Setting Up a Sole Trader in Malaysia

Updated on Friday 29th September 2023

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Setting up a sole trader in Malaysia requires only a few simple steps for registration. This is why this business form is a popular one for young entrepreneurs or for those who have just decided to start their own business and become self-employed. At our law firm in Malaysia, we can provide adequate legal advice regarding the liabilities that arise when deciding to open this type of business.
 

Registration steps of a sole proprietorship in Malaysia


If you have decided to set up a sole trader in Malaysia and you want to know what the necessary documents in this endeavor are, we invite you to discover some of the most important ones:
 
  • The registration form can be found at the Companies Commission in Malaysia (SSM).
  • This form must be completed with personal data, the proposed name for the company, the type of activities, business address, etc.
  • Establishing a sole trader in Malaysia also requires obtaining a letter of approval from a local or national government agency.
  • One of the SSM agents can check the name requested for a sole trader in Malaysia, to ensure that it is valid.
  • Payments for sole trader registration in Malaysia follow: RM 30 per year for using the personal name or RM 60 for using a specific trading name.
  • Once the necessary payments are made and the certificate of incorporation is issued, sole proprietorship in Malaysia can work.

We remind those interested that they could opt for the services offered by one of our lawyers in Malaysia. They can take care of the formalities and documents, which will then be registered with the relevant authorities.
 

How long can a sole proprietorship be registered in Malaysia?


Normally, a sole trader in Malaysia can be registered in about 30 days, once the SSM approves the submitted documents. We recommend that for a correct and quick establishment of a sole trader in Malaysia, you talk to one of our specialists. We have a team ready to guide you from the very beginning and explain all the legal aspects.
 

Are there funding options for sole traders in Malaysia?


Yes, those who operate in Malaysia as sole traders can opt for the loan offers offered by local and international banks. Several financial options can be accessed both by young entrepreneurs up to 30 years old, as well as by those with a solid business background. If all the conditions required by the banks are met, then the financing is done quickly and without complexity.
 

Taxation for sole proprietorship in Malaysia


One of the interesting aspects of the sole trader is the fact that there is no distinction between the owner and the business registered in Malaysia. Starting from this aspect, the business owner is directly responsible for profit and losses, and income tax ranges between 2% and 26%. An advantage in this regard is the fact that only one tax return document is completed. In a case where you need a tax advisor to explain to you what it means to tax a sole proprietorship in Malaysia, we recommend that you trust our company.
 

Why is a sole proprietorship in Malaysia a great option for investors?


The sole proprietorship is the first option for those who want to start a small business. This business is run by the founder himself and there is no distinction between the company and the individual. This means that the sole proprietor is liable for all of his assets. 

The sole trader is the simplest business form in Malaysia and also the easiest to set up. Tax obligations also arise for these self-employed individuals who derive income from the country and spend more than a certain amount of days in Malaysia during each tax year.

One of the experts at our law firm in Malaysia can give you specific details about taxation for sole proprietors and information about the double tax treaties and how or if they apply if you are a foreign investor in the country. 

Citizens who want to apply for residency in Malaysia can discover the services offered by our lawyers experienced in immigration issues. Thus, they will assure the clients that all the necessary documents are prepared properly. Also, they will be in permanent communication with our lawyers to know at what stage the respective process is. What is good to know is the fact that residency can be obtained for an indefinite period, meaning that you no longer need to apply for permanent residency after the temporary one.
 

What are the advantages of a sole trader in Malaysia?


The sole trader is an advantageous business form for certain investors.  Here is why:
 
  • It is usually the first step for those who want to provide consulting services, small traders, and entrepreneurs.
  • This business form needs to be registered with the Companies Commission.
  • The registration needs to take place within 30 days following the commencement of the business.
  • The sole trader is the only one liable for the debts and responsibilities of his/her firm in Malaysia.

If you want to know more about how a sole trader can be established in this country, feel free to discuss further details with our Malaysian lawyers. On the other hand, those interested in relocation can get in touch with our immigration lawyers in Malaysia.
 

Some facts about Malaysia's economy


When you set out with a business idea in a certain destination, it is very important to familiarize yourself with the business climate, the country's economy, the tax system, and other such aspects. It is also valid for Malaysia, and in the following lines you can get an idea of the country's economic direction, before starting a business on your own:
  • Q1 of 2023, registered an economic expansion at a jump of 5.6% year-on-year in Malaysia.
  • The manufacturing sector in Malaysia is one of the most important. In this sector, there was a slight increase registered, of approximately 3.2% y/y in Q1 of 2023.
  • Another sector of interest in Malaysia is the services field. This area experienced a rapid growth in Q1 of 2023, of approximately 7.3% y/y, after an expansion of about 9.1% y/y recorded in Q4 of 2022.

You can find out more about other types of legal entities in Malaysia from our experts. If you need legal advice on how to invest or open a company in the country please do not hesitate to contact our lawyers in Malaysia.