What Is The Difference Between Sole Proprietorship/Enterprise And Sdn. Bhd. Company In Malaysia?
Q1: What sets apart an Sdn. Bhd. from a Sole Proprietorship in Malaysia?
A1: Sdn. Bhd. and Sole Proprietorship are distinct business structures in Malaysia. A Sdn. Bhd., or private limited company, is a legal entity with its own rights, capable of owning property and enjoying perpetual succession. Conversely, a Sole Proprietorship is a business owned and managed by a single individual.
Q2: How do liability terms differ between Sdn. Bhd. and Sole Proprietorship?
A2: In a Sdn. Bhd., shareholders’ liability is limited to their share capital. This means their personal assets remain separate from those of the company, shielding them from its debts. Conversely, in a Sole Proprietorship, the owner is personally liable for all business obligations.
Q3: Which business structure is preferable for Malaysians or foreigners?
A3: Sole Proprietorship may suit Malaysians running small or home-based ventures, while Sdn. Bhd. is ideal for expansion or for foreigners establishing a company in Malaysia.
Q4: Can foreigners register a Sole Proprietorship in Malaysia?
A4: No, only Malaysian citizens or permanent residents can register a Sole Proprietorship. However, foreigners can establish a Sdn. Bhd. in Malaysia.
Q5: How does one terminate their business?
A5: Sole proprietors can terminate their business registration via the SSM ezbiz portal, while Sdn. Bhd. must follow formal winding-up or striking-off procedures under the Companies Act 2016
Q6: What factors differentiate a Sdn. Bhd. from a sole proprietorship in Malaysia?
A6: A Sdn. Bhd. provides limited liability protection to shareholders, whereas a sole proprietorship holds the owner personally liable for all business debts.
Q7: Should one opt for a sole proprietorship or partnership in Malaysia?
A7: The choice depends on factors like business nature, desired control level, and profit-sharing. Consulting with a business advisor or accountant is advisable.
Q8: Can a Sole Proprietorship be converted into a Sdn. Bhd.?
A8: Yes, by incorporating a new Sdn. Bhd. and transferring assets and liabilities from the Sole Proprietorship.
Q9: What are the tax implications for Sdn. Bhd., sole proprietorship, or partnership in Malaysia?
A9: Sdn. Bhd. faces corporate tax, while sole proprietorships pass income to owners, taxed at individual rates.
Q10: What are the requirements for incorporating a Sdn. Bhd.?
A10: Requirements include at least one Malaysian director, RM1 minimum paid-up capital, at least one shareholder, and a registered office address in Malaysia.
Q11: What are the requirements for registering a Sole Proprietorship?
A11: Malaysian citizens or permanent residents can register a Sole Proprietorship with a valid personal identification document through the Suruhanjaya Syarikat Malaysia (Companies Commission of Malaysia).
Q12: Are audited financial statements mandatory for Sdn. Bhd. and Sole Proprietorship?
A12: Yes, Sdn. Bhd. must submit audited financial statements annually, while Sole Proprietorships are exempt.