This document defines and explains the requirements and process for becoming a sole trader or sole proprietorship in Malaysia. A sole proprietorship is an unincorporated business owned and run by one individual. To become a sole trader in Malaysia, the owner must be a Malaysian citizen or permanent resident aged 18 or older. The owner submits an application and pays registration fees ranging from RM30-RM60 per year depending on if they are registering a personal or trade name or branches. Being a sole trader has advantages like being your own boss but also disadvantages like unlimited liability and limited access to financing.

1. PROFIT BASED
ORGANIZATION
SOLE TRADERS
NUR KHAIRUN NAJWA
NUR AMANINA HIDAYATI

3. Definition of sole trader
A sole proprietorship is formed under the Business
Act 1956 (Amendment 1978)
Business that is run by a single individual who
makes all the decisions
Personally entitled to all of the profits and its
responsible for any debt the company incurs
Example : Beauty salon, tailor shop, restaurant,
cafe

5. WHAT IS THE REQUIREMENT
TO BECOME A SOLE TRADER?
– OWNER MUST BE A MALAYSIAN CITIZEN OR PERMANENT
RESIDEN OF MALAYSIA
– OWNER MUST BE AGED BETWEEN 18 YEARS AND ABOVE
– ONLY ONE OWNER IS ALLOWED TO SUBMIT APPLICATION

6. HOW TO BECOME A SOLE TRADER IN
MALAYSIA

7. FEE ?
–Trade Name – RM60 per year
–Personal Name - RM30 per year
–Branch (s) - RM5 per year for
each branch

8. Sole trader/ sole propriertorship
Owns and runs their own
business
No legal distinction exists
between business and the sole
trader
The finance is usually limited
The business is close to the
customer
The sole trader has privacy and
limited accountability
Registering the business is
generally relatively easy and
inexpensive – and quick

11. Advantages and Disadvantages
of sole proprietorships
ADVANTAGES
- FEW LEGAL FORMALITIES
- PROFIT TAKING
- BEING YOUR OWN BOSS
- PERSONALISED SERVICE
- PRIVACY
DISADVANTAGES
- UNLIMITED LIABILITY
- LIMITED SOURCES OF FINANCE
- HIGH RISKS
- WORKLOAD AND STRESS
- LIMITED ECONOMIES OF SCALE
- LACK OF CONTINUITY

12. Glossary
1) Sole trader / sole propriertorship – an individual who runs and owns a
personal business
2) Unincorporated – owner is the same legal entity as the business
3) Unlimited liability – full legal responsibility that business owners and
partners assume for all business debts

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