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What is a Sdn Bhd?

Thinking of starting a new business and quickly get it up and running?

There are four different set-ups to suit your nature of business, according to SME Corporation Malaysia (SME Corp).

These are Private Limited Company (Sdn