Today’s young people are very business-minded and very bold and innovative. But before doing business, everyone needs to figure out the unit and form of business registration. The following is a summary of the differences between Enterprise and Sdn Bhd, so that friends who plan to do business can refer to it!
| Enterprise | Sdn Bhd | |
| Legal status | There is no legal status. The business owner and the company are the same entity and are not separate | Belongs to an independent individual and has legal status. The company’s investors (shareholders) contribute capital, and the chairman runs the company |
| Number of business owners/shareholders | 1. Sole Proprietorship: 1 person 2. Partnership: 2-20 people | 2 to 50 people |
| Debt liability | Unlimited. Business owners are fully responsible | Limited to paid-up capital paid or not yet paid by shareholders |
| Permanent operation | Once the identity of the business owner changes (such as bankruptcy, death, resignation or new partners), it will be dissolved | Perpetual extension, rights can be transferred to other persons/companies through share transfer |
| Asset and property ownership | Belongs to all business owners and enjoys it jointly | Owned by the company, not the shareholders |
| Business management | Therefore, the business owners jointly manage | Jointly managed by the Chairman. At least 2 directors are required |
| Tax rate | The profits earned will be added to the business’s personal income and will be subject to personal income tax | If the paid-in capital is not more than RM2.5 Million, the first RM500,000 is 20%, and the excess is 25% |
| Is it necessary to appoint a company secretary and auditor? | Unnecessary | Need |
| Can I get a bank loan? | Difficult and often depends on the personal financial situation of the business owner | Easy, depending on the company’s cash flow and business prospects |
Sdn Bhd has at least 2 shareholders and must appoint a company secretary. However, it is not necessary to appoint an accounting firm to do the accounting. You can hire your own staff to do the accounting. The company’s accounts, whether they are income or expenses, must be clear for each transaction, and must be audited and a tax agent must be appointed to file taxes. The advantage is that it is easier to apply for bank loans, undertake some large-scale projects, buy and sell or trade, and obtain government contracts. Moreover, it is a limited liability, and the company’s finances are independent. If the company’s finances are in trouble, it will not affect personal assets. But the disadvantage is that the accounts must be clear, the fees are relatively high, and it is more difficult to “avoid” taxes.
Enterprises also need to have simple accounts but no audit is required, and there is no need to report company accounts. You only need to report the profits earned by your company on your personal income tax. The advantage is that the cost is low and it is easier to “avoid” taxes, but it is more difficult to apply for loans or obtain some large transactions and government bids. Moreover, the company’s finances will affect personal assets. If the company goes bankrupt, creditors can apply for a court order to seize and auction the assets in the individual’s name to repay debts.
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