The Companies Commission of Malaysia (SSM) introduced new qualifying criteria for audit exemption for certain private companies through Practice Directive No. 10/2024, which came into effect for financial periods commencing on or after January 1, 2025 . The objective of this directive is to alleviate the regulatory and financial burden on micro and small-to-medium enterprises (SMEs), allowing them to redirect resources towards business growth and innovation, while still maintaining essential financial accountability. Crucially, it also aims to mitigate the issue of a supply-demand gap resulting from the high demand for statutory audits and the limited number of approved auditors available in Malaysia. Under the revised framework, a private company qualifies for audit exemption if it can meet at least two (2) of the three (3) following criteria for the current financial year and the immediate past two (2) financial years Existing Audit Exemption Criteria The previous framework (Practice Directive No. 3/2017) grants exemption based on three categories, and a company must fulfill any one of the three (3) criteria for the current and immediate preceding financial years: Previous Audit Exemption Criteria Under  Practice Directive No. 3/2017 Companies need to fulfill any one of the following criteria Dormant Companies Companies with no significant transaction since incorporation or during the current and immediate past financial year. Zero-Revenue Companies Companies generating no revenue in the current and immediate past two years, with the total assets not exceeding RM 300,000 during the same period. Threshold-Qualified Companies Companies with the revenue and total assets not exceeding RM 100,000 and RM 300,000 respectively over the current and past two financial years, and employing not more than 5 employees New Qualifying Criteria for Audit Exemption Under Practice Directive No. 10/2024, a private company qualifies for audit exemption if it fulfils at least two (2) of the following three (3) criteria  over the current and immediate past two financial years . This criteria take effect for financial reporting periods commencing on and after 1st January 2025. New Audit Exemption Criteria Under  Practice Directive No. 10/2024 Companies need to fulfill at least 2 criteria Annual Revenue  The annual revenue of the company during the current financial year and in the immediate past two financial years do not exceed RM3,000,000 All income source including:  Business Income  Investment Income  Account Receivable Total Assets  The total assets of the company in the current statement of financial position and in the immediate past two financial years do not exceed RM3,000,000 Current Assets Non-Current Assets Number of employees The number of employees at the end of the current financial year and in the immediate past 2 financial years do not exceed 30. ✅ Employees include:  Local and foreign full-time employee  Contract workers  Employees under probation ❌ Employees exclude: Local and foreign full-time employee  Contract workers  Employees under probation Other Condition: Dormant Companies Companies which are dormant  since the time of incorporation, or; dormant during the immediate past and current financial year  Implementation Phase To ensure a smooth transition, the new criteria will be implemented gradually. The implementation will take place over three years, with an incremental increase in the thresholds for revenue, assets, and the number of employees. Year 2025 Phase 1 2026 Phase 2 2027 Phase 3 Financial period Commencing on or after 1st January 2025 until 31st December 2025 Commencing on or after 1st January 2026 until 31st December 2026 Commencing on or after 1st January 2027 Submission year Beginning from 1st January 2026 Beginning from 1st January 2027 Beginning from 1st January 2028 Threshold Turnover RM 1,000,000 RM 2,000,000 RM 3,000,000 Assets RM 1,000,000 RM 2,000,000 RM 3,000,000 Number of Employees 10 20 30 Companies That Are NOT Qualified for Audit Exemption Based on the criteria from SSM's Practice Directive No. 10/2024, a private company would NOT  qualify for an audit exemption if it falls into any of the following categories , even if it meets the financial and employee thresholds: Exempt Private Companies (EPC) Public / Listed Companies Subsidiary of a Public Company Foreign Company How to apply for Audit Exemption If the company meets the specified criteria and elected to be exempted from audit, the company is required to lodge the following documents with the Registrar:  Unaudited Financial Statements A Directors’ Report A Statement by Directors A Statutory Declaration Audit Exemption Certificate The company must still prepare a complete set of unaudited financial statements in compliance with a approved accounting standard - Malaysian Private Entities Reporting Standard (MPERS) or Malaysian Financial Reporting Standards (MFRS) Actually, it's the same as the financial statements submitted before,  just without the auditor's signature What Happen if Company is No Longer Qualifies for Audit Exemption If your company no longer qualifies for audit exemption, the status will be terminated.  For any subsequent financial year where it no longer meets the criteria, it will be required to undergo statutory audit and exemption for past year will remain valid .  Does Audit Exemption Affect My Companies Audit exemption can lower short-term costs, but companies should be aware of the potential risks .  Ultimately, it is not  an ideal choice for those focused on   long-term growth and development. Limited access to financing Banks and investor may prefer audited accounts for loan approvals and investments.  Tax Compliance Risk  Tax authorities may question the accuracy of financial statements. Credibility Concerns  Unaudited financial statement may be perceived as less reliable by stakeholders. Regulatory Compliance Issues  Lead to undetected errors or fraudulent practices, increasing the risk of penalties of underpay taxes or custom duties.

