Starting a business can be an extremely rewarding experience, but it's important to make sure you're aware of the necessary steps and licenses needed in order to establish a presence in Malaysia legally. The type of license you need to apply for will depend on the type of business you are operating. This article provides an overview of what you need to know about business licenses and where to get them.
What is a business license?
Business licenses are easily defined as legal documentation that acts as proof that your business has the legal right to operate in a certain state or city. And for any sort of business that plans to operate in Malaysia, is required to apply for these licenses before they can run any sort of business activity.
What types of business licenses are there in Malaysia?
There are mainly 3 groups of business licenses in Malaysia and within each group, there will be a set of licenses associated.
Don’t worry, we’ll go through all of them to make your business journey a little easier!
I. General Licenses
General licenses are defined as the licenses that are necessary to apply regardless of the type of business your plan to start.
Company Registration (for Companies)
If your choice is to start your own company you will need to first register your company. Once you’ve registered your company, you will then receive a ‘Certificate of Incorporation’ or more commonly known as ‘Notice of Registration’ from the SSM once you’ve completed the incorporation process and have submitted all the required documents.
III. Activity Specific Licenses
Activity Specific Licenses are licenses that look over and give permission to conduct certain activities. These Licenses can apply to different industries and sectors. These Licenses require people who apply them to meet certain criteria that are designed to protect the citizen’s interest, employment, worker’s safety, general public and environment.
Busking Permits
Liquor / Alcohol License
Sales Tax License
Construction plan
Approval to relocate, install or change air-purifying equipment.
Do take note that the above licenses are just general guidelines. Depending on the business that you are trying to start, you might need different business licenses at different periods of your business journey.
How to know what type of business license will my company need?
Previously, entrepreneurs might need to make guesses about what type of licenses they will need for their business. However, that’s no longer the case as everything is available here. From the type of business license required to the responsible local councils.
If you’re unfamiliar with the website, allow us to show you a quick guide to how to quickly check on your required license.
Go to the MalaysiaBiz website
Click on Business Licensing
You can either choose to search by Agency or by the type of business that you are trying to operate.
Once done, you will be shown the List of Federal Licensing and State Licensing that you will need to run your business properly.
Take note of the government body and the agency that you will require to do.
Download the required form or go to the government agency website to fill in the form there.
How do I apply for and renew my business License?
Once you’ve known what type of business license you will need, it’s time to apply for one! Normally, you’d need to go to your local council to apply for and renew your business license. However, some of the local councils are starting to adopt the click-and-mortar system where business owners are able to apply for their licenses online.
Take a look below and check if your respective local council offers online business license application or renewal service!
For first-timers, do take note that most of the links below will require you to have an account with that Local Council. So, you’ll need to register yourself first before applying for business licenses.
Online License Application and Renewal Available
DBKL (Dewan Bandaraya Kuala Lumpur)
MBSJ (Majlis Bandaraya Subang Jaya)
MBPJ (Majlis Bandaraya Petaling Jaya
PPJ (Perbadanan Putrajaya)
MBSP (Majlis Bandaraya Seberang Perai)
MBPP (Majlis Bandaraya Pulau Pinang)
MBK (Majlis Bandaraya Kuantan)
MBMB (Majlis Bandaraya Melaka Bersejarah)
DBKK (Dewan Bandaraya Kota Kinabalu)
Only Available through Visiting Physical Branch / Over the Counter
MBAS (Majlis Bandara Alor Setar)
MBI (Majlis Bandaraya Ipoh)
MBSA (Majlis Bandaraya Shah Alam)
MBS (Majlis Bandaraya Seremban)
MBJB (Majlis Bandaraya Johor Bahru)
MBIP (Majlis Perbandaran Johor Bahru Tengah)
MPPG (Majlis Perbandaran Pasir Gudang)
MBKT (Majlis Bandaraya Kuala Terengganu)
DBKU (Dewan Bandaraya Kuching Utara)
MBKS (Majlis Bandaraya Kuching Selatan)
MBM (Majlis Bandaraya Miri)
Again, depending on the area where you’d want to operate your business or the type of business that you are trying to start, your respective local council and required licenses might differ. So it’s best to use the MalaysiaBiz website to check out which Local Council should report to.
