You have just completed registering your business as a limited liability company (Sdn. Bhd.), so what comes next? Or if you haven't or is planning to register for one, you may do so here! This article bridges that knowledge gap and provides clear steps you should take to navigate through the post-incorporation phase including opening bank accounts, complying with tax regulations and other essential matters.
Ready to get your business rolling efficiently after incorporation? Let’s dive in!
Immediate Actions after Company Incorporation
Once you have incorporated your business, some of the immediate tasks that a new company has to complete include appointing the relevant professionals, displaying and publication of business name and registration number, opening your bank account, setting up proper accounting and finance processes, as well as establishing Human Resource (HR) policies and payroll systems.
1. Appoint a company secretary
This role is mandated by law in Malaysia. The company must appoint a company secretary within 30 days of incorporation. The functions of a company secretary includes serving as the point of communication between the company and the authorities. They ensure regulatory compliance, safe keep corporate and legal records of your company, maintain official documents such as share certificate, statutory books, common seal that are kept in the registered office, handle shareholder communication and facilitate board meetings. As every company must have a registered office, your outsourced company secretarial firm's office is usually your company's registered office as well.
2. Displaying and publication of name and registration number
The Companies Act, 2016 requires a company to disclose its registered name and company registration number on all its business letters, notices and other official publications, websites, bill of exchange, promissory notes, endorsements and order forms, cheques purporting to be signed by or on behalf of the company, order invoices, and other demands for payments, receipts and letters of credit purporting to be issued or signed by or on behalf of the company; and all other forms of business correspondence and documentation.
3. Open bank account
Once you start your business, you will need to open a bank account for your company. A separate bank account for your new company ensures clear financial records for accounting and tax purposes.
Look out for banking providers that offer attractive benefits, such as being digital friendly with good online banking facilities, low transaction fee, ease to obtain a business credit card and dedicated services depending on your business needs.
To open a business bank account, you'll need to provide proof of incorporation, plus other documents such as board resolution for bank account opening depending on the chosen bank's specific requirements. Your company secretary will be able to assist you with some of these documents required by the bank.
4. Appoint auditor and tax agent
One fundamental step to take after incorporating your company is appointing key personnel like auditor and tax agent.
Hiring a qualified auditor reinforces financial integrity within your organisation. They examine financial records to check for accuracy, identify discrepancies, and propose corrective measures if necessary. Frequent auditing can prevent instances of potential fraud or theft while ensuring adherence to financial regulations.
A certified tax agent simplifies your tax responsibilities by advising on tax laws that apply specifically to your business sector. They assist in filing returns accurately and punctually as well as optimising your tax liabilities through legal means.
5. Business License
When you are ready to start doing business, depending on the type of business and location, you may be required to obtain business licenses. If you wish to have a signboard for your business, you will also need to apply for a Signage Advertisement License.
6. Setup proper accounting and finance processes
Establishing rigorous accounting and finance procedures is essential once you have commenced operations. Take the initial step of selecting a robust accounting software that allows for invoicing as well as efficient tracking of income, expenses, receivables, and payables. If you do not have the expertise to do so, consider hiring an accountant who will be able to assist you in setting up and implementing the necessary software and processes.
Besides giving clarity on financial health, this streamlines tax filing when corporate tax filing season comes around. Next in line: implementing strict budgeting practices to effectively regulate expenditures and optimise profits.
7. Setup Human Resource (HR) policies and payroll systems
Setting up HR policies and payroll systems is an essential step after you have set up your company if you intend to hire employees. These policies ensure that you comply with employment regulations and treat your employees fairly.
Start by creating an employment contract, a comprehensive employee handbook that outlines the company's values, rules, and expectations. This will help set clear guidelines for both management and staff members.
Additionally, establish procedures for hiring, performance evaluation, disciplinary actions, employee benefits administration, and leave management. Alongside this, implement a reliable HR system to enable easy tracking of your employees' leaves and claims.
8. Registering with Relevant Authorities
After incorporating your company, it is crucial to register with the relevant authorities to be compliant with the laws. This includes obtaining a Company and Employer Tax Registration Number (C and E numbers), and registering with the Employees Provident Fund (EPF) Board and Social Security Organisation (SOCSO), Human Resource Development Corporation (HRDC) when you start hiring.
Obtain Company and Employer Tax Registration Number (C and E numbers)
Every company requires a Company Tax Registration Number (C number) and Employer Tax File Number (E Number). Upon incorporation, IRB may automatically assign a C and E number to your company. You may check with your company secretary on this.
If you do not have these numbers assigned to your company, you may submit an application with the Inland Revenue Board (IRB) to obtain this number. The process typically involves providing necessary documentation such as your company's certificate of incorporation and other relevant information. Once approved, you will receive your unique C and E numbers, which will be used for filing tax returns and making tax payments on behalf of your company.