Entering into a partnership can be one of the most impactful decisions for entrepreneurs in Malaysia. This business structure is particularly favored by small business owners due to its collaborative nature and shared responsibilities. In this guide, you'll discover all you need to establish a partnership in Malaysia, complete with practical insights tailored for enterprise entrepreneurs. Understanding Partnership In Malaysia, a partnership, also known as an enterprise. A partnership is a business structure where two or more individuals come together to run a business, sharing responsibilities, profits, and liabilities. Requirements for Establishing a Partnership Who is eligible to setup a Partnership All partner must be a Malaysian Citizen or Permanent Resident of Malaysia . All Partner must be at aged 18 years and above . Only owner or partner is allowed to submit an application. Benefits of Partnership Running a partnership comes with several advantages: Easy and Quick to Register Establishing a partnership in Malaysia is quick and straightforward. You just need to complete a registration form and pay a nominal fee, usually around RM 60. The entire process can be completed in just a few days. Share Responsibility Partners can share the responsibility of the running of the business. This will allow them to make the most of their abilities. Rather than splitting the management and taking an equal share of each business task, they might well split the work according to their skills. Fewer Compliance Requirements    Unlike private limited companies, partnership enjoy a much lighter compliance load, making them easier to manage. For example, there is no need t o appoint a licensed secretary, auditor, or tax agent. This simplicity in regulatory obligations makes it an economical choice for micro-entrepreneurs and small business owners looking to minimize costs and streamline their business operations. Lower Annual Maintenance Cost Compared to Private Limited Company (Sdn Bhd), a partnership has the lowest annual maintenance cost due to fewer compliance requirement. Steps to Register a Partnership in Malaysia To Register a partnership, follow these steps: 1. Choose a Business Name Business may be registered using personal name or using a trade name. Personal Name - must be stated in the identity card is not required to apply for business name Trade Name - the name of the proposed business and must obtain prior approval from the Registrar of Business. 2. Complete Business Registration Form (Form A) You can choose to visit nearest SSM branch or submit online through ezBiz Portal Business name Commencement date of business Principal place of business The address of the branch of business (if any) Information of owner and partners Type of business carried out Photocopy of your Identification Card (IC) Business Name Approval Form (Form PNA.42) Registration Fee Fees for business registration are as follows: Partnership using Trade Name - RM60 per year A sole proprietorship uses its own name as stated on the identity card - RM30 per year Every Branch (if any) - RM5 per year Business Information - RM10 Note: Registration can be made within one (1) year and up to five (5) years Challenges Faced by Partnership While there are many benefits, partnership do encounter challenges: Unlimited Liability As a partnership, partners are personally responsible for all business debts and obligations. This means if the business incurs debt or gets sued, the partners’ personal assets could be at risk. Joint and Several Liability Each partner can be held fully liable for the actions of the other partners, which can increase individual risk even if they were not directly involved in the action that caused the liability. Limited Perceived Credibility Partnership might struggle to establish credibility, particularly when seeking bank loans or forming supplier partnerships. Lenders and suppliers may perceive partnerships as higher-risk ventures compared to larger corporations or limited liability companies (LLCs), impacting business opportunities and growth. Disputes Over Profit Distribution Profits must be shared among partners based on the agreed-upon ratio, which can lead to dissatisfaction if contributions are perceived as unequal. Disagreements over profit distribution can strain the partnership. Higher Tax Rates In a partnership, the business income is reported on each partner’s personal tax return. This can lead to higher overall tax liability, especially when certain income thresholds are reached Challenges in Succession Planning Partnerships tend to be closely linked to the partners' identities and personal engagement in the business, which complicates the process of transferring the business to others. Final Thoughts Establishing a partnership in Malaysia can be a beneficial endeavor for numerous entrepreneurs. This business model, characterized by its collaborative approach, shared duties, and the possibility of pooled resources, appeals to individuals aiming to merge their strengths and expertise. However, it is crucial to weigh both the benefits and potential challenges before making the decision. Proactively managing risks—through clear partnership agreements, regular communication, and strong mutual trust—is essential for success. This guide provides aspiring entrepreneurs with the essential knowledge needed for establishing a partnership in Malaysia. With a solid understanding of this business model, you can set the stage for a successful and sustainable entrepreneurial journey.

