In Malaysia, you register a business online with the Companies Commission of Malaysia (SSM) in one of four forms: a sole proprietorship, a partnership, a private limited company (Sdn Bhd) or a limited liability partnership (LLP), with sole proprietorships and partnerships in Sabah and Sarawak the main exception. The cheapest is a sole proprietorship under your own name, at RM30 a year, while a Sdn Bhd costs RM1,000 to incorporate, according to SSM’s comparison of business entities.

The fee is the smallest part of the decision. Before you register a company in Malaysia, or settle for a simpler business registration, answer three questions: who carries the debts if the business fails, who is allowed to own it, and how much yearly paperwork you are prepared to keep up.

This guide sets out SSM’s rules for each structure so you can see the trade-offs side by side. It explains the rules; for advice on your own situation, speak to a company secretary, lawyer or tax agent.

The four structures at a glance

The table below summarises SSM’s own comparison of business entities in Malaysia, with fees from its business and company fee tables.

The single biggest line in that table is personal liability. In a sole proprietorship or partnership, the business and its owners are legally the same, so a business debt can be pursued against your house, car and savings.

A Sdn Bhd and an LLP are separate legal entities, which puts a wall between the business’s debts and your personal assets. Any personal guarantee you sign, for a bank loan for example, still binds you personally.

Sole proprietorship: the simplest start

A sole proprietorship is a business wholly owned by one individual, registered under the Registration of Businesses Act 1956. You can trade under your own name as it appears on your identity card, or under a trade name such as “ABC Trading”, SSM’s comparison table explains. A business registered under a personal name cannot take in a partner.

Who can register one

The owner must be a Malaysian citizen or permanent resident aged 18 or above, and only the owner may submit the application, under SSM’s guidelines for registering a new business. Foreign nationals without permanent residence therefore cannot use this route and need to look at a company or an LLP instead.

Geography matters too. The same SSM guidelines say the Registration of Businesses Act covers businesses operating in Peninsular Malaysia and the Federal Territory, so a sole proprietor or partnership based in Sabah or Sarawak should check the state’s own registration rules. Companies and LLPs, by contrast, are formed under federal Acts that SSM administers.

Fees, timing and renewal

Registration costs RM30 a year under a personal name or RM60 a year under a trade name, according to SSM’s table of fees. Each branch adds RM5 a year, and you apply through SSM’s EzBiz online portal after creating a user account.

You must register within 30 days of starting the business, and each registration can run for one to five years, the same guidelines say. Renewal is due within the 30 days before the registration expires, and changes such as a new address or business activity must be registered within 30 days, under SSM’s note on the responsibilities of owners and partners.

What you must display

Your registration certificate must be displayed at your main premises, with a signboard showing the business name and registration number outside. The name and number also go on your letterhead, invoices and bills, the same SSM note says.

If you sell online, the rules go further. Since 7 May 2020, online businesses must show their name and registration number on their website, social media pages and online marketplace listings, SSM said in its announcement of the rule change. An online business with no physical premises is treated as operating from the owner’s home address.

The cost of not registering

Carrying on a business without registering it, or after the registration has expired, is an offence under the Act. On conviction, the penalty is a fine of up to RM50,000, imprisonment of up to two years, or both, according to SSM’s note on owners’ responsibilities.

Registration with SSM is also not a licence to trade. Depending on what you do and where, you may still need a premises licence from your local council or a permit from a ministry or agency, which SSM reminds owners to obtain separately.

How the profit is taxed

A sole proprietorship has no tax identity of its own: its profit is part of your personal income. LHDN’s individual tax rate table for years of assessment 2023 to 2025 rises in steps to a top rate of 30%. That top rate applies to chargeable income above RM2 million.

Partnership: two to twenty people, shared risk

A partnership is registered under the same Act and the same EzBiz portal as a sole proprietorship, with the same RM60 yearly fee for a trade name. It must have between two and twenty partners and must use a trade name, not a partner’s personal name, under SSM’s comparison table.

The defining feature is liability. Each partner has unlimited liability, jointly and severally with the partnership, which can extend to personal assets. Joint and several liability generally means a creditor can pursue any one partner for the whole of a partnership debt, not just that partner’s share.

SSM records who the partners are; it does not decide how they share profit, make decisions or leave. Those terms are for the partners to agree between themselves, and a lawyer can set them out in a written partnership agreement. If a partner dies, the remaining partners can either file a notice ending the business within 30 days or apply to remove the deceased partner and carry on, the comparison table notes.

Sdn Bhd: the private limited company

A private company limited by shares, the familiar “Sdn Bhd”, is incorporated under the Companies Act 2016. It is a separate legal entity: it owns its assets, signs its own contracts and carries its own debts, and shareholders’ liability is limited to any amount unpaid on their shares, according to SSM’s comparison table.

