Sole Proprietorship Registration in Malaysia

Sole Proprietorship in Malaysia

The meekest form of business ownership in Malaysia is sole proprietorship. Compared to larger businesses, this type of business is not a distinct entity from the owner. In a sole proprietorship, the owner and the company are the same, and the whole lot you earn from your business will count as your income.

Malaysia's business is at its peak presently for new businesses. With a GDP value of $354.348 billion, Malaysia's economy is at an all-time high. However, Malaysia has the affluence of doing business with the rank of 15 out of 180 countries. The most communal business to take in Malaysia is Sole Proprietorship.

Benefits of Sole Proprietorship Registration in Malaysia

There are a lot of advantages to Sole Proprietorship registration in Malaysia. The important benefits of the sole proprietorship registration in Malaysia are mentioned below

You have authority

If you register a sole proprietorship in Malaysia, the sole proprietor will have full control and decision-making authority over the company. All profits will be transferred immediately to the company owner's account.

Corporate Tax

A sole Proprietorship is not legal, so all the chargeable income will be taxed at the owner's income tax rate, which means there is no corporate tax if you register a Sole proprietorship in Malaysia.

Low annual fees

The lowest yearly maintenance fee is for a Sole Proprietorship compared to a Private Limited Company (Sdn. Bhd), Partnership, or Limited Liability Partnership.

Low rigid regulations

If you register a sole proprietorship in Malaysia, you will see that because the majority of the owners are small business owners, there are fewer laws and regulations that have to be followed in a sole Proprietorship.

Easy to wind up

Your sole Proprietorship can easily be wound up by visiting the Malaysian Companies Commission (SSM), or it can be closed automatically if you don't pay your yearly fees on time.

Entry Conditions

If you do sole proprietorship registration in Malaysia, it is the most common and easiest business structure, and any permanent resident or Malaysian citizen can register.

Documents needed for Sole proprietorship registration in Malaysia

The documents which will be required during the process of Sole Proprietorship registration in Malaysia are mentioned below

• Identity card copy
• Your copy of the permit, approval, license, or any other relevant documents
• Information about your business name and activities

Steps for Sole Proprietorship Registration in Malaysia

If you want to kick-start your business, the steps for Sole Proprietorship registration in Malaysia are mentioned below:

Step 1- Pick your business name

For Sole Proprietorship registration in Malaysia, the name you choose can be the same as on your identity card or any name. If you choose a different name, you should give three possible names to be examined. Also, you will have to complete the Business Name Approval Form (Form PNA.42) if the name chosen is different.

Complete Form A

For sole proprietorship registration in Malaysia, the next step is to fill out the business registration form. This form is titled Form A, which will need the following details for completion

• Business Name
• Type of Business to be registered
• Date of business commencement
• The main address for business
• Owner's information, which includes clear copies of the owner's ID card or PR permit

Submit application

• For the submission of the application, you will need the following:
• You have to complete the Form PNA.42 and Form A
• Documents that have all the details of business activities proposed
• Relevant permits

Fee payment

For Sole proprietorship registration in Malaysia, you will be liable for the following fees:

• RM 60 as the registration Fee
• For the printout of business activities, RM 10
• The naming fee if you are not using the name on your identity card is RM 30
• After all the required fees are paid, you will receive your certificate of registration in one day or on a particular business day.

Requirement for Sole Proprietorship Registration in Malaysia

If you want to do Sole proprietorship registration in Malaysia, then there are particular requirements for the whole process, which are mentioned below:

• The owner should be a Malaysian permanent citizen or a Malaysian citizen
• The owner should be a minimum of 18 years old
• Only the owner is allowed to apply

Penalty for not doing Sole Proprietorship registration in Malaysia

As given in the Companies Act 2016 in Malaysia, there are some penalties if you are caught doing business without doing sole proprietorship registration in Malaysia. Depending on the situation and the business, there can be a single penalty or multiple penalties for your crime. This process is only to ensure the safety of Malaysian citizens in case any illegal business activities are carried out in Malaysia. The Penalties are stated as follows:

• Fine up to RM50000
• Jail time of two years
• In several cases, both situation

Tax Registration in Malaysia

After you have completed your sole proprietorship registration in Malaysia, you will have to register as a taxpayer. You can do that in two ways

• You have to attach your Malaysian identity card by using E-Drafter
• Or, if you are heading to Lembaga Hasil Dalam Negeri (LHDN office) with the above-mentioned documents, you have to add a copy of your latest salary slip and a copy of your marriage certificate, if relevant.

Your application will be approved in at least three days, after which you will need to call the LHDN hotline for your income tax number.

After your application has been approved, you must call the LHDN hotline to obtain your income tax number.

After your application is approved, you must register for the e-filing. You will also need a PIN for the first time login, and for that, you must go to the LHDN office. After you have the PIN, visit the e-filing website.

Service Tax

The consumption tax imposed on taxable services, with a rate of service tax of 6%, is the service tax. You will be liable to register when the total value of the table services for the 12 months exceeds or is expected to exceed the prescribed registration threshold for different categories of business. The service tax payment will be on a bi-monthly basis.

Corporate Tax

The companies who are residents with a paid-up capital of less than MYR 2.5million and gross income from business sources that should not surpass MYR 50 million will be taxed 17% on the first MYR 600,000 of the chargeable income and at the average rate on the balance above MYR 600,000.

Tax Rules for the Sole Proprietorship in Malaysia

When you do Sole proprietorship registration in Malaysia then, some tax rules have to be followed, which are mentioned below

In Malaysia, there is no difference between a Sole Proprietorship and a Natural person who owns their business. Pass-through entities are called sole proprietorships, which means that earnings and losses are passed to the business owners; as a result, no separate tax return filing is needed.

Sole Proprietorships in Malaysia will be subject to income tax on a gradual scale based on individual income, which ranges from 2% to 26%.

In a sole Proprietorship in Malaysia, one should pay the following taxes

• Self-employment tax
• Social Security tax
• Property tax

Factors to consider for naming Sole Proprietorship in Malaysia

As you already know, your company's name is the most important part of the whole process of sole proprietorship registration in Malaysia. It will be the first impression that your customers, suppliers, and stakeholders will have. Therefore, your company name should be relevant and attractive.

While you are naming your business, you have to consider some aspects, which are mentioned below:

Short and upfront

The business name must be short and not very lengthy. The consumer should be able to pronounce and remember your business name correctly whenever they hear it for the first time.

Relevant name

The company name you choose for your business should be relevant and reliable, matching the company branding and corporate identity.

Specialty

Your business name must not be similar to or identical to that of another company or trademark. If you use an existing company name, you must try to avoid making it plural or varying merely the letter case, spacing, or punctuation marks.

What services Enterslice can provide?

At Enterslice, we offer inclusive services for Sole Proprietorship Registration in Malaysia, helping entrepreneurs who want to establish their businesses easily and comply. Our experts will guide you >through registration, ensuring you obey legal requirements. Enterslice is your reliable partner in navigating the complications of establishing Sole Proprietorship registration in Malaysia. We offer you personalized assistance when embarking on your business journey. We at Enterslice are dedicated to streamlining your path to success.