In Malaysia, one of the primary reasons business owners opt to establish private limited companies, such as Sdn Bhd (Sendirian Berhad), PLT (Partnership Limited by Shares), or Berhad (public limited company), is indeed to benefit from tax efficiency. Private limited companies typically enjoy lower corporate tax rates compared to personal income tax rates, allowing business owners to retain more profits within the company. This structure can lead to significant tax savings, especially for those with higher personal income tax brackets. Corporate Tax Rate (YA 2024 and onwards) The Inland Revenue Board (LHDN) applies differentiated tax rates based on company size and residency status. The current tax structure for the Year of Assessment 2024 and onwards is as follows: Details Net Chargeable Income Tax Rate Paid Up Capital less than RM 2.5 mil Gross Business Income less than RM 50 mil First RM 150,000 RM 150,001 - RM 600,000 RM 600,001 and above 15% 17% 24% Paid Up Capital more than RM 2.5 mil Gross Business Income more than 50 mil Non-Resident Company - 24% Corporate Tax Rate 2024 Condition to enjoy Preferential Tax Rate (15%)   MUST be Malaysian Resident Company Paid Up Capital NOT more than RM 2.5mil Income from business sources NOT more than RM 50mil If the company has a holding company , them holding company need to be Malaysian Resident Company No more than 20% of shares hold by foreign companies or NON-Malaysian citizens , either directly or indirectly.  Holding Company A holding company is a company that owns more than 50% of another company's shares, giving it control over that company. For example, if Company A owns over 50% of Company B, then Company A is the holding company of Company B  Holding Company

Incorporation of Sdn Bhd Setting up a private limited company (Sdn Bhd) is one of the most common methods for entering the Malaysian market. This type of company offers limited liability protection and is treated as a separate legal entity, meaning its debts and obligations are not tied to individual shareholders. The Malaysian government actively encourages business development and provides a relatively streamlined registration process. Basic Requirement & Information Under the Companies Act 2016, foreigner must prepare the below information to register a Sdn Bhd: Company Name Must be unique and NOT similar to existing company names. Should be in English Must end with " Sdn Bhd " Company Shareholders at least one shareholder Can be an individual or a corporate entity 100% foreign ownership is allowed Must have a residential address in Malaysia Company Director at least one LOCAL director must be at least 18 years old Must have a residential address in Malaysia Business Nature Up to 3 business activities Clear definition of primary business activity is needed Business Address A physical office or factory address is required Tenancy agreement must be in the company’s name. If do not have an office, a virtual office address may be used Financial Year End MUST set a company financial year end for annual report For FIRST year company may set within 18 months from date of incorporation Paid Up Capital No Minimum Required ，starting from RM1 Specific capital thresholds may apply if involving application of working permit / specific license Company Registration Process A licensed company secretary will guide you through the registration with the Companies Commission of Malaysia (SSM). When all required documents are complete, the process typically takes 3–5 business days . Step 1：Company Name Search Company Secretary will assists to check whether is the proposed name is available and not identical to any existing company. Step 2：Provide Registration Details to Company Secretary Providing basic information, including shareholder & director details, company address, business nature and others Company registration basic information Director and Shareholder Identification (Malaysian Identity Card (IC) / Passport) Company Secretary will based on the provided information prepare relevant forms / documents for incorporation. Step 3：Submit Application to SSM Company Secretary will submit all necessary documents to  Companies Commission of Malaysia (SSM) and pay the registration fee, RM1,010. Step 4：Successfuly Incorporated After the approval from the Companies Commission of Malaysia (SSM), the company secretary will issue the company registration certificate. This marks the official establishment of your company. The certificate contains essential information about the company, such as the company name, registration number, date of incorporation, and key details of shareholders and directors. Once you receive the company registration certificate, you will be able to legally conduct business activities, signifying that your company has officially entered the market and possesses a legally recognized identity. However, before actually commencing operations, there are several important initial setups that need to be completed to ensure that your company can operate smoothly and achieve its intended business goals. Essential Steps for Foreigners After Registering a Company in Malaysia Successfully registering a company is just the first step. Before officially commencing business operations, there are several important matters that need to be addressed. Here is a checklist  to ensure your company operates in compliance and smoothly in Malaysia. Essential Post-Registration Checklist: Open a company bank account Lease an office or business premises (sign a lease agreement) Apply for utility services - water (PBA), telephone and internet (TM), electricity (TNB) Apply for business licenses and permits Register for employer accounts We hope this guide will assist you in your entrepreneurial journey in Malaysia. If you have any questions, feel free to consult a company secretary or legal advisor at any time.

