How to Start a Company in Sabah (Kota Kinabalu Guide)

Starting a company in Sabah, particularly in Kota Kinabalu, is slightly different compared to other parts of Malaysia. While the incorporation process is still handled by SSM, there are additional local requirements, especially for licensing and operations.

This guide gives you a practical overview, especially if you are not from Sabah or a foreigner planning to set up a business here.

✅ 1. Incorporate Your Company with SSM

The first step is to register your company as a Sdn Bhd with SSM.

You will need:

• At least 1 director residing in Malaysia

• At least 1 shareholder

• A registered address

• A suitable company name

For foreigners:

• You can be a shareholder

• But you will usually need a local resident director

📍 2. Understand Sabah-Specific Requirements

This is where things differ.

Even after incorporation, many businesses in Sabah must deal with local authorities, especially if you are operating from a physical premise.

In Kota Kinabalu, this usually involves:

• DBKK (Dewan Bandaraya Kota Kinabalu)

• Local trade licence requirements

👉 Incorporation alone does NOT mean you can start operating immediately.

👉 Application of Trading License under DBKK must require at leasts 1 director to be a Sabahan

🪪 3. Work Permit / Expatriate Pass (For Foreigners)

If you are a foreigner and plan to work in your own company in Sabah, you will need a valid work permit.

Common options include:

• Expatriate Pass (EP)

• Other relevant work permits depending on your role

Important points:

• You cannot legally work in Malaysia without a valid permit

• Approval depends on your company structure, role, and business activity

• Some applications require supporting documents and justification

• Different structure of ownership between foreigner and local would lead to different requirements for share capital and allocations of shares.

👉 This step is often overlooked and can delay business operations if not planned early.

🏢 4. Business Premise & Address

For many businesses, having a proper address is important.

Options include:

• Physical office or shop

• Shared office

• Virtual business address (for certain cases)

Some licences may require:👉 A physical inspection of the premise

📄 5. Apply for Relevant Licences

Depending on your business activity, you may need:

• DBKK trade licence

• Industry-specific licences

👉 Requirements vary depending on your business type.

👥 6. If You Hire Employees

Once your business starts operating, you will need to handle employer obligations:

EPF (KWSP)

• Register as employer

• Make monthly contributions

SOCSO / PERKESO

• Register employer and employees

• Monthly contributions required

LHDN (Employer Registration)

• Register employer account

• Handle Monthly Tax Deduction (PCB)

• Submit Form E annually

💼 7. Set Up Payroll & Records

Payroll is not just paying salary.

It includes:

• Payslips

• EPF / SOCSO / PCB deductions

• Proper record keeping

👉 Many small businesses overlook this early on.

⚠️ Common Challenges (Especially for Non-Sabahans & Foreigners)

• Not understanding local licensing requirements

• Assuming SSM registration is enough

• Work permit delays

• Difficulty dealing with local authorities

• Lack of local guidance

💡 Practical Advice

Starting a business in Sabah is straightforward if you understand the process.

The key differences are:👉 local licensing requirements👉 work permit requirements for foreigners

Having proper guidance can help you:

• avoid delays

• avoid unnecessary applications

• start operating faster

✅ Final Thoughts

Setting up a company in Kota Kinabalu involves more than just incorporation. Understanding local requirements, licensing, and compliance is essential for a smooth start.

📲 Need Help Getting Started?

If you are planning to start a business in Sabah, feel free to reach out via WhatsApp. We’ll guide you step by step.