ADVANTAGES SDN BHD VS SOLE PROPRIETORSHIP

Separate Legal Entity

Private Limited Company (Sdn. Bhd.) is a legal entity and a juristic person established under the Companies Act 2016. Hence, a company has a range of legal capacities including opening of a bank account, hiring of employees, taking on equity or obtaining licenses and more as an independent corporate entity. The members (Shareholders/Directors) of a company have no personal liability to the creditors of a company for company’s debts.

You are the Boss

A Sole Proprietor has complete control and decision-making power over the business. All profit will go to business owner pocket directly.

Owning Property

Private Limited Company (Sdn. Bhd.) being an artificial person, can acquire, own, enjoy and alienate, property in its name. The property owned by a company could be machinery, building, intangible assets, land, residential property, factory, etc., No shareholder can make a claim upon the property of the company – as long as the company is a going concern.

No Corporate Tax Payments

Sole Proprietorship is not a legal entity, all its chargeable income will be taxed at business owner personal income tax.

Easy Transferability

Ownership of a business can be easily transferred in a company by transferring shares. The signing, filing and transfer of share transfer form and share certificates is sufficient to transfer ownership of a company. In a private limited company, the consent of other shareholders may be required to effect share transfers.

Lowest Annual Cost

Compare to Private Limited Company (Sdn. Bhd.),Limited Liability Partnership or Partnership, Sole proprietorship has the lowest annual maintenance cost.

Uninterrupted Existence

Private Limited Company (Sdn. Bhd.) has ‘perpetual succession’, meaning uninterrupted existence until it is legally dissolved. A company being a separate legal person, is unaffected by the death or other departure of any member and continues to be in existence irrespective of the changes in ownership.

Less Formal Business Requirements

Most of the Sole Proprietorship are micro or small business owners, there are lesser rules & regulations need to be complied by Sole Proprietorship (e.g. Exempt from preparing audited report).

Borrowing Capacity

Investors, Venture Capitals, Banks and Financial Institutions prefer to provide funding to a company rather than partnership firms or proprietary concerns.

Winding Up Easily

You can visit SSM to close your Sole Proprietorship immediately or your Sole Proprietorship will be closed automatically if you did not pay your annual fee on time.

Lower Income Tax Rate

The highest income tax rate of Private Limited Company is 24% while highest income tax rate of individual can up to 28%. Distribution of income wisely may help in income tax saving.

Minimum Entry Requirements

Sole Proprietorship is the most common and simplest business vehicle in Malaysia, any Malaysian citizen or Permanent Resident can register it themselves easily.