Comparison between the business entities in Malaysia

sarah
March 28, 2022
2:18 am
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	BUSINESS	BUSINESS	COMPANY	LIMITED LIABILITY PARTNERSHIPS (LLP)
	Partnership	Sole Proprietorship
Capital Contribution	Partners	Own contribution	Capital	Partners
Ownership	Owned by two (2) or more persons but not exceeding 20 persons	Wholly owned by a single individual	Private Company At least one (1) director who ordinarily resides in Malaysia by having a principal address of residence in Malaysia and one (1) shareholder. Public Company At least two (2) directors who ordinarily reside in Malaysia by having a principal address of residence in Malaysia and a minimum of one (1) shareholder.	- At least two (2) persons (wholly or partly, individual or corporate body) - Unlimited for the number of partners
Legal Status	Not a separate legal entity	Not a separate legal entity	Separate legal entity	Separate legal entity
Liability Party (responsible for debt)	Partners	Partners	Company (liability is limited to the number of shares invested or guaranteed)	LLP
Management Responsibilities	Partners	Partners	Board of Directors	Partners
Personal Liability	Unlimited liabilities (jointly and severally liable with partnership) which may include partner's personal assets	Liability to the owner is not limited to invested capital. It also includes the personal assets of a single owner	Private Company Limited By Shares (Sdn. Bhd., Public Company Limited By Shares (Berhad) & Company Limited by Guarantee No liability against directors or shareholders. The liability of members is limited to the amount of capital invested in the company Liabilities incurred by directors or shareholders to the extent of the non-paid capital	Conventional Partnership to LLPThe liability incurred is limited to an agreed agreement There is no liability to the partners except for wrongdoing or omission or without authority Private Limited Company to LLPThe partner’s liability is jointly and severally with LLP to the extent of the non-paid partner’s capital
Risk	Risk contribution to partners	Full risk on the business owner	Investment risk does not involve personal assets	Risk contribution to partners
Advantages and disadvantages	Advantages: Easy to set up Easy to get capital Disadvantages: Unlimited liability	Advantages: Easy to set up Disadvantages: Limited capital Unlimited liability	Advantages: Company shares may be traded with the approval of other shareholders Higher capital Long lifespan (owner and companies are separate entities) Shareholders are protected by law Disadvantages: Longer procedure of incorporation The cost of incorporation is quite high	Advantages: Limited liability Partners' asset is protected Disadvantages: An LLP must have at least two (2) members. If one (1) member chooses to leave the partnership, the LLP may have to be dissolved.
Taxation	Income tax	Income tax	Corporate tax Income tax on individual shareholders	Corporate tax Income tax on individual shareholders
Business Termination / Dissolution of Company	Easy to terminate and shorter procedure (no fees required)	Easy to terminate and shorter procedure (no fees required)	Takes a long time and procedure to dissolve the company	Takes a long time and procedure to dissolve the LLP