Home - Sole Proprietorship Malaysia - Comparing with SDN BHD
When setting up a business, there are several governmental regulations of course. Upon fulfilling those regulation and requirements, one can carry out their business in this nation. One of such regulation you need to come across first is choosing the right company structure in Malaysia.
Yes, Malaysia offers various business structures among which you need to choose your company type first. Sole proprietorship, Partnership Company, SDN BHD or limited liability companies (LLC) are the three most popular company structures in Malaysia. Here in this article we will deal with the sole proprietorship Malaysia and also figure out how it is different from that of a SDN BHD or limited liability company.
Malaysia allows various business strategies for entrepreneurs. The nation has all corporate amenities and social facilities that a business person asks for when reciting in Malaysia. This makes the country one of the most enticing center for investors all around the world. Naturally, you can expect hard competition too, no matter wherever you want to step in into the Malaysian corporate environment.
When you are up for a business you first have to decide which business plan is preferable for your company in Malaysia. If it is a sole proprietorship the company procedure is different from that of sdn bhd or partnership business. Let’s have a looks on the Sole proprietorship Malaysia.
Before Registration process one must understand what a sole proprietorship Malaysia actually means; Sole proprietorship is a type of business where the whole business is owned by a single owner, there will be no partners or shareholders.
The business will be set using that single owner’s personal name as per his / her identity card or trade name. To incorporate a sole proprietorship business in this country, an entrepreneur needs to follow several steps. Following are the steps that must not be skipped during sole Registration of a company process:
There are some charges owner needs to pay at regular yearly interval to maintain the trade name and if a new company branch needs to be opened. The table below illustrates that minimum government fees for sole proprietorship business:
Service | Charge (RM)/ year |
Business trade name | 60 |
Personal name | 30 |
Opening of company branch | 5/ branch |
Sole proprietorship Malaysia comes with various facilities and few baggage’s as well. This is obvious for all businesses, where company gives you various facilities; in exchange you need to handle few drawbacks. Sole proprietorship may sound simple and linear and has various facilities, but drawbacks are present as well. Let us scan out those pros and cons on this type of business in Malaysia.
How Sole proprietorship is different from SDN BHD? By now you got a clear idea about sole proprietorship business in Malaysia. You also know how Registration can be done and what are the pros and cons of this type of company in Malaysia. Now let’s move one step further and compare sole proprietorship Malaysia with SDN BHD Malaysia and find out the existing differences between them.
First comes the liability sector of these two business types; owner of a sole proprietorship business is liable to all the losses and debts made in the company. However the profits are all enjoyed by the single owner too. On the other hand, SDN BHD comes with limited liabilities. Here the liability is undertaken by the company which acts as an individual entity in the company, and therefore owners are not fully liable of the losses made. Profits are in a same way well distributed among company shareholders or partners.
The sole ownership company in Malaysia owns by a single person, so no hierarchy comes in this scene. He or she is solely responsible for all the activities in the business and doesn’t need to obey or are not subjected to obligate to anyone for the company activities. SDN BHD on the other hand follows superior managements, and board of directors. The decision of any kind related to the company cannot be taken solely and must be discussed via standard meeting procedures with other designated personnel and co owners in the company.
The taxation process is much linear in case of sole proprietorship than that of SDN BHD. The trade tax or corporate tax is fully subsidized in sole ownership business. However the owner needs to pay a self employment tax. In case of limited liability Company in Malaysia standard corporate tax is applicable, and need to pay on time. So such company need to structure a tax plans to keep the taxation process clear.
Here SDN Bhd gets an advantage point as in this type of company, business continuation is very much possible if an individual owner or director leaves the company or expires during running of the company. The deeds, MoA and AoA are made keeping in mind this type of uncertainty. In case of single ownership business in Malaysia, this is not possible as the company is owned and managed by a single person. Therefore, if the owner dies, the company gets dissolved as well.
Lastly, the cost evaluation suggest that sole proprietorship Malaysia takes very less expenses to run the business in contrast to the business establishment and running cost needed for the SDN BHD in Malaysia. The cost of running sole ownership business is almost negligible, no; company secretary or other company recruitment is needed if business doesn’t ask one.
The establishment cost is less and governmental requirements are also negligible in Sole Ownership Company. However, this is not the case for Limited liability Company; here hiring a company secretary is mandatory by the company law of Malaysia. Such companies need to deal with the expenses such as employers’ salaries, allotment cost for business premises, purchase office equipment and other mandatory expenditures.
Here are the sole proprietorship Registration of a company steps:
This is a simplest business type in Malaysia, where a single individual registers and owns a company. As a result, he/she manages this whole company by his/her own and enjoys the benefits and liabilities by his/her own as well.
Yes, despite sole proprietorship is all about a single owner, where business is managed and run by an individual person under the Businesses Registration Act 1956, but if the owner requires, he/she can hire employee employees in the company.
The sole ownership business can be registered from the nearest SSM counter by submitting Form A and other recommended documents, or by online registering via Ezbiz Online services at ezbiz.ssm.com.my.
The only big difference between sole proprietorship (single ownership), partnership and private limited companies is in the ability to protect business owners from legal liability in case anything goes wrong. If you set up your business as an Sdn Bhd, you and your shareholders will be protected by the corporate membrane. And the other hand, A sole proprietorship is businesses which are owned by just one individual. Owners of sole proprietorship experience unlimited liability.
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