Type of Business Entity For Me

SYOB? Congratulation to you.

Here's a breakdown of the different types of business entity to choose.

1. Sole Proprietorship:

• Simplest and easiest to form.

• Owned and operated by one person.

• All profits and losses belong to the sole owner.

• No distinction between the business and the owner's personal assets. This means the owner has unlimited liability for business debts – if the business can't pay, the owner's personal assets can be seized.

• Easy to set up and maintain.

• Good for small, low-risk businesses.

• Tax - income earn from sole proprietorship to be accounted as Individual Income under Form e-B.

• Go to https://ezbiz.ssm.com.my/ to register.

2. Partnership:

• Owned by two or more people (partners).

• Partners share profits, losses, and management responsibilities according to a predetermined agreement.

• There are two main types of partnerships:

  • General Partnership: All partners have unlimited liability for the business's debts.

  • Limited Partnership: At least one partner (general partner) has unlimited liability, while others (limited partners) have liability limited to their investment in the business.

• Relatively easy to form.

• Good for businesses where partners bring complementary skills and resources.

• Tax - income earn from partnership to be accounted as Individual Income under Form e-B.

• Go to https://ezbiz.ssm.com.my/ to register

3. Limited Liability Partnership (LLP):

• Similar to a general partnership, but with limited liability protection for some or all partners.

• Partners' personal assets are generally shielded from business debts, except in cases of negligence or malpractice.

• Offers more flexibility in profit-sharing arrangements than an LLC.

• More complex to form and maintain compared to a general partnership.

• Often used by professionals such as lawyers, accountants, and architects.

• Tax - Income earn in LLP is a corporate tax, simiar to Sdn Bhd, at 15% to 24%.

4. Private Company (Sdn Bhd):

• Separate legal entity from its owners (shareholders).

• Offers limited liability protection to shareholders. Their personal assets are not at risk if the company incurs debts.

• More complex and expensive to set up and maintain compared to other structures.

• Requires compliance with stricter regulations.

• Suitable for businesses aiming for growth, attracting investors, or limiting owner liability.

• Tax - Income generated in Sdn Bhd is a corporate tax, simiar to LLP, at 15% to 24%.

Choosing the Right Structure:

The best ownership structure depends on various factors like:

• Number of owners

• Liability preferences

• Growth potential

• Management complexity

Consider consulting Your Advisor to determine the most suitable structure for your specific business needs.