Convert from Enterprise to Private Company (Sdn Bhd)
Why you need to upgrade your Enterprise to a Private Company (Sdn Bhd)?
- When your personal income tax bracket reaches 19%
- You anticipate having multiple business partners
- You have expansion and fundaraising plans
7 Steps to Convert from Enterprise to a Private Company (Sdn Bhd)
Congratulations on deciding to incorporate an Sdn Bhd company! You will be saving more by paying the corporate tax rate, with potential for significantly more savings as your revenue grows!
You can’t actually upgrade or convert from Enterprise to a Private Company. The shift requires incorporating a new Sdn Bhd then to closing down your existing Enterprise after all the renegotiating and transferring of assets and liabilities.
For a full guide on the various requirements to incorporate a company, check out our guide to incorporating a Private Company (Sdn Bhd).
Step 1
Open a corporate bank account
Establishing a dedicated corporate account for your new Sdn Bhd is essential for managing all company transactions. This freshly arranged banking system ensures a clear distinction between your business and personal finances, playing a crucial role in projecting a reliable and professional image.
Step 2
Transfer assets & liabilities to new Sdn Bhd
This process includes the acquisition of assets and the transfer of liabilities from your Enterprise.
It is crucial to accurately document all assets in a balance sheet to ensure that the ‘sale’ of Enterprise to Sdn Bhd is executed at the correct book value of the assets.
Engaging a lawyer might be necessary to negotiate with creditors and facilitate the transition of debtors to the new Sdn Bhd.
Step 3
Re-sign contracts with stakeholders
To ensure seamless operations, renew contracts using your Sdn Bhd with your stakeholders, which include suppliers, clients, and customers.
This implies that moving forward, they will be engaging in business transactions with your new Sdn Bhd, distinct from your individual capacity.
Step 4
Register with LHDN
Your new Sdn Bhd needs to handle its own taxes and file returns as a separate entity. To get started, you can sign up for an account through MyTax, LHDN’s online portal.
Within the first three months of operation, your Sdn Bhd will need to start providing estimated tax payments. For a comprehensive list of tax responsibilities for Sdn Bhd, you can refer to LHDN’s Tax File Registration page.
Step 5
Register with EPF, SOCSO, EIS and HRDF
If your enterprise had existing employees, this transition shouldn’t catch them off guard.
Your Sdn Bhd is required to officially register as an employer with the EPF within 7 days and SOCSO within 30 days from the date of hiring the initial employee.
Step 6
Apply for necessary business licenses
Depending on your business’s nature, it might be necessary to acquire specific licenses or permits for operations. This becomes crucial, especially if your expansion includes new activities that demand additional business licenses.
Step 7
Close down the Enterprise
Once you’ve transferred assets and liabilities, honored contracts and obtained necessary licenses, and registered with government bodies, it’s time to close the old business.
You can conveniently complete this process online through SSM’s EzBiz portal, incurring a fee of RM200. Following the successful termination, SSM will send you an email, marking the completion of the ‘upgrade’ process.
How is pricing determined for this service?
The fee for converting of an Enterprise to an Sdn Bhd, is dependent the area of involvement in the steps as listed above as well as the consultation fee.