So I recently incorporated mr-stingy as a Limited Liability Partnership (LLP) in my home country of Malaysia.
I looked for information online before I started, but couldn’t find anything comprehensive. So for the benefit of everyone who’s interested to start their own company, I decided to write this guide. Here’s everything I know about starting an LLP.
Why a Limited Liability Partnership?
If you haven’t heard of an LLP before, it’s a new business model — the love child between a traditional private limited (Sendirian Berhad) company and a partnership. An LLP offers benefits of a private limited company without its painful reporting requirements.
Private limited companies are great, but they cost a lot, especially for small business owners. Search online, and you’ll find companies offering to help set up a private limited company for about RM 1,500. And it costs at least RM 2,500 per year to maintain (for mandatory expenses like secretary fees, auditor fees and accounting fees).
On the other hand, you can set up an LLP for the price below:
- Company name reservation: RM 30 (Update 14th Dec 2015: Company name reservation is not mandatory)
- Registration fees: RM 500
- Certificate fees: RM 21.20, including GST (Update 14th Dec 2015: This used to cost RM 47.70. Details in Step 14 below)
(The RM 500 registration fees don’t include your LLP certificate. As to why someone would register a company without wanting a certificate beats me, but anyway…)
- Total: RM 521.20
And it’ll cost you this much to maintain it yearly:
- Annual declaration: RM 200
It’s a lot cheaper because you don’t need to do things like have an Annual General Meeting, hire a company secretary, and submit audited financial reports.
But why not form a sole proprietorship or partnership instead? They cost much cheaper. Only RM 60 per year to start and maintain (RM 30 if you’re not creative and use your own name).
Because an LLP is a separate legal entity from its partners. It declares its tax separately from its partners (important, because it can help optimize the tax you pay). And then the most important point of all: like a private limited company, an LLP offers limited liability to its partners.
Meaning even if the LLP is sued and goes bankrupt one day, creditors cannot come after your personal assets. But in a conventional sole proprietorship or partnership — they can and they will.
Like many things in Malaysia — the idea behind LLPs is good. But the implementation hasn’t gone so well.
Most people only know the traditional business models like sole proprietorship and private limited, so getting things done can be a pain.
Prime Example: I went to buy a car for my LLP recently and the officers at the Road Transportation Department (Jabatan Pengangkutan Jalan) didn’t know how to do the vehicle transfer. They had never heard of an LLP before. I had to have several discussions and trips to the JPJ office before I could finally get it done.
But anyway, that’s partly why I’m here. To try new things, rough it out, and write about my experiences — hopefully it’ll make some other person’s journey a smoother one.
So here’s how you start a Limited Liability Partnership in Malaysia.
1. Register on the MyLLP System
Start by creating an account on the MyLLP system by going to their website here.
*Update 14th Dec 2015 — SSM has upgraded to MyLLP 2.0 so a lot of the screens you’ll see will be different from my screenshots below.
Click on the “Sign Up” button beside “I am new to MyLLP”. Then enter your identification number (can be IC, Army or Police) and details.
Important: For “User Type,” make sure you select “Verified User” (instead of General User), otherwise you won’t be able to continue with the LLP registration.
Once you’ve successfully registered on the system, they’ll email you something that looks like this:
Print a copy. You’ll need it for your visit to the Companies Commission of Malaysia (Suruhanjaya Syarikat Malaysia, SSM) office.
2. Make Your Way to Your Nearest SSM Office
You can find a full list of SSM offices here.
The most convenient one for me is the head office at Menara SSM:
No 7, Jalan Stesen Sentral 5
Kuala Lumpur Sentral, 50623 Kuala Lumpur
Operating Hours: 8:15 AM – 5 :15 PM
It’s about five minutes’ walk from the KL Sentral LRT station:
You don’t need to register at the main counter on the ground floor. Just grab the lift and head to Level 17 for LLP matters.
3. Take Your Number and Wait for Your Turn
In my experience the staff at Menara SSM are efficient. I’ve never had to wait more than half an hour. And usually my number gets called within ten minutes.
Pass the email you printed in Step 1 (and your IC) to the friendly person at the counter. She will verify your registration and then give you your Login ID and Password.
4. Login to the MyLLP System & Reserve Your LLP Name
*Update 26th Sept 2015 — One of my readers (Thanks Jason!) just told me that Steps 4 & 5 are not mandatory. Meaning you can actually go straight to Step 6. I recommend you do it — it’ll save you RM 30!
At Menara SSM, there’s a bunch of computers already hooked up to the MyLLP system. Login to the system using your newly obtained Login ID and Password.
(You could probably do this at home too, but since I was already there — I used the computers provided.)
Click on “Name Registration” and check if anyone else already has your company name. If not, reserve the name and make the RM 30 payment. I used the credit card option to pay.
(The verification and payment steps are identical to the ones in Step 7 and below, so I decided not to include them here)
5. Logout, Go Home and Wait
I initially thought that I could complete the registration in one day.
