What’s in this article
Setting up a business in Malaysia, particularly a Limited Liability Company (LLC) or Sdn Bhd, offers entrepreneurs and foreign investors a cost-effective and flexible business structure. A Limited Liability Company separates personal assets from business liabilities, providing protection and credibility. With Malaysia ranked 12th globally in the World Bank’s Ease of Doing Business Index (2020), it’s an attractive destination for setting up a Limited Liability Company.
The process of establishing a Limited Liability Company involves various costs, including registration fees ranging from RM1,050 to RM1,500. Professional incorporation services typically cost RM1,500–RM3,500, ensuring compliance and efficiency. Annual maintenance costs, including company secretarial, accounting, and tax filing services, amount to approximately RM5,000–RM10,000 per year.
Malaysia’s vibrant economy, where SMEs contribute over 38% to GDP and makeup 97% of business establishments, underscores the benefits of choosing a Limited Liability Company for entrepreneurs seeking operational flexibility and tax advantages. With robust infrastructure and government support, starting a Limited Liability Company in Malaysia is a strategic step toward business growth in Southeast Asia.
How Much Does It Cost to Set Up an LLC in Malaysia?
Setting up a business in Malaysia is a great opportunity, and one of the most viable options is establishing a Limited Liability Company, better known as a Sdn Bhd or Sendirian Berhad. For proper financial planning, it is crucial for entrepreneurs and investors to understand how much it costs to set up an LLC in Malaysia.
In this article, we will discuss the costs associated with setting up an LLC, including registration fees, professional services, and other expenses you need to consider. Additionally, we will explore the implications of different business structures and provide guidance for foreign investors aiming to incorporate in Malaysia.
What is an LLC in Malaysia?
In Malaysia, an LLC is referred to as a Sdn Bhd, which translates to “private limited company.” It is a business structure that separates the legal entity from the owners, limiting liability to their company shares. This makes it an attractive option for entrepreneurs who wish to protect personal assets while enjoying tax benefits and operational flexibility.
A Sdn Bhd Malaysia company is particularly suitable for SMEs, foreign companies, and investors, as it demonstrates credibility and offers numerous business opportunities in this country. Additionally, this type of company is governed under the Companies Act 2016, which outlines the legal framework for incorporation, operations, and compliance.
Understanding Different Business Structures in Malaysia
Before diving into the costs, it’s essential to understand the common types of business structures in Malaysia:
- Sole Proprietorship: Ideal for small-scale entrepreneurs but lacks liability protection.
- Partnership: Suitable for small businesses with shared ownership but still involves unlimited liability.
- Private Limited Company (Sdn Bhd): Offers limited liability, tax benefits, and credibility for larger operations.
- Public Company (Berhad): Designed for businesses planning to raise capital through public listings.
- Unlimited Company: Rarely used, involves unlimited liability for its shareholders.
- Limited by Guarantee: Often used for non-profit organizations.
Choosing the right business structure depends on your business goals, risk tolerance, and capital requirements. Most entrepreneurs prefer the Sdn Bhd due to its flexibility and protective features.
Cost to Register a Limited Liability Company
The primary cost to register a company limited by shares in Malaysia includes the registration fees paid to the Companies Commission of Malaysia (SSM). Here’s a breakdown:
- Reservation Fee for Names: RM 50 per company name submitted.
- Registration Fee: RM 1,000 for most Sdn Bhd companies.
Additional fees may apply for expedited services or specialized permits depending on the registration process in Malaysia. It is recommended to carefully select your company name to avoid unnecessary rejections or delays during the approval process.
Cost of a Company Secretary in Malaysia
Under Malaysian company law, every Sdn Bhd must appoint a qualified company secretary within 30 days of incorporation. This professional ensures compliance with statutory requirements and maintains key corporate records.
- Appointment Fee: RM 300–RM 600 (one-time).
- Annual Retainer Fee: RM 800–RM 2,000, depending on the complexity of the business.
Failure to appoint a company secretary can result in penalties and delays in day-to-day business operations. Additionally, the company secretary plays a vital role in preparing resolutions and ensuring compliance with the Companies Commission of Malaysia.
Professional Services for Incorporation in Malaysia
If you are unfamiliar with the LLC registration process, hiring consultants in Malaysia can save time and ensure compliance.
- Professional Incorporation Services: RM 1,500–RM 3,500.
The cost of these services varies based on the provider and any additional requirements, such as drafting your company’s business activities, securing a registration certificate, or applying for specialized licenses. Many entrepreneurs prefer this route as it simplifies the incorporation process, especially for foreign companies unfamiliar with Malaysian business law.