Register with the Employees Provident Fund (EPF) Board
If you intend to hire employees, it is crucial to register with the Employees Provident Fund (EPF) Board. This registration ensures that you comply with Malaysia's mandatory national social security scheme, which provides retirement benefits and financial protection for employees.
By registering with the EPF Board, you will be able to contribute to your employees' retirement savings and ensure their financial security in the long run.
Register with the Social Security Organisation (SOCSO)
SOCSO provides social security protection to employees in Malaysia, covering benefits such as medical treatment, disability, and employment injury.
By registering with SOCSO, you ensure that your employees are protected and entitled to these benefits. To register, you will need to provide relevant employee information and contribute a monthly payment based on their wages.
Register with the Human Resources Development Corporation (HRDC)
Depending on the nature or type of your business and number of employees, you may be required to register with the Human Resources Development Corporation (HRDC). The HRDC focuses on promoting workforce training and development in Malaysia.
By registering your company with the HRDC, you can access various training programs for your employees and benefit from their expertise in improving human resource capabilities within your organisation.
Ongoing Responsibilities
Some of the important ongoing responsibilities as part of the post-incorporation steps include submitting monthly and annual employer's returns and contributions, filing estimate of tax payables (CP204), submitting income tax and Sales and Service Tax returns and payments, preparing and circulating financial statements, conducting statutory audit for each financial year, lodging financial statements with the Registrar,
File estimate of tax payables (Form CP204)
When you start doing business upon formation, the company is required to file an estimate of tax payables using the CP204 form. By filing this form, you provide an estimation of the amount of tax payable for the year of assessment. It allows the authorities to assess and monitor your expected tax liabilities accordingly.
File annual returns
Filing annual returns involves submitting important information and documents to SSM after one year of incorporation. Your company secretary will be responsible to file these returns. These returns provide a snapshot of your company, including details about shareholders, directors, and capital structure.
Maintain accounting records and prepare & circulate financial statements
Every company is required to maintain proper accounting records are kept within 60 days from the completion of the transactions and prepare financial statements annually. Financial statements provide a comprehensive overview of your company's financial performance and position, which includes your company's income statement and balance sheet. The financial statements will need to be prepared according to prescribed accounting standards.
These statements are essential for both internal management and external stakeholders such as investors, creditors, and regulatory authorities. Other than for regulatory purposes, by carefully preparing accurate financial statements on a regular basis, you can assess the financial health of your company, make informed business decisions, attract potential investors or lenders if needed and ensure transparency in your operations.
The company shall circulate these statements to the members as required by law.
Conduct statutory audit for each financial year
Every year, after the financial statements are prepared, it is crucial to conduct a statutory audit of your financial statements. This audit ensures that your company's financial records are accurate and in compliance with legal requirements.
The audit process involves an independent auditor reviewing your financial transactions, analysing important documents such as bank statements and invoices, and providing an opinion on the fairness and reliability of your financial statements.
By conducting these audits annually, you can maintain transparency, build trust with stakeholders, and ensure that your company remains compliant with applicable laws and regulations.
Lodge financial statements with the Registrar
The company is also required to lodge the financial statements with the Registrar. Once the financial statements are ready, the company secretary will submit them to the Registrar within the specified deadline.
Submit income tax returns & payments (Form C)
After your financial statements for the financial year is ready, you will need to accurately report your company's taxable income and calculate the correct amount of tax payable based on the applicable tax rates, and remit any balance tax payment to IRB.
Submit monthly employer’s returns & contributions
As an employer, it is important to compute your employees' payroll based on the prescribed regulations and deduct the correct amounts from their payroll to be remitted to IRB, EPF, SOCSO and HRDC. You will need to submit monthly returns for your employees' contributions. These returns include details of the employees' salaries or wages, as well as the relevant deductions such as income tax, EPF, SOCSO, and HRDC.
Submit annual employer’s returns (Form E)
Every company is required to submit a return form for employer (Form E) annually to IRB. It is a declaration made by the employer on the details of the employees, total remuneration and total deductions remitted to IRB during the year. It is compulsory for limited liability companies (Sdn. Bhd.) to submit these returns, whether or not they have any employees during the past year.
Submit Sales and Service Tax (SST)
If your company is liable to register for SST, you will be required to collect SST and remit to the Royal Malaysian Customs Department (RMCD). You must file the returns and remit the payment based on the regulations.
Outsourcing your compliance matters
Upon incorporation, it is crucial to take important steps to ensure compliance with the relevant laws and hiring the necessary professionals for your administrative and reporting requirements. The business entity must also stay compliant with its ongoing responsibilities which include submitting monthly and annual statutory returns, conducting statutory audits, and filing tax returns to all the relevant authorities. It's essential to stay on top of this requirement to avoid hefty penalties.