Suruhanjaya Syarikat Malaysia (SSM) has released a new version of the Malaysian Business Reporting System known as MBRS 2.0 on 25 September 2024. With the implementation of MBRS 2.0, companies are required to prepare, validate, and submit all financial data and information online through the MBRS 2.0 system. SSM will no longer accept counter submission . WHAT YOU NEED TO KNOW WITH THIS CHANGES Timely Preparation of Management Accounts Prepare your company’s management accounts within 3 months after the financial year-end to allow enough time for audit, tax, and company secretary teams to complete their tasks. Required Longer Preparation Time Company secretaries may need more time to enter and validate financial data through the M Tools system for MBRS 2.0 submission.

Starting a business in Malaysia requires you to first register your business with the Suruhanjaya Syarikat Malaysia (SSM). This step is essential for any business type, whether it's a sole proprietorship, partnership, or a Sendirian Berhad (Sdn Bhd). After completing this registration, you must also obtain various other licenses and permits. Business licenses can be divided into 3 main categories, which are: General Licenses Sector Industry Specific Licenses Activity Specific Licenses General Licenses Starting a business in Malaysia requires obtaining general licenses, which are essential for entrepreneurs to comply with local regulations and legal frameworks. These licenses represent the government's official authorization for individuals or companies to legally conduct business in the country. Business Premise License Signboard License Business Premise License In order to start the business operation, you need to apply business license from the respective local council (list of local authority in Malaysia) Sample of Business Premises Business License Signboard License A signboard license is a permit granted by local authorities in Malaysia, enabling you to legally display a signboard for your business. This is a mandatory requirement for all businesses in Malaysia. Signboard Guideline There is a specific design guidelines that your signboard must adhere in order to be approved and licensed by the local authorities. Operating without a valid signboard license or with a non-compliant signboard can result in fines and even the removal of your signboard. Signboard Guideline Sector / Industry-Specific Licenses Sector or industry-specific licenses are established by various government bodies to regulate certain types of economic activities, protect public interest, maintain industry standards, and align with national development policies. Licenses related to the Manufacturing Sector MIDA Licenses and Permission related to the Distributive Trade KPDN Licenses related to the Telecommunication Sector MCMC Licenses related to the Broadcasting Sector MCMC Licenses related to the Oil Exploration Sector PETRONAS Licenses related to the Construction Sector CIDB Licenses related to the Banking Sector BANK NEGARA License under Department BLESS , Ministry Of Entrepreneur Development (MED) License under the Department of Occupational Safety and Health Malaysia (DOSH) MyKKP License under the National Water Services Commission (SPAN) e-Permit Activity-Specific Licenses Activity-specific licenses in Malaysia are regulatory requirements that govern various sectors and activities. These licenses ensure that businesses operate within a framework of established guidelines, promoting compliance and accountability. Example of Activity-Specific Licenses are: Certificate of Fitness for Certified Machinery Approval for Expatriate Posts Approval to install/resite/alter Air Pollution Control Equipment (bag filter and chimney) Building Plan Approval Sales Tax License MySST Conclusion In Malaysia, it is essential for every business to apply for and secure the necessary licenses to operate legally. This involves not just one permit but a layered system of registrations, approvals, and permits that differ depending on the business type and its specific activities. Securing the appropriate licenses is essential for a compliant and successful business, starting with the initial company registration with SSM, obtaining a premise and signboard license from your local council, and potentially acquiring additional permits specific to your industry or activities.