Paid-Up Capital Requirements
Paid-up capital is the initial investment in the company by its shareholders. While many industries in Malaysia have no mandatory minimum paid-up capital, some sectors require a higher amount to align with your business needs.
- Standard Minimum: RM 1,000.
- Specific Industries: RM 500,000 for businesses hiring foreign employees or operating in regulated sectors.
Having adequate paid-up capital not only meets regulatory requirements but also boosts your company’s credibility when dealing with clients and suppliers.
Office Setup and Rent
All limited liability companies in Malaysia must have a registered office address for official correspondence. Additional physical office space is optional but may be required depending on day-to-day business operations.
- Registered Office Address: RM 600–RM 1,200 annually (virtual office).
- Physical Office Rent: RM 1,000–RM 5,000 per month, depending on location and size.
For businesses looking to minimize initial costs, virtual offices provide a cost-effective solution while meeting the legal requirement for a registered address.
Opening a Corporate Bank Account
Every Sdn Bhd Malaysia company must open a business bank account and register financial transactions. Banks typically require an initial deposit.
- Estimated Initial Deposit: RM 1,000–RM 5,000.
Opening a corporate bank account is a critical step in running a business. It facilitates day-to-day transactions and ensures proper financial management for tax filing and auditing purposes.
Licensing and Permits
Some business activities require specific licenses or permits to operate legally. These costs vary based on the business form and industry.
- General Business License: RM 500–RM 1,000.
- Specialized Licenses: RM 1,000–RM 10,000 (e.g., restaurants, construction).
Ensuring compliance with licensing requirements is crucial to avoid legal complications. Businesses in regulated industries should budget for higher licensing costs and renewal fees.
Annual Maintenance Costs
Apart from the initial setup, running a business in Malaysia involves recurring expenses to comply with local regulations:
- Company Secretary Fees: RM 800–RM 2,000.
- Accounting and Audit Fees: RM 3,000–RM 10,000 (depending on business size).
- Tax Filing Fees: RM 500–RM 2,000.
- SSM Annual Return Fee: RM 150–RM 200.
Annual maintenance costs ensure your company remains in good standing with the Companies Commission of Malaysia. Proper budgeting for these expenses is essential to avoid disruptions in business activities.
Total Estimated Cost of Starting an LLC in Malaysia
To provide an overview, here’s a summary of typical costs:
| Category | Estimated Cost (RM) |
|---|---|
| Registration Fees | 1,050–1,500 |
| Company Secretary Fees | 300–2,000 |
| Professional Services | 1,500–3,500 |
| Paid-Up Capital | 1,000+ |
| Registered Office Address | 600–1,200 annually |
| Licensing and Permits | 500–10,000+ |
| Office Rent (Optional) | 1,000–5,000 per month |
| Initial Bank Deposit | 1,000–5,000 |
Cost Considerations for Foreign Companies
Foreign investors or companies incorporated in Malaysia should also account for these additional costs:
- Work Passes: Fees for obtaining an Employment Pass or Entrepreneur Visa.
- Compliance Costs: Legal and tax consultations to meet the requirements for starting and running a business in Malaysia.
- Translation Services: For non-Malay or non-English documents required during the incorporation process.
Why Choose Paul Hype Page Malaysia?
Navigating the incorporation process in Malaysia can be complex. Paul Hype Page Malaysia offers end-to-end support for company formation in Malaysia, ensuring compliance and operational readiness. We specialize in helping businesses register a company limited by shares, apply for a business license, and secure other approvals.
Our services include:
- Incorporation Services: Streamlining the LLC registration process.
- Company Secretary Services: Ensuring statutory compliance.
- Licensing Assistance: Helping you obtain necessary permits for different business types.
- Tax and Accounting Services: Managing finances to adhere to Malaysian business law.
Whether you’re a local entrepreneur or a foreign investor, we align with your business goals to ensure success. Visit Paul Hype Page Malaysia today to learn more about our services and start your journey to incorporation in Malaysia.
Conclusion
Starting an LLC in Malaysia is affordable and offers many advantages for both local and foreign investors. By understanding the requirements for starting, registering, and maintaining your company, you can create a written plan to manage your finances effectively and focus on day-to-day business operations. Malaysia’s business-friendly environment is ideal for entrepreneurs ready to seize growth opportunities.
Taking the time to research and budget for these costs ensures a smoother incorporation process. Whether you aim to launch a small local business or expand as a foreign investor, Malaysia’s robust infrastructure and supportive business ecosystem make it a prime choice for your venture.
