Business Resource

Step-by-step Procedure to get a business license in Malaysia

Malaysia, the Southeast Asian nation with its dynamic perspective on global commerce, is attracting entrepreneurs to establish and carry out their business operations in Malaysia, which also legally mandates every legal entity to get a business license to comply with the regular set of rules that comprehensively guide the generic procedure of getting a business license in Malaysia. The respective authorities of Malaysia hold the right to allow relevant official permits and licenses to ensure the usage of certain properties and industries and the documentation of the business setups. The business license in Malaysia is ensured through the nature of the business or the determination of the industries in which the business is being carried out. The application of more than 300 types of business licenses in Malaysia can be ensured through Enterslice’s smooth process for license registration and renewal (whenever applied).

Prospective overview of business license in Malaysia

A business license in Malaysia is mandatorily required by all business enterprises registered following the revised provisions of the Companies Act of 2016. A business license acts as a business ID, i.e., the business identification card, to ensure the legal operation of the business setups in Malaysia. A business license means to get a legal business permit through the issuance of a document ID card by the government agencies of Malaysia granting specific business operations in the industry registered in accordance with the local, regional, and national regulations of Malaysia. The business license in Malaysia requires registration, approvals, and other permits to be ensured by the legislative and other administrative government agencies, statutory bodies, and local authorities established to ensure the smooth and legal conduct of business operations in Malaysia.

Different spectrums of Business License in Malaysia

It is important to understand the different spectrums of business licenses in Malaysia, which ultimately aids in securing the liability count of businesses registered and operating in Malaysia. Simply, a business license in Malaysia is categorized into three different spectrums of industries registered in Malaysia, namely, the general, industry-specific, and activity-specific licenses. The detailed explanation of all three types of business licenses in Malaysia is explained below.

General Business License

The general business license includes a list of necessary licenses and permits required at the time of incorporation of a business entity in Malaysia. The grant of a general license allows the business entities to conduct business operations at a specified location in accordance with the laws and regulations applied. The business units are held responsible for gathering the following licenses as provided below:

1. A business Premise License allows a business to establish and operate its operations at a specified place or location. The different types of business premise licenses in Malaysia include flower shop licenses, barber shop licenses, office licenses, shoe shop licenses, F & B Restaurant Licenses, etc.;
2. A signboard License or Signage Advertisement License is necessary for legal entities willing to display their signboard outside the premises or kiosk of the business that administers the size, design, and placement of the signboard for at least 1 year from the date of approval. The nature, name, and license number of the business must be mentioned on the signboard in Malay language;
3. A company Registration License, which is required for the registration of business entities with the Companies Commission of Malaysia, i.e., SSM;
4. A company income tax registration license is required to register or ensure the income tax of the employees enrolled in the business entity;
5. A license for Employees Provident Fund (EPF);
6. License for Human Resource Development Fund (HRDF) to support the training and development of the employees enrolled in the business entity;
7. SOSCO registration for a license (Social Security Organization) assures medical benefits and social security of the employees enrolled in the business entity, etc.

Industry-Specific Business License

The industry-specific business license in Malaysia is granted to a business enrolled in a particular industry or sector identified as having a unique nature or impacting public safety and welfare as identified by the Malaysian government. It is also known as a Sector-Specific Business License in Malaysia. Some of the examples of industry-specific business licenses include:

1. License granted to the manufacturing sector under the regulatory authority, i.e., MIDA;
2. License granted to the wholesale and retail trade industry by the Ministry of Domestic Trade and Consumer Affairs;
3. License granted to the telecommunication and broadcasting industry under the authority of Malaysian Communications and Multimedia Commission’s Office Portal;
4. Licenses and permits granted to the Construction and Real Estate Industry by the Construction Industry Development Board (CIDB);
5. License granted to the Banking Sector regulating under the aegis of Bank Negara Malaysia;
6. A license granted to the industries engaged in online services;
7. License granted to the Oil Exploration Industry;
8. Permits and licenses for starting public houses engaged in restaurant business engaged in the sale of liquor and alcoholic drinks, etc.;
9. License for establishing schools and colleges are required to be issued under the aegis of the Ministry of Education;
10. License granted for engaging in the travel and hospitality business through the Ministry of Tourism, Arts, and Culture Malaysia;
11. License granted to the media industry by the Malaysian Communication and Multimedia Center;
12. License for the food and beverage industry, including halal certification;
13. License for transportation and Logistics industry providing for land public transport license and freight forwarding license;
14. License to the healthcare industry allowing the grant of a medical practitioner, pharmacy, and private clinic licenses;
15. A license granted to the entertainment and leisure industry, such as clubs, karaoke lounges, and gaming businesses like casinos;
16. A business license is granted to the agriculture and plantation industry, etc.