If you plan to conduct business in Malaysia, choosing an appropriate legal structure is crucial. Among the various business entities available, the Sendirian Berhad (Sdn Bhd), or Private Limited Company, stands out as the most popular choice for formal businesses, mid-sized enterprises, and foreign companies. This article will provide a comprehensive overview of Sdn Bhd companies, covering their key characteristics, advantages, disadvantages, eligibility criteria, and the step-by-step process for registering a Sendirian Berhad company in Malaysia Understanding Sdn Bhd A Sendirian Berhad (Sdn Bhd) is a private limited company structure, registered under the Companies Act 2016 and supervised by the Companies Commission of Malaysia (SSM). It is the most prevalent business entity in Malaysia, favored by both local and foreign entrepreneurs. Why Choose Sdn Bhd in Malaysia Choosing a Sendirian Berhad (Sdn Bhd) in Malaysia offers a range of benefits that make it an appealing option for entrepreneurs: Steps to Incorporate an Sdn Bhd In Malaysia Steps to Incorporate an Sdn Bhd In Malaysia Statutory Compliance Requirement of a Sdn Bhd A Sdn Bhd (Sendirian Berhad) is a private limited company in Malaysia, and it is subject to various statutory compliance requirements. These requirements ensure that the company operates within the legal framework and maintains good corporate governance. Below are the key statutory compliance requirements for a Sdn Bhd: Statutory Compliance Requirement of a Sdn Bhd Disadvantages of Sdn Bhd While Sendirian Berhad (Sdn Bhd) companies offer numerous advantages, there are also some disadvantages to consider: Complex Statutory Compliance Requirements: Sdn Bhd companies are subject to stricter regulatory requirements, such as annual audits, filing annual returns, maintenance of statutory records and  various tax compliance obligations to ensure transparency and accountability. Higher Compliance Cost Higher compliance costs are a notable drawback of operating an Sdn Bhd. Companies often need to hire professional services, such as company secretaries, auditors, and tax consultants to meet complex statutory compliance requirement. Complex Decision-Making Process Decision-making in an Sdn Bhd can be slower and more complicated, especially when multiple shareholders are involved. This complexity arises because many decisions require board approvals or shareholder consent, which can hinder flexibility and slow down the decision-making process. Less Privacy Information about Sdn Bhds, including financial statements and shareholder details, is publicly accessible, which may be a concern for some business owners. Difficulty in Dissolution The stakeholder protection of an Sdn Bhd makes its dissolution process more complex and challenging. This involves strict regulatory compliance, final audits, settling debts, distributing assets, obtaining tax clearance, and legal procedures. These requirements enhance trust but add to the complexity of dissolving the company. Final Thoughts Establishing a Sdn Bhd in Malaysia can be a highly advantageous option for entrepreneurs. This business structure, characterized by limited liability, separate legal entity status, and the potential for tax benefits, appeals to those seeking to protect their personal assets while fostering credibility and professional growth. Nevertheless, it is essential to consider both the advantages and possible challenges before deciding. Successfully running an Sdn Bhd involves navigating complex regulatory requirements, managing financial audits, and ensuring compliance with tax obligations. Additionally, the intricate decision-making processes and complexities of dissolution necessitate careful thought. This guide equips aspiring entrepreneurs with the crucial information required to set up an Sdn Bhd in Malaysia. By gaining a comprehensive understanding of this business model, you can lay the foundation for a successful and enduring entrepreneurial venture.