What you need to incorporate

A private company needs at least one director who ordinarily resides in Malaysia, meaning his or her principal place of residence is in Malaysia, and at least one promoter, according to SSM’s page on starting a company. A Sdn Bhd can have one to fifty shareholders.

You also need a registered office address in Malaysia and the particulars of every director and promoter. A written constitution is optional for a company limited by shares.

Within 30 days of incorporation, the company must appoint a company secretary, the same SSM page says. The role needs a qualified company secretary, as SSM’s comparison table notes, which is why owners without that qualification engage a licensed secretary or a secretarial firm.

The incorporation process

Applications are made online through SSM’s MyCoID system, in one of two ways. Direct incorporation combines name reservation and incorporation in one application. Alternatively, you reserve a name first and then submit the incorporation within 30 days of approval, or a longer period the Registrar allows, up to 180 days.

The incorporation fee is RM1,000 for a company limited by shares, according to SSM’s company fee table. Reserving a name separately costs RM50 for every 30 days. SSM issues a registration notice; a certificate of incorporation is issued only if you apply for one and pay the prescribed fee.

Beneficial ownership: who really owns the company

Since 1 April 2024, Division 8A of the Companies Act 2016 has required every company to identify, verify and record its beneficial owners, the real people who own or control it. The company must lodge that information with SSM within 14 days of recording it, through the Electronic Beneficial Ownership System (e-BOS), under SSM’s Practice Directive 9/2024.

Lodging beneficial ownership information is free, and the directive says the framework provides no exemption for any class of company.

The yearly obligations

Every company lodges an annual return within 30 days of the anniversary of its incorporation, and a private company lodges its financial statements within 30 days of circulating them to members, SSM’s comparison table sets out. These are the filings that make a Sdn Bhd more demanding than a sole proprietorship.

For a private company, the annual return costs RM150 to lodge, according to the company fee table. Lodging financial statements costs RM50 if they are audited or RM20 if not. Beyond these fees, budget for the professional work behind them: the secretary’s retainer, bookkeeping and, unless the company qualifies for exemption, an audit.

Who can skip the audit

Private companies must normally appoint an auditor every financial year. SSM’s Practice Directive 10/2024, issued on 16 December 2024, lets a private company skip it if it meets at least two of three tests on revenue, total assets and employees, in the current year and the two years before.

The limits rise in three steps, and each step applies to financial periods beginning in that year:

Dormant companies remain exempt. The exemption does not apply to a subsidiary of a public company, to a public company, to a foreign company, or to an exempt private company that has chosen to lodge an exempt private company certificate, the directive adds. Whether a company qualifies is a judgement on its own figures, so confirm it with your company secretary or accountant before deciding not to appoint an auditor.

Two further conditions in the directive matter in practice. An exempt company still lodges unaudited financial statements with the required certificate, and it must have its accounts audited if voting members holding at least 5% of its issued shares, or the Registrar, give written notice in time.

How a company’s profit is taxed

A company pays income tax in its own name, at a standard rate of 24%. Smaller companies pay lower rates on part of their income, as LHDN sets out in its Public Ruling No. 8/2025 on micro, small and medium companies.

To qualify, a company must be resident and incorporated in Malaysia, with paid-up capital of no more than RM2.5 million at the start of the basis period. Its gross business income must also stay within RM50 million.

From the year of assessment 2024, the ruling adds an ownership test: a company does not qualify if more than 20% of its paid-up capital is owned, directly or indirectly, by foreign companies or by individuals who are not Malaysian citizens. Links to a larger related company can also rule a company out.

The conditions are LHDN’s to apply, so ask LHDN or a tax agent which rate applies to your company and year of assessment.

LLP: limited liability with a partnership’s flexibility

A limited liability partnership, or PLT in Malay (Perkongsian Liabiliti Terhad), is registered under the Limited Liability Partnerships Act 2012. SSM describes it as a vehicle that combines features of a company and a conventional partnership: the partners get limited liability, while the internal rules are set by the partners’ own agreement, according to its page on starting an LLP.

Who can form one

An LLP needs at least two partners, who may be individuals or bodies corporate, and there is no maximum. It is open to any lawful business carried on for profit, and SSM names professionals such as lawyers, chartered accountants and company secretaries among its intended users, along with SMEs, joint ventures and venture capital.

Every LLP must appoint a compliance officer, who registers the LLP and handles its filings. The compliance officer must be one of the partners or a person qualified to act as a company secretary, aged at least 18, a Malaysian citizen or permanent resident, and ordinarily resident in Malaysia, the same SSM page says.

Fees and filings

Registration through SSM’s MyLLP portal costs RM500. Instead of an annual return and financial statements, an LLP lodges an annual declaration within 90 days of the end of its financial year, with the first due within 18 months of registration, under SSM’s comparison table.

An audit is not compulsory unless the LLP agreement provides for one. This lighter routine is the clearest practical difference from a Sdn Bhd.

