Playtology

There are few types of business entities in Malaysia, quite similar to other countries, for the tricky part is the taxes. But we suggest you to look for audit or accountant consultant for more professional advises. In Malaysia, taxes are charged around 24% for corporate tax, while there’s some applicable tax deduct condition. For sole proprietor, taxation is based on income rate. Type of business entities are below:

1. Sole Proprietorship

Own and run by single individual with liable for all business debts. Only Malaysian can register sole proprietor in Malaysia. Easy and inexpensive for solopreneur to register, but disadvantage for business need to apply for fund due to less credibility and high risk of liability.

2. Partnership

Own and run by two or more individuals with liable for all business debts. Only Malaysian and permanent resident can register under this entity. Remember to write partnership agreement to protect your rights, especially for partner who only provide fund.

3. Limited Liability Partnership (LLP)

Combined of partnership and company with limited liability. All debts and assets are under legal entity. Raise capital by selling shares.

4. Private Limited Company (Sdn. Bhd.)

Company with limited liability for shareholder and separate legal entity of owner from personal assets. Can be run under sole or partnership with the subject of initial capital and auditor. Raise capital by selling shares.

5. Public Limited Company (Berhad)

Larger organization which can offer shares to public and stock exchange. Company under stringent financial and regulations.

6. Unlimited Company

Unlimited liability company that offer less complex structure than private limited company. Suitable for business can cover up with personal assets.

7. Foreign Company

Company owned by foreigner or branch by foreign company. Higher corporate tax.

For solopreneur and socialpreneur, consider a sole proprietor or partnership during start-up will be easier to balance and amend your business plan since you will only pay for income tax based on your profits. Once your revenue goes higher and steady, you may change to Sdn Bhd anytime for less taxation. But you have to go through the process of company set up and close down the account of your sole proprietor, unless you have enough initial capital or investors to register a Sdn.Bhd, but make sure to prepare enough fund to maintain even without making profit.