Comprehensive Guide to Setting up Company in Malaysia by Foreigner
TABLE OF CONTENT
Malaysia has emerged as a popular destination for foreign investors due to its strategic location, friendly business environment, and stable political climate. As a result, setting up a company in Malaysia has become a popular choice among foreign investors. However, the process of setting up a company in Malaysia can be complex, especially for those who are not familiar with the legal and regulatory requirements. In this comprehensive guide, our DNBC Financial Group’s experts will provide you with step-by-step guidance on how to set up a company in Malaysia as a foreigner. We will cover the legal and regulatory requirements, as well as the practical considerations that you need to keep in mind while setting up a company in Malaysia.
Comprehensive Guide to Setting up Company in Malaysia by Foreigner
Steps to set up company in Malaysia by foreigner
Step 1: Choosing the Right Business Entity
The first thing that you need to do when setting up a company in Malaysia is to understand the types of companies that are available. There are four types of companies in Malaysia: Sole Proprietorship, Partnership, Limited Liability Partnership (LLP), and Private Limited Company (Sdn Bhd). As a foreigner, you are only allowed to set up a private limited company (Sdn Bhd).
A private limited company (Sdn Bhd) is a legal entity that is separate from its shareholders. It has its rights, duties, and liabilities. Setting up a private limited company is the most popular option for foreign investors because it offers limited liability protection, which means that your personal assets will not be at risk if the company goes bankrupt.
Step 2: Obtaining the Necessary Licenses and Permits >
Before you can start your business in Malaysia, you will need to obtain the necessary licenses and permits. The type of licenses and permits you will need will depend on the type of business you are setting up.
For example, if you are setting up a restaurant, you will need to obtain a food and beverage license. If you are setting up a construction company, you will need to obtain a construction license. It is important to research and understand the specific licenses and permits you will need for your business.
Step 3: Registering Your Business
Once you have chosen the right business entity and obtained the necessary licenses and permits, the next step is to register your business with the Companies Commission of Malaysia (SSM).
To register your business, you will need to prepare the necessary documents, such as the Memorandum and Articles of Association, Form 49, Form 24, and Form 44. You will also need to provide details about your business, such as its name, address, and nature of business.
Step 4: Opening a Bank Account
After registering your business, you will need to open a bank account in Malaysia. This will enable you to conduct business transactions, such as receiving payments from customers and paying suppliers.
To open a bank account, you will need to provide the bank with the necessary documents, such as your company registration documents and identification documents.
Or, you can open DNBC International Business Account, which allows you to save time and money. Without having to wait in line or make an appointment, you can open an international business account online. DNBC is a safe and stress-free method of payment. We offer cheap currency exchange rates for money transfers.
Step 5: Obtaining a Work Permit and Visa
As a foreign entrepreneur, you will need to obtain a work permit and visa to work and reside in Malaysia. There are several types of work permits and visas available, such as the Employment Pass and Malaysia My Second Home (MM2H) program.
To obtain a work permit and visa, you will need to provide the necessary documents, such as your passport, business registration documents, and proof of financial stability.
Step 6: Hiring Employees
If you plan to hire employees for your business, you will need to comply with Malaysia's labor laws and regulations. This includes registering your employees with the Employees Provident Fund (EPF) and Social Security Organization (SOCSO) and providing them with the necessary benefits and protections.
It is also important to draft employment contracts that comply with Malaysia's labor laws and regulations.
Step 7: Complying with Tax Requirements >
As a business owner in Malaysia, you will need to comply with the country's tax requirements. This includes registering for a tax identification number, filing tax returns, and paying the necessary taxes.
It is important to understand Malaysia's tax laws and regulations to ensure compliance and avoid penalties.
Helpful tips for saving money when setting up company in Malaysia by foreigner
Conduct thorough research
Before you even start the process of setting up your company in Malaysia, it's crucial to do your homework and conduct thorough research. This includes researching the local business environment, regulations, tax laws, and cultural norms. You should also research the market demand for your products or services, the competition, and potential partners or investors.
By doing your due diligence and gathering as much information as possible, you can avoid costly mistakes and make informed decisions. You can also identify areas where you can save money, such as by choosing a more affordable location or finding a cheaper supplier.
Take advantage of tax incentives
Malaysia offers several tax incentives for foreign investors, including tax exemptions, tax holidays, and tax incentives for specific industries. These incentives can significantly reduce your tax liabilities and help you save money when setting up your company in Malaysia.
To take advantage of these tax incentives, you'll need to meet certain criteria, such as investing in specific industries, hiring local employees, or meeting certain capital requirements. It's crucial to understand the requirements and limitations of each tax incentive to ensure that you're eligible and can comply with the regulations.
Hire a local expert
Setting up a company in Malaysia as a foreigner can be a complex and time-consuming process. To navigate the local regulations, cultural norms, and business environment, it's recommended to hire a local expert, such as a lawyer, accountant, or business consultant.
While hiring a local expert may seem like an additional cost, it can save you money in the long run by avoiding costly mistakes, ensuring compliance with regulations, and finding cost-effective solutions. A local expert can also help you network with local contacts, suppliers, and investors, which can lead to new business opportunities and cost savings.
Negotiate with suppliers
One of the most significant expenses when setting up a company in Malaysia can be the cost of supplies, equipment, and services. To save money, it's crucial to negotiate with suppliers and find the best deals.
You can negotiate with suppliers by comparing prices, requesting quotes from multiple vendors, and leveraging your purchasing power. You can also ask for discounts, bulk pricing, or payment terms that suit your cash flow.
About DNBC Financial Group
DNBC Financial Group is an international financial institution that offers businesses and individuals worldwide a smart digital payment system, a quick payment platform, and a simple online money transfer/receipt service .
The mission of DNBC Financial Group is to simplify global financial payments, to make day-to-day transactions run smoothly, and to ensure that customers always meet their payment deadlines.
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