July 28, 2021

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Registration of Company vs. Registration of Business: What’s the Difference?

3 min read
daftar syarikat

Many would think that the Registration of Company (ROC) and the Registration of Business (ROB) are the same. You encounter these words when you plan to start a business and may get confused. Why are there different guidelines for each? Which one do I really need? What are their advantages? We’ll answer all these questions here, in contrast between ROB and ROC in Malaysia.

ROB Vs. ROC

In the bigger picture, ROB and ROC are the same- it is the process of making a business legal. But when you go to their technical definitions, ROC creates an artificial entity- the company, while ROB does not. Each process also legalizes different business entities. For example, ROB is for sole proprietorships and partnerships. Meanwhile, ROC establishes Private Limited Company, Company Limited by Guarantee, Unlimited Company, Public Limited Company, and Foreign Companies.

Registration of Business

The Registration of Business Act 1956 governs the ROB. Business registration does not create a separate entity, so the business and the owner are the same in the technical sense. This means that the liability of the business is also a liability to the owner/s, and the debtors can run after their private properties. Another disadvantage of ROB is that business owners need to renew their registrations annually.

However, the business registration process is very straightforward and affordable.  ROB adds credibility to the business and makes the entity much easier to find for customers. Businesses registered as sole proprietorship and partnerships are also much easier to manage, and their accounting and taxation compliance more straightforward. This registration is appropriate for small or starting business owners.

Registration of Company

Registration of a company is another term for incorporation. This process is more complicated than the registration of business because it creates a separation between the owners and the company itself. The goal of this separation is to protect the private properties of the owners. So in instances when the company cannot pay its liabilities anymore, the debtors cannot run after the owner’s separate properties. Additionally, the owners can’t also be held liable for the actions or negligence of the company because, in the eyes of the law, the owners and the company are separate beings.

The Companies Act of 2016 governs the registration of companies in Malaysia. Entrepreneurs typically start their businesses as a sole proprietorship or partnership and then incorporate when the business is already steadily growing. Others incorporate from the start to better get access to resources, funds, and opportunities. Some corporations also start as private ones, then go public so investors can find them easily in the daftar syarikat (company list) and buy their stocks. Between ROB and ROC, ROC provides more options for entrepreneurs to grow and explore.

Company Formation Assistance in Malaysia

Starting a business can be very daunting. Get the proper support and do things right with company formation services in Malaysia. 3E Accounting is an internationally recognized corporate services provider and specializes in helping starting entrepreneurs like you turn their business ideas into reality. Our experts can advise you which steps to take depending on your capacity and goals. Contact 3E Accounting Malaysia today to get in touch with our expert company formation assistants!

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