Activity-Specific Business License

An activity-specific business license in Malaysia is granted based on the specific activities and operations of the businesses enrolled in the industries and other markets of Malaysia. The activity-specific license granted for carrying out specific business activities can be used in one or more business areas. A list of the activity-specific business licenses required by the business entities registered in Malaysia is provided below:

1. Grant of food handling and hygiene license;
2. Grant of trade license for handling trade-related activities like hawking, mobile vending, and selling alcohol;
3. Grant of license to the business engaged in activities of petroleum and explosives;
4.  Employment agency License granted to the business engaged in the employment and placement drives;
5. A waste management license is granted for the proper disposal and management of waste disposal by the business entities enrolled in Malaysia;
6. Mining license granted for carrying out the business activities of mineral exploration and extraction;
7. Event management license granted to the business entities engaged in managing social and corporate events and gatherings in Malaysia;
8. Lottery and betting licenses granted for carrying out lottery, betting, and gaming business in Malaysia;
9. Certificate or license for the fitness of certified machinery;
10. Grant of sales tax license;
11. Permit for endorsing a fire brigade;
12. Grant of building plan approval license;
13. Grant of license for a business engaged in direct selling;
14. Grant of health therapy license for carrying out massage parlour and sauna business, etc.

Significance of Obtaining a Business License in Malaysia

The significance observed in obtaining a business license in Malaysia after the completion of the procedure for business registration attracts the following benefits:

1. Avoid penalties and legal conformity of the business entities registered in Malaysia;
2. Aids in the protection of the interest of the consumers;
3. Adherence to the strict standards and other safety requirements for ethical practices in Malaysian business;
4. Provides opportunities for the growth and development of the business enterprises;
5. Ensures transparency, accountability, and legal compliance in the business environment of Malaysia;
6. Avoid disruptions to the business operations;
7. Also facilitates certain banking, record-keeping, borrowing, etc., operations of the business registered in Malaysia;
8. Easy access to foreign markets, etc.

How do you obtain business licenses in Malaysia?

Before applying for a necessary business license in Malaysia, it is important to first delve into the procedure for the registration of a legal business unit through the Companies Commission of Malaysia, i.e., SSM. Business License in Malaysia is a patterned procedure that is governed under the aegis of the Registration of Business Act of 1956. The steps required to get a business license in Malaysia are laid below:

Step 1: Determine the nature of the licenses required

The first step required after the registration of a business in Malaysia is to conduct proper business research to analyze the requirements and the nature of the licenses required for carrying out business operations in Malaysia. The factors that must be kept in mind during conducting business research include:

1. The timing of business registration;
2. The business activities for which the entity has been registered in Malaysia;
3. The ownership status of the business;
4. The geographical scope of the business registered in Malaysia;
5. The branches of the business (if any), etc.

Step 2: Gather relevant documents

The next step in the procedure requires gathering all relevant information and documents that aid the procedure to obtain a business license in Malaysia. The list of documents varies according to the nature and the requirements of the business license in Malaysia. Some of the common documents include:

1. The facsimile of the business registration certificate;
2. The facsimile of the financial statement of the business;
3. The facsimile containing the site plans;
4. A copy of the partnership agreement (if any);
5. A facsimile of certain grants, titles, rent or lease agreements;
6. The photo ID of the applicant;
7. The facsimile of construction certificate of occupation;
8. The complete facsimile of the SSM documents;
9. Photographs of the applicant;
10. Photographs of the business premise, the company’s signboard, etc.;
11. The facsimile of the Fire Department Support Letter;
12. A copy of the office layout plan;
13. A facsimile of the certificate of fitness for the business premises;
14. The list of products with relevant prices, etc.

Step 3: Prepare and complete the application

The next step requires you to download and fill out the application form following the research conducted to obtain a business license in Malaysia. The relevant information pertaining to the nature and operations of the business is to be recorded in the application form with the help of supportive documents.

Step 4: Make necessary payments

Making the necessary payments to obtain a business license in Malaysia is the next crucial step mandatorily required by every business filing an application for a business license in Malaysia. The payment of the government fees for obtaining the business license is to be made before the submission of the application for the business license in Malaysia. The payment for the business license is admitted only in certain situations:

1. If the payment is made in cash,
2. If the payment of fees is made through money order,
3. If the mode of payment is through remittances,
4. A bank draft is used to make payments of the prescribed fees;
5. If the payment is accompanied by a credit card,
6. If the payment is a government fee, it is directly made payable to the bank’s counter.

Step 5: File and submit the application

The next step after the payment of the fees requires for the submission of the license application to the local authorities of Malaysia namely the town or local council along with a copy of an Assessment Receipt of the business. The submission of the application form may be accompanied through online mode, by mail, or in person to the Dewan Bandaraya Kuala Lumpur (DBKL).

After the submission of the application form is complete the applicants need to wait till the processing of the application is complete by the Malaysian government which might differ according to the nature of the business license applied for. The standard time required for the approval of the business license in Malaysia ranges somewhere between 1 to 6 months.

Step 6: Obtain a Certificate of Approval or License

On the approval of the application form for obtaining a business license in Malaysia, the Malaysian government issues a certificate or professional license to the business authorities for at least 1 year, which enables a duty to adhere to the conditions stipulated in the business license. The procedure does not end at this point. On the contrary, it requires the legal entities to renew the business license from time to time.

Conclusion

It is mandatory to obtain business licenses and required permits by every business entity crucial to legally incorporate business in Malaysia. The business license in Malaysia is granted based on the nature of the business and industry for which the license is mandatory. The importance of getting a business license registered in Malaysia varies according to the type of license required to ensure the legality of the business registered in Malaysia.

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