In Malaysia, for anyone to start running a business will have to undergo business registration with the Companies Commission of Malaysia abbreviated SSM (Suruhanjaya Syarikat Malaysia). Given there are different types of entities available in Malaysia, it is crucial to understand their functions to ensure that it suits your business plan and expectations.
Categories of Business Entity Registration
There are three (3) main categories of business entity registration
| Name | Registration of Business (ROB) | Registration of Company (ROC) | Limited Liability of Partnership (LLP) |
|---|---|---|---|
| Regulation | Registration of Business Act 1956 | Companies Act 2016 | Limited Liability Partnerships Act 2012 |
| Legal status |
|
|
|
| Types of businesses |
|
| Limited Liability Partnership (LLP) |
Types of Businesses in Malaysia
Generally, there are 5 main types of business entities in Malaysia.
- Sole proprietorship
- Partnership
- Limited Liability Partnership (LLP)
- Private Limited Company (Sdn. Bhd.)
- Public Limited Company (Berhad)
The table below will highlight the differences of each business type:
| Sole proprietorship | Partnership | Limited Liability Partnership (LLP) | Private Limited Company (Sdn. Bhd.) | Public Limited Company (Berhad) | |
|---|---|---|---|---|---|
| Owner(s) of the business | Owned by single individual | Owned by 2 to 20 partners | Partners have share in the capital and profits | Members (shareholders) invested into the Company have certain rights relation to the Company | Members (shareholders) invested into the Company have certain rights relation to the Company |
| Legal status | Not separate legal entities | Not separate legal entities | Separate legal entities | Separate legal entities | Separate legal entities |
| Liable party towards the debts | Owner | Partners | Company | Company | Company |
| Company Secretary | Not applicable | Not applicable | Qualified company secretary | Qualified company secretary | Qualified company secretary |
| Annual compliance | Annual fee required | Annual fee required | Annual declaration and solvency statement must be filed | Annual return must be filed on each calendar year | Annual return must be filed on each calendar year |
| Audit requirement | Not applicable | Not applicable | Not compulsory unless stated otherwise | Not compulsory unless stated otherwise | Compulsory |
| Tax rate | Tax chargeable on owner (0% to 26%) | Tax chargeable on owner (0% to 26%) | Tax chargeable on Company For paid up capital less than MYR 2.5 million:
For paid up capital more than MYR 2.5 million
| Tax chargeable on Company For paid up capital less than MYR 2.5 million:
For paid up capital more than MYR 2.5 million
| Tax chargeable on Company For paid up capital less than MYR 2.5 million:
For paid up capital more than MYR 2.5 million
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