SSM Business Advisory
In realizing SSM’s strategic direction towards reaching its vision “To Be a Top Tier Corporate Registry and Regulatory Authority”, SSM consistently benchmark itself against the highest standards achieved by Corporate Registrars around the globe. As such, the introduction of Business Advisory Unit was materialized on 3 July 2017 as part of the business process improvement in SSM.
Do you know whether your business activity is related to hobby or business?
Before you start a business, you need to know whether the status of your activity is a hobby or business related. You need to establish the status of your activity early because the activities you are doing will involve various factors such as tax claims and other deductions.
A hobby is an activity which you do for leisure or during your free time for recreation or pleasure.
The benefits of a hobby activity:
- For self-excitement and self-esteem;
- As a present or sold at a material cost;
- Can be done according to your time or when there is a request; and
- There is no obligation for you to report on the activity being performed.
A business is an activity which is done commercially in order to gain profit.
The benefits of doing a business:
- You will get access to information, services and government concessions for businesses;
- You can create a business identity when selling to customers and other businesses;
- You can claim tax deduction for business expenses on your taxable income;
- You can expand your business network as well as provide the buyer confidence in your goods and services; and
- You can manage and handle your own time by employing employees to manage your business.
When you do business, you earn profit, you pay taxes for your revenues, able to claim deductions from your expenses and have a business registration number (sole proprietorship / partnership, company or PLT). These numbers do not apply if this activity is a hobby.
Definition of a business or a hobby
It is important to understand the difference between a hobby and a business for tax, insurance and legal purposes.
Questions to consider:
- Is this activity for commercial use?
- Is your primary intention to get revenue?
- Do you regularly repeat your activities?
- Are your activities planned, organized and implemented as business oriented?
If you answered "yes" to most of the questions above, you might be doing business.
There are three (3) types of business entities that can be carried on in Malaysia:
- Sole proprietorship / partnership business – is a business carried on regulated under the Business Registration Act 1956 (Act 197).
- Company – A company is a business entity incorporated under the Companies Act 2016 (Act 777) regulation.
- Limited Liability Partnership - it is an alternative business entity regulated under the Limited Liability Partnership Act 2012 (Act 743).
When starting a business, there are some other things you should consider in preparation to setup the business. Among the information which you need to know is:
- Information regarding licensing (MalaysiaBiz, BLESS)
- Information on financing (SMEinfo, MAGIC)
- Information on training (SMEinfo, MAGIC)