Starting a sole proprietorship can be one of the most impactful decisions for entrepreneurs in Malaysia. This business structure is particularly favored by small business owners due to its simplicity in management and relatively easy regulatory requirements. In this guide, you'll discover all you need to establish a sole proprietorship in Malaysia, complete with practical insights tailored for enterprise entrepreneurs. Understanding Sole Proprietorship In Malaysia, a sole proprietorship, also known as an enterprise. A sole proprietorship is the simplest business structure, owned and managed entirely by one person . It is easy to set up , with low costs and minimal regulations . The owner is personally responsible for all business debts and liabilities. Requirements for Establishing a Sole Proprietorship Who is eligible to setup a Sole Proprietorship The owner must be a Malaysian Citizen or Permanent Resident of Malaysia . The owner must be at aged 18 years and above . Only owner is allowed to submit an application. Benefits of Sole Proprietorship Running a sole proprietorship comes with several advantages: Easy and Quick to Register Establishing a sole proprietorship in Malaysia is quick and straightforward. You just need to complete a registration form and pay a nominal fee, usually around RM 60. The entire process can be completed in just a few days. Full Control & Decision Making Power As the sole proprietor, you can make all business decisions swiftly and flexibly without needing approval from partners or shareholders. This allows you to implement changes and new ideas immediately. All profits generated by the business are yours to keep. Fewer Compliance Requirements    Unlike private limited companies, sole proprietorships enjoy a much lighter compliance load, making them easier to manage. For example, there is no need to appoint a licensed secretary, auditor, or tax agent. This simplicity in regulatory obligations makes it an economical choice for micro-entrepreneurs and small business owners looking to minimize costs and streamline their business operations. Lower Annual Maintenance Cost Compared to Private Limited Company (Sdn Bhd), a sole proprietorship has the lowest annual maintenance cost due to fewer compliance requirement. Steps to Register a Sole Proprietorship in Malaysia To Register a sole proprietorship, follow these steps: 1. Choose a Business Name Business may be registered using personal name or using a trade name. Personal Name - must be stated in the identity card is not required to apply for business name Trade Name - the name of the proposed business and must obtain prior approval from the Registrar of Business. 2. Complete Business Registration Form (Form A) You can choose to visit nearest SSM branch or submit online through ezBiz Portal Business name Commencement date of business Principal place of business The address of the branch of business (if any) Information of owner and partners Type of business carried out Photocopy of your Identification Card (IC) Business Name Approval Form (Form PNA.42) Registration Fee Fees for business registration are as follows: Sole Proprietorship using Trade Name - RM60 per year A sole proprietorship uses its own name as stated on the identity card - RM30 per year Every Branch (if any) - RM5 per year Business Information - RM10 Note: Registration can be made within one (1) year and up to five (5) years Challenges Faced by Sole Proprietorship While there are many benefits, sole proprietors do encounter challenges: Unlimited Liability As a sole proprietor, you're personally responsible for all the business debts and obligations. This means if your business incurs debt or gets sued, your personal assets could be at risk. Limited Perceived Credibility Sole proprietorships might struggle to establish credibility, particularly when seeking bank loans or forming supplier partnerships. Lenders and suppliers may perceive sole proprietorships as higher-risk ventures compared to larger corporations or limited liability companies (LLCs), impacting business opportunities and growth. Higher Tax Rates Depending on the revenue, a sole proprietor might end up in a higher personal income tax bracket. Since the business income is reported on your personal tax return, this can lead to higher overall tax liability once certain income thresholds are reached. Challenges in Succession Planning Sole proprietorships are often closely tied to the owner’s identity and personal involvement in the business. This makes it challenging to pass the business on to someone else, which can be a hurdle when planning for retirement or unexpected circumstances. Final Thoughts Establishing a sole proprietorship in Malaysia can be a gratifying venture for many entrepreneurs. With its straightforward registration, fewer compliance requirements, and the advantage of full control, this structure is appealing for individual business owners. However, it is crucial to weigh both the benefits and potential challenges before making the decision. Proactively managing risks—through diligent record-keeping, obtaining necessary permits, and separating personal and business finances—is essential for success. This guide provides aspiring entrepreneurs with the essential knowledge needed for launching a sole proprietorship in Malaysia. With a solid understanding of this business model, you can set the stage for a successful and sustainable entrepreneurial journey.

In Budget 2025, the Ministry of Finance introduced a significant reform by implementing a Dividend Tax. This new tax policy marks a pivotal shift in the way dividends, which are a portion of a company's earnings distributed to its shareholders, are taxed. Effective 1st January 2025, dividend income derived by individual shareholders will be subject to a rate of 2% dividend tax on chargeable dividend income after taking into account allowances and deductions.