Beneficial ownership for LLPs

LLPs also carry a beneficial ownership duty. The first phase of the Limited Liability Partnerships (Amendment) Act 2024 took effect on 31 January 2025, and LLPs had to lodge beneficial ownership information through e-BOS LLP from 30 May 2025, according to SSM’s 2025 regulatory update. From 1 November 2025, SSM said late lodgement fees would apply and enforcement action would be taken for non-compliance.

Converting to an LLP

An existing conventional partnership, private company or conventional professional firm can apply to convert into an LLP, according to SSM’s page on LLP conversion. Only the compliance officer can lodge the application.

The conditions differ by starting point. A partnership converts with the same partners and must appear able to pay its debts as they fall due. A private company must also have settled its statutory fees, advertised its intention in a newspaper and the Gazette, and obtained the agreement of all its creditors and shareholders.

Which structure fits which situation

No structure is right for everyone, but SSM’s rules point in clear directions for common situations. Read these as a map of the rules, not a recommendation; your own figures and plans decide.

• Testing an idea on your own, with little at stake. A sole proprietorship has the lowest cost and the lightest paperwork, but you carry every debt personally.
• Two or more people starting together. A partnership is cheap, but each partner can be pursued for the firm’s debts. An LLP gives the same people limited liability for an RM500 registration and an annual declaration.
• Planning to bring in investors or issue shares. Only a company has share capital, so a Sdn Bhd is the structure built for selling a stake or adding shareholders.
• Founders who are not Malaysian citizens or permanent residents. Sole proprietorships and partnerships are closed to you, which leaves a company, which needs at least one director who ordinarily resides in Malaysia, or an LLP, which needs a compliance officer who is a citizen or permanent resident. A company more than 20% owned by non-citizens or foreign companies also misses the lower tax rates for smaller companies, under LHDN’s public ruling, and any licensing rules for your sector still apply.
• Professional firms. SSM’s LLP pages name lawyers, chartered accountants and company secretaries among the professionals who can practise through an LLP, subject to their own professional body’s rules.

Tax can shift the answer either way. Company rates and personal rates are set on different scales, and the way you take money out of a company, as salary, director’s fees or dividends, has its own tax treatment. A tax agent can run the numbers on your expected profit.

What applies whichever you choose

Some obligations follow the business, not the structure. Three are worth planning for from the start.

• Licences. SSM registration does not replace a premises licence from your local council or approval from a sector regulator, as SSM’s note on owners’ responsibilities points out.
• e-Invoicing. Whether you must issue e-invoices depends on turnover, not on whether you are a sole proprietor or a Sdn Bhd. Our guide to e-invoicing for SMEs explains the thresholds and the relaxation period.
• Checking the other side. Before you sign with a supplier, landlord or partner, you can confirm their registration with SSM. Our explainer on SSM company searches shows what a search tells you.

What to do next

1. Decide on liability first. If you could not cover the business’s worst-case debts from your own pocket, look closely at a Sdn Bhd or an LLP.
2. Check eligibility. Confirm that every owner meets the rules for the structure you want, including the citizenship rule for sole proprietorships and partnerships and the residency rules for directors and compliance officers.
3. Choose and check a name. A personal-name sole proprietorship uses your identity card name. Anything else needs a name SSM will approve, so prepare more than one option.
4. Line up the people. For a Sdn Bhd, engage a company secretary before incorporation so the appointment is made within 30 days. For an LLP, agree who will act as compliance officer.
5. Register online. Use EzBiz for a sole proprietorship or partnership, MyCoID for a company, or MyLLP for an LLP, and keep the fee ready.
6. Set up the yearly calendar. Note your renewal date, annual return or annual declaration deadline, and, for companies and LLPs, the beneficial ownership updates.
7. Talk to a tax agent early. The structure decides how profit is taxed and how you can take money out, which is easier to plan before the first sale than after.

FAQ

Can a foreigner register a sole proprietorship in Malaysia?

No. SSM’s registration guidelines require the owner or partners to be Malaysian citizens or permanent residents aged 18 or above. A company or an LLP is the route for others.

How much does it cost to register a Sdn Bhd?

The SSM incorporation fee for a company limited by shares is RM1,000, under its fee table, plus RM50 for every 30 days if you reserve a name separately. Company secretary, accounting and any audit fees are charged by the professionals you engage and vary.

Can I run an online business from home under a sole proprietorship?

Yes. Where an online business has no physical premises, the owner’s residential address is treated as the business address, and the business name and registration number must appear on its website, social media and marketplace pages, under the 2020 amendment to the business registration rules.

Does every Sdn Bhd need an audit?

Not every one. Under Practice Directive 10/2024, a private company that meets two of the three size tests for its financial period, and for the two years before, can be exempt, while dormant companies remain exempt.

Is a company secretary compulsory?

Yes, for a company. The first company secretary must be appointed within 30 days of incorporation, according to SSM’s page on starting a company. An LLP has a compliance officer instead.