Starting a business in Indonesia is an exciting endeavor, but navigating the legal landscape can be overwhelming for first-time entrepreneurs. Whether you’re launching a small startup or opening a branch of an international company, it’s crucial to comply with local regulations from the very beginning.
Here’s a step-by-step guide to legally registering a business in Indonesia:
1. Choose the Right Legal Entity
The most common types of business entities in Indonesia are:
- PT (Perseroan Terbatas) – A limited liability company, suitable for local or foreign investors.
- CV (Commanditaire Vennootschap) – A partnership firm, typically used for small-scale local businesses.
Foreign investors generally opt for PT PMA (Penanaman Modal Asing), a special type of PT that allows foreign ownership.
2. Reserve Your Company Name and KBLI
Your company name must be unique and approved by the Ministry of Law and Human Rights. It should not resemble existing companies or violate moral and public order standards.
KBLI, or Klasifikasi Baku Lapangan Usaha Indonesia, is the Indonesian Standard Industrial Classification. It’s a five-digit code used to categorize a company’s business activities. When registering a business, owners must specify the appropriate KBLI codes that accurately reflect their business operations. To decide on the correct KBLI, business owners should carefully review the detailed list of codes provided by the Indonesian Central Bureau of Statistics (BPS) and select those that most closely match their intended business activities. It is crucial to choose the right codes as they impact licensing requirements and other legal aspects.
3. Prepare the Deed of Establishment
This deed, drafted by a notary, includes your company’s articles of association and must be legalized by the Ministry of Law and Human Rights.
4. Register with OSS (Online Single Submission)
Through the OSS system, you will obtain:
- Business Identification Number (NIB)
- Company’s Business License
- Location and Environmental Licenses (if required)
This process can now be done entirely online, making it more efficient than ever.
5. Obtain Tax Registration (NPWP)
All businesses in Indonesia must register with the Tax Office to obtain a Taxpayer Identification Number (NPWP). This is required for issuing invoices and handling employee taxes.
6. Register for Social Security (BPJS)
If you hire employees, you are legally obligated to register them with BPJS Kesehatan (health insurance) and BPJS Ketenagakerjaan (employment insurance).
Starting a business involves more than just a great idea. Legal compliance ensures your venture can operate smoothly and avoid penalties. If you’re unsure about legal procedures or documentation, Mylaw.id can help your needs — from business registration to legal advisory.