Business Plan

2 Vital Factors that Entrepreneurs Must Know When Registering their Companies

You have thought long and hard over whether you want to leave the safety of a corporate environment and start your own business. You have counted your savings and decided that you have enough cash in the bank to give it a fair shot. You have spoken to your peers and potential customers about your idea, and the feedback has been encouraging. Now it’s time to take the next step. Before you start putting your idea into reality, you first need to make a few decisions, and you need to understand the implications of those decisions.

  • Get the right legal framework

As an entrepreneur in Malaysia, you have in principle two options:

  • Sole proprietorship
  • A company limited by shares (Sdn Bhd)

If you are a foreigner, the choice has been made for you already: only Malaysians and permanent residence are eligible to register for a sole proprietorship.

Advantages of a sole proprietorship:

  • All profits generated by the business are your own personal property. You will only have to pay personal income tax, not business tax
  • No reports of accounts are required


  • You are liable for all business debts, and you will be personally responsible for all risks and failures in the business

Another difference is that, unlike a sole proprietorship, a Sdn Bhd can have more than one owner. In addition a Sdn Bhd creates a significant bigger impression when you meet potential clients – and that could mean the difference between getting that sale and coming in second. For those reasons (growth possibilities in issuing new shares, limitation of person liability, and image) a Sdn Bhd is most probably the preferred option if you start a business with the idea of growing it big.

  • Choose your name wisely

Before you can register your company, you need a name for your business venture. This name needs to fulfill the following criteria:

  • You must really like the name (personal preference), and it should be a name that you will still like 5 years from now
  • The name should ideally reflect what the business is all about
  • The name is original and ideally sticks in the mind of our target audience
  • The name is available and acceptable to SSM for registration.

Example: we have decided to call our business INCUBE8. It does fulfill all the above criteria:

  • We really like the name (well, that’s a personal preference)
  • The company helps to grow companies. We are like an incubator with a host of added services, hence incube8 (spoken: “incubate”) reflects exactly what we do
  • Incube8 sticks. People like “8”, as this a lucky number. And it takes people a bit to figure out exactly what “Incube8” means. During that time they thnk about our name. People remember us.
  • Due to the use of the number 8 in our company name our name is unique (at least in Malaysia), and not part of the list of words requiring approval by the ministry.

### Special Thanks for Article Contribution by Harald Weinbrecht, Founder of Incube8 ###

Harald Weinbrecht is a serial entrepreneur who made Malaysia his home 15 years ago. His first venture was ISS Consulting, a regional SAP consulting firm he co-founded in 1997 that went public on MESDAQ 10 years later. He currently runs Incube8 (, a serviced office center cum incubator with the mission to help growing companies succeed. He is also actively involved in OpenPath (, and TrickleStar (, and is an advisor / mentor for a number of start-ups in various industries. Harald is a 3-times Ironman finisher and runs a 3:45 marathon, when he’s not busy helping other entrepreneurs. He can be contacted at [email protected].