| Topic |
Sdn Bhd (Private Limited Company) |
Enterprise (Sole Proprietorship) |
|---|---|---|
| Limited Liability Protection | Shareholders’ liability is limited to their share capital, protecting personal assets from company debts and liabilities. | Owner has unlimited liability; personal assets can be used to settle business debts. |
| Separate Legal Entity | The company is a distinct legal entity, capable of owning property, entering into contracts, suing, and being sued independently of its shareholders. | No separate legal entity; business and owner are the same. |
| Perpetual Succession | Company continues to exist regardless of changes in shareholders or directors, ensuring business continuity. | Business ends if the owner dies or withdraws. |
| Lower Tax Rates and Tax Benefits | Corporate tax rates are generally lower, start from 17% to 24% with eligibility for tax incentives and exemptions. | Income is taxed as personal income, with rates up to 30%, generally higher tax burden. |
| Stronger Financing Ability | Easier to obtain bank loans and attract investors; can raise capital through share issuance. | Financing mainly depends on personal funds or loans, harder to secure external funding. |
| Professional Business Image | Higher credibility with customers, suppliers, and investors, enhancing business opportunities. | Lower market credibility. |
| Flexible Share Transfer | Shares can be transferred to new investors or heirs, allowing flexible ownership changes. | Ownership cannot be transferred. |
| Hiring Foreign Employees | Can apply for work permits to hire foreign talent. | No such facility is available. |
| Incorporation Requirements |
- Minimum 1 director (aged 18+, resident or non-resident) - Minimum 1 shareholder (individual or corporate, foreigners allowed 100% ownership) - Must appoint a licensed company secretary within 30 days |
No director or secretary required; owner manages business directly. |
| Capital Requirements | No minimum paid-up capital; can start with as low as RM1, with the option to increase later. | No capital requirements. |
| Incorporation Process |
1. Name reservation with SSM 2. Prepare and sign incorporation documents 3. Submit to SSM 4. Appoint a company secretary 5. Open a bank account and obtain licenses Typically completed within 3–10 working days |
No formal registration process; a business can start immediately after registration with SSM as a sole proprietorship. |
| Legal Entity and Liability | Company assets are liable for debts; shareholders’ personal assets are protected. | Owner is personally liable for all business debts and obligations. |
| Annual Compliance | Mandatory submission of annual returns, audited financial statements, and tax filings to SSM. | Minimal compliance; no audited reports required. |
| For E-Invocing | Company TIN | Personal TIN |
Malaysia