What constitutes a Partnership?
Partnership is a business owned and run by two or more persons, but not exceeding 20 persons. In Malaysia, all economic partnerships are governed by the Partnership Act 1961.
How to start a Partnership?
- Registration must be done within 30 days from the date of commencement of the partnership.
- Registration can be done at SSM counter OR through online services via ssm.com.my.
- Complete and submit the Business Registration Form (Form A) – filling in your personal details, nature of business etc. Form A can be downloaded from the SSM website.
- Complete the business name approval form (Form PNA.42), subject to the requirements in the Guidelines for Business Name Application, and Rules of Business Registration 1957.
- Business Registration Certificate can be obtained very quickly, within 1 hour after payment.
Fee?
- Trade Name – RM60 per year
- Personal Name – RM30 per year
- Branch(s) – RM5 per year for each branch
Do I need a partnership agreement before starting a business?
No, you don’t need a partnership agreement for registration of business.
HOWEVER, it is highly advisable to have one properly drafted by legal professionals because a partnership agreement is important to detail your profit sharing regime, to avoid unwanted dissolution, to define each partner’s exact responsibilities and level of authority, and to set out how disputes shall be resolved. No matter how much of a friend/relative/trusted individual your partner is, you should never enter a business partnership without a formal partnership agreement because like any relationship, partnerships are fraught with opportunities for disagreement and misunderstanding. As much as you don’t want this to happen, things can get really nasty during a relationship breakdown. As most of you are aware, each partner has unlimited liability for the whole partnership’s debts, therefore a partnership agreement is crucial to protect your interest to ensure the other partner(s) indemnify you against any personal debts and to share losses equally.
Taxation for Partnership?
Partners are liable for the partnership’s profit under personal income tax, not corporate tax. Partners are taxed on their chargeable income at rates ranging from 2% to 26%. A self-assessment system operates for payments, estimates and tax assessments.
