Difference between SDN BHD, Sole-Proprietor and Partnership

Types of business structures and company incorporation in Malaysia

  • Sole-Proprietor: is a traditional and a commonly used business structure around the word. Sole Proprietor is also known as a Sole Trader. For some businesses, this structure is suitable because it is the easiest and the cheapest form of business structure out there.
  • Partnership: is the second most common structure of business out there. Basically what happens in a partnership is that the business is owned by two or more separate entities.
  • SDN BHD: stands for Sendirian Berhad. SDN BHD is a private limited company which cannot make its shares available to the general public. To Incorporate or register a SDN BHD (Private Limited or LLC) company in Malaysia must have a minimum of 2 directors. As the shareholder / director of a SDN BHD, you don’t need to put your personal wealth and assets at risk.

Why is choosing the right business structure for your business important?

Choosing the right business structure is crucial decision for a business. If the right business structure is chosen it boosts a business towards success. The correct business structure will help businesses to reach their full potential. If a business fails in choosing the right structure it will face several severe difficulties while operating in the long run.

Setting up a company in Malaysia by using the SDN BHD (Sendirian Berhad) structure is the best choice for an Entrepreneur. This structure should be opted for by an entrepreneur who is committed and ambitious about his or her business. There are major benefits of using this structure which no other structure offers.

  1. The liability is limited. An entrepreneur’s personal wealth is protected if the business encounters a loss or if the business fails.
  2. Another major advantage of this structure is that the income tax risk exposure is low. Most SDN BHD are better managed and regulated. The tax planning is better as the company is a separate legal entity. Tax saving up to 20% compared to individual tax rate.
  3. The Business Continuity will never stop. A company using SDN BHD structure will never expire and the company will exist even if the key owner passes away.
  4. Getting a loan is easier for this structure. It all depends on company’s cash flow, strategy and business prospects. Accounts of SDN BHD Company are more reliable and trustworthy.

Incorporation company in Malaysia require you to engage the service of company secretary, to help you to complete the company registration process.

Every company (sdn bhd) must have at least one company secretary in the Board and the company secretary must be a member of a professional body or licensed by SSM Malaysia.

Contact Bayabumi Accountancy Services today for all your incorporation needs.

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