Common PT PMDN Errors

Introduction

Setting up a PT PMDN (Perseroan Terbatas Penanaman Modal Dalam Negeri), or Limited Liability Company for Domestic Investment in Indonesia, is one of the most popular ways for local entrepreneurs to establish a formal business. While it provides credibility, legal protection, and access to wider opportunities, many business owners make mistakes during the registration and operational process. These errors can lead to delays, penalties, or even rejection of the application.

In this guide, we’ll cover the most common PT PMDN errors and how to avoid them.

1. Incomplete or Incorrect Documentation

One of the biggest mistakes is failing to submit all the required documents or providing inconsistent details. Missing paperwork, mismatched addresses, or outdated identification often cause delays.

How to Avoid:

• Double-check all documents before submission.
• Ensure personal IDs, business licenses, and addresses are valid and updated.
• Work with a professional consultant if unsure about requirements.

2. Using the Wrong Business Classification (KBLI Code)

The KBLI (Indonesian Standard Business Classification) determines what activities your company can legally engage in. Many business owners either choose the wrong code or select one that requires additional licenses, leading to complications later.

How to Avoid:

• Research KBLI codes thoroughly before applying.
• Choose the code that best matches your main business activity.
• Consult with BKPM (Investment Coordinating Board) or legal experts to confirm suitability.

3. Incorrect Capital Structure

By law, PT PMDN companies must meet certain minimum paid-up capital requirements. Some entrepreneurs underestimate or misreport their capital, which can create compliance issues.

How to Avoid:

• Understand the minimum capital rules for your industry.
• Ensure that capital is clearly recorded in the company’s deed.
• Maintain transparency in financial reporting.

4. Not Appointing the Right Directors and Commissioners

Indonesia requires every PT PMDN to have at least:

• 1 Director (responsible for daily operations)
• 1 Commissioner (responsible for oversight)

Many businesses mistakenly appoint unqualified individuals or fail to align roles properly.

How to Avoid:

• Choose directors and commissioners who understand their legal responsibilities.
• Document their roles and powers clearly in the Articles of Association.

5. Delays in Tax Registration (NPWP)

Some companies forget to immediately register for a Taxpayer Identification Number (NPWP), which is essential for operations, contracts, and compliance. This can lead to penalties or business restrictions.

How to Avoid:

• Apply for NPWP immediately after company registration.
• Keep track of tax filing deadlines and requirements.

6. Overlooking Business Licenses (OSS System)

With Indonesia’s Online Single Submission (OSS) system, most businesses need to secure additional permits depending on their activities. Entrepreneurs often skip this step, which puts them at risk of being non-compliant.

How to Avoid:

• Check OSS licensing requirements for your KBLI code.
• Secure all necessary permits before starting operations.

7. Mixing Personal and Business Finances

A very common mistake is using personal bank accounts for company transactions. This leads to accounting confusion and tax complications.

How to Avoid:

• Open a dedicated business bank account under the company’s name.
• Keep financial records separate for transparency.

Conclusion

Starting a PT PMDN can be rewarding, but avoiding these common mistakes is crucial for smooth operations. By ensuring proper documentation, choosing the right KBLI code, meeting capital requirements, and staying compliant with tax and licensing rules, you’ll set a strong foundation for your business.

If you’re unsure about the process, working with professional consultants or legal advisors can save time, money, and stress.