It really does you know?

OK enough venting from me already, today I’m gonna talk about what type of business I’m gonna start up as… though I probably should have went and registered my business already. I’ve been procrastinating and will get it done soon.

Anyhow, I’ve stolen the below information from various sources =P but added some of my own comments to each:

Sole Proprietorship is the simplest form of business in terms of registration and formulation.

• Only Malaysian citizens and permanent residents are eligible to register for a sole proprietorship. This form of business should be registered as soon as it is operational. It is an offence if you fail to register your business.

• For someone like myself, this is probably the best way to go as it has the lowest yearly fees and is basically the simplest form of business to register.

• • However, signing up as a sole proprietor has an extremely dangerous drawback, there is no difference between yourself and the business. Any legal action taken against the business is also legal action taken against you.

• Damn, you can even register your business online now! I didn’t know that… Hmm… maybe I’ll try registering online, to see if the government has really put some thought into the process. (Why do I have the feeling something is going to screw up?)

A Partnership is when you decide to pool capital and work together with at least one more person. In this form of business, you and your partner(s) are joint-owners of the business, and therefore will share the profits and risks.

• If you intend to start a partnership, it is advisable to have a formal agreement drawn up by a lawyer. Only Malaysian citizens and permanent residents are eligible to register a partnership. (Just in case your partner decides to screw you over)

• I’m quite undecided about ‘business partnerships’ because you usually form one with either family or friends. What I’ve always wondered is how you work out the percent ownership when say, I start up the business but my ‘partner’ only comes in at a later date?

• • There’s no way I’d give up 50% of my business just like that… as the cost of 50% of the business may be low now but you know that in a few years time you have the potential to flourish.

• • But then again, you can’t ask your business partner to pay up for future potential right?

• • Other things you have to work out in writing (in case of disputes) is the control of the business, i.e. who does what, and profit sharing.

• As you can see, I’m not really all that sure about partnerships, and anyway… I prefer to do things myself.

• Typically the fees for registering your business as a sole proprietor or as a partnership don’t go past RM150 at the most.

Things should run better as a large group of individuals right?

But not always.

Limited Companies are incorporated under the Companies Act 1965, enforced by the Commission of Companies Malaysia.

• One type of limited company is a Sdn. Bhd. or a private limited company, when you register your business as one it allows the risk to be taken away from the individuals (the directors/ owners of the company) and placed onto the business as a single entity. A Sdn. Bhd. requires at least 2 directors and a corporate seceratary (whom you can hire from a 3rd party now a days).

• • The fees to sign up as a private limited company are much higher than for a sole proprietor or partnership and typically can cost in the thousands.

• • As you will require shareholders to be a Sdn. Bhd, you will need to have some bought up capital invested in the company. This usually comes from yourself and your director(s) but can be as little as RM2 if you wanted it to.

• The second and by far the way to go if you need to raise shitloads of funds is to incorporate as a Bhd. or public limited company. Again, the liability is shifted from the owners to the company, thereby removing the threat of personal loss (almost anyway).

• • Registering your business as a Bhd. will mean that you list your company on the stock exchange (KLSE) on one of the boards (main, secondary, tertiary, fourthtiary… OK I don’t know all the names, so sue me.) and shareholders will be able to trade stock in your company. The higher the share price, the more money your company will have to… umm… buy stuff.

• • But, if the product or service you provide/ sell is not up to scratch or it doesn’t have the potential to bring in large amounts of money (and hence the potential for the share price to go up or dividends to be paid out to investors) over an extended period of time, then DON’T HOPE that you will ever be able to incorporate like this.

• • This one is probably best left to the big boys.

One thing you can rest assured of is that regardless of what type of business you register as, one day the government will come knocking on your door asking for tax. (you know… so they can build roads/ schools/ buy a minister a car/ buy a minister a house etc.)

But that information you’ll have to find out yourself… because I don’t know anyway.

So good luck in registering your starting business in Malaysia!