60.

Registration of the sole proprietorship

Upon registering, you are required to attach more relevant documents:


To register a sole proprietorship in Malaysia, the following criteria must be fulfilled:

  • The owner must be a Malaysian citizen or permanent resident of Malaysia
  • The owner must be aged 18 years and above
  • Only the owner is allowed to apply.


Keep in mind: Even though businesses have been registered with SSM, business owners are responsible for obtaining licenses, permits, or approval letters from other relevant authorities to operate their businesses.

SSM will issue a Certificate of Incorporation upon compliance with the incorporation procedures and requirements.

Contracts

Ensure compliance with our localized contracts

Generate contracts in seconds. We’ll ensure that you're complaint with local labor laws, no matter where you live.

Learn more

Tax Registration in Malaysia

Once you register your sole proprietorship, your next step would be to register yourself as a taxpayer. You can manage that in two ways:

  • Using E-Draftar, by attaching your Malaysian identity card (MyKad);  
  • Or heading to LHDN Office (Lembaga Hasil Dalam Negeri): in addition to all the above documents, you will also need a copy of your latest salary slip and a copy of your marriage certificate (if applicable). 


It takes three days to have your application approved, and after that, you should call the LHDN hotline to get your income tax number. 

Once your application has been approved, you will need to register for e-Filing. You’ll need a PIN for the first-time login, and to get one, you will have to go to the nearest LHDN office in person. Once you have the PIN, visit the e-Filing website and click on “Login Kali Pertama”.

Service Tax

Service Tax is a consumption tax levied on taxable services where the rate of service tax stands at 6%, required for the business with a minimum threshold of MYR 500,000 a year. It is a single-stage tax charged once by the service provider. There will be no input or exemption mechanisms available for service tax. The submission is on a bi-monthly basis.

Corporate Tax

The corporate tax rate for resident small and medium-sized enterprises (with capitalization under MYR 2.5 million) is 17% on the first MYR 600,000 and 24% above MYR 600,000.

Benefits of using Deel

Relying on Deel to manage the contractors you decide to hire will help you get your sole proprietorship on the right foot. Our experienced teams work towards

providing you the most streamlined contractor experience. With Deel, you can:

  • Have a centralized platform that takes care of all the documentation, such as contracts, invoices, and compliance documents.
  • Manage payments in different currencies and withdraw with a payment method of your choice (SEPA, PayPal, Payoneer, or bank transfer).
  • Get 24/7 access to customer support and a team of experts

Hiring remotely?

Legally hire anyone, anywhere in the world, run payroll in 100+ currencies.

Deel's partnered with 100+ labor law experts so you can pick from the library of localized contract templates and legally onboard your international teammate in minutes.

From onboarding to payroll, Deel team has you covered.