But after paying to reserve the LLP name, I couldn’t find the next step. There was no “Proceed to Registration” button.
Confused, I went to the counter to ask for help.
“You have to wait for three working days,” the lady at the counter said, “and then you can do the registration online.”
6. Login to MyLLP and Register
So I waited a few days. Kept logging in to see the status, but it kept saying “Pending Payment”.
The strange thing was the system never emailed me or sent me an alert saying my name reservation was complete. Remember what I said about good ideas, but poor implementation?
*Update 26th Sept 2015 — It seems like this is a common problem if you use SSM’s computers to do the payment in Step 4. My girlfriend used her personal computer for Step 4, and she immediately got approval to proceed.
This is what I recommend now: Skip Steps 4 and 5. And use your own computer to do everything.
Anyway, after a week I couldn’t wait any longer so I decided to try anyway.
I logged back into MyLLP and clicked on “LLP Registration” >> “General Registration”
Then I entered my “Proposed Name” and hit “Search”. (The same name I reserved in Step 4).
This time, there was a line in green saying “Please proceed to reservation”.
Click on “Proceed”.
7. Clarify Your LLP Name
The next screen is to clarify your LLP name — if the name is unclear or if it’s not in English / Bahasa Malaysia.
It also allows you to add details of an authorization letter. For example, if you use a name that needs permission from a professional body (accountants, lawyers, secretaries).
Leave this blank and click on “Proceed to LLP Registration” if you’re just registering a simple LLP like me.
8. Enter Your LLP Details
The first tab consists of basic information about your business: partnership agreement, address, and nature of business.
And yes, for you solopreneurs — you can use your home address.
9. Enter Compliance Officer Details
If you’re a solopreneur, this means you
10. Add Your Partner(s) Information
An LLP needs to have at least two partners…
But the total number of partners is unlimited!
11. Enter Your Business Code(s)
Business codes are numbers which help SSM classify what kind of business you’re involved in.
You can search for business codes directly on the MyLLP system by keying in keywords. Or find the complete list here.
The closest thing I could find for a blog was “Web Portals”.
Once you’re done, declare that you aren’t lying, and click “Pay and Submit”.
12. Make Payment
It costs RM 500 to register an LLP. You can pay either via credit card or online fund transfer:
13. Check Your Email
Once you’ve successfully made payment, Mr. LLP Administrator will send you two emails. The first tells you that you’re now RM 500 poorer. The second is the one below:
Congratulations, you’re now the proud owner of a company!
14. Go Back to SSM for Your Certificates
So you’re now the proud joint-owner of a Limited Liability Partnership. Except that you have no proof — other than Mr. LLP Administrator’s email. How will you do things that a company needs to do — like opening a bank account and buying assets?
Right — you’re gonna need your company certificates. But they’re not going to be automatically sent to you. You have to specifically request for them at SSM.
Go back to Level 17, and look for the form below:
Take a number, submit the completed form, and make payment (cash only) at the counter.
It’ll take three working days to process. So you’ll have to come back… again!
*Update 14th Dec 2015 — You can now purchase a Certificate of Registration (CN5877) directly on the new MyLLP system. It costs only RM 21.20. And saves you a trip to SSM. Basically point number 14 above is no longer valid.
It looks like this:
15. Visit Your Friends at SSM 3 Working Days Later
Since you’ve spent so much time at SSM, you’ve probably already made some friends there. Go back and pay them a visit.
Take a number, wait for your turn, and collect your certificates at the counter. It should take less than five minutes once it’s your turn. Like I said before, Menara SSM staff are really efficient.
And then you can give everyone a goodbye hug. Because you’re finally done!
So after RM 577.70 and multiple visits to Menara SSM, I finally got everything done. Overall, it was a good experience. The staff at Menara SSM were courteous and professional. The MyLLP system worked OK too. Just a few points for improvement — which I’ll send to SSM:
- There’s no notification once your Name Reservation is successful.
- You have to separately apply for LLP certificates. (Do people really start companies without wanting the certificates?)
- The whole process seems disjointed — half online, and half over-the-counter transactions. Would be good if it was fully online.
- There’s little documentation on how the process really goes. There’s a lot forms and FAQs online, but no flowcharts showing the full process and timelines. How does the man on the street actually know what to do?
*Update 14th Dec 2015 — SSM has recently upgraded the MyLLP website. I haven’t tested it in detail yet, but it looks like some problems above have been fixed. And my very helpful readers have been commenting below on the new changes. Thanks guys! Please keep the info coming.
Finally, if you’re thinking it’s such a hassle to go through the whole process — there are companies that will do everything for you. It’ll just cost you a bit more.
And if you’ve made it this far — you’re probably interested in setting up your own company too. Let me know if you have any questions. I wish you the very best.
For further information: SSM
Picture from Pexels