In this certificate, basic information such as your
Company’s name,
Date of incorporation
Unique SSM number
will be provided to prove that your company has been incorporated legally under the Company Acts of Malaysia. You can take a look at a sample of a certificate of incorporation here.
Company and Employees Income Tax Registration
Doing business in Malaysia also means you will need to pay taxes like every other business. As long as you’re a business or company hiring employees, you will need to register an employer tax file (E-Number).
To register yourself and your company as an E-number, you can choose to go to any physical LHDN premises near you or register online.
EPF (Employees Provident Fund)
Speaking of hiring employees, we’ll definitely need to talk about EPF.
EPF or Kumpulan Wang Simpanan Perkerja (KWSP) in Malaysia is a retirement saving fund that must be contributed by both the companies and the employees to ensure that employees will still have money to spend after retirement.
As long as you’re running a business, you are required to contribute to your staff or employees’ EPF monthly. To do so, you will need to register yourself as an EPF employer here.
SOCSO (Social Security Organisation)
If you’re planning to hire employees, did you know that you will need to pay for their insurance?
Social Security Organisation (SOCSO) or Pertubuhan Keselamatan Social (PERKESO) is the insurance or protection plan that is required to be paid by both employers and employees.
Any businesses or companies in Malaysia must register themselves with SOCSO upon hiring a new employee. Registering yourself with SOCSO is a piece of cake, you’ll just need to follow a few easy steps that are available right here.
HRDF (Human Resource Development Fund)
Noticing that your staff are getting more in numbers? Well, you’ll need to take note of HRDF!
Hiring ten or more employees to your business as an employer means that you must register yourself with the HRDF.
HRDF is the mandatory payment that is collected by the Human Resource Department Fund imposed on all employers from different industries. The fund collected will be then utilized for the training and development of the Malaysian workforce.
Failure to do so might end up with entrepreneurs fined up to RM10,000 or imprisonment for up to 1 year.
Unfamiliar with how to register yourself with HRDF? Don’t worry! Click here to bring yourself to the registration guide for HRDP!
Business Premise Licenses and Signboard Licenses
Starting a business means that you will be needing a place to run your business and a signboard to let the public know about your business. And as you have expected, to legally run your business at a physical building or display your signboard, you will need licenses for that.
Applying for these licenses might be slightly troublesome as you will need to send in your application to different local authorities depending on the area you wish to operate your business.
If you’re unsure about where you should submit your application, you can try out this website created by the government as you can search for the licenses required and the responsible local council based on the area you plan to operate your business.
II. Sector or Industry Specific Licenses
These are the licenses that you will need if you plan to start your business in a specific industry or sector. Below are some examples of industries and their respective government agenc.
1. Manufacturing Sector Licenses.
If you’re trying to start a manufacturing company, you will need to apply for a manufacturing license. And to do so, MIDA will be the government agency that you will need to look for.
2. Distributive Trade Licenses and Permission
If you’re someone who’s trying to start a business related to distributive trade and have foreign involvement then you’ll need to take note of the following Ministry of Domestic Trade and Consumer Affairs (KPDNHEP).
3. Telecommunication Sector Licenses
Take a look at this link or check this PDF out for more information.
4. Broadcasting Sector Licenses
Click on this link to the official website to learn more.
5. Oil Exploration Sector Licenses
Any business related to Oil Exploration must be licensed by Petronas.
Click this link to learn more.
6. Construction Sector Licenses
Any construction-related matter should be referred to CIDB.
7. Banking Sector Licenses
Any bank-related issues should be referred to the Bank Negara website. If you’re interested in starting your own commercial bank, you can take a look at this PDF.
8. BLESS, Ministry of Entrepreneur Development (MED)
If your license falls under BLESS or MED, you can check their website here.
9. Department of Occupational Safety and Health Malaysia (DOSH)
Anything related to the department of occupation this link to know more.
10. National Water Services Commission (Span)
You can access Span’s website here. For any related issues with the license, you can click here and permits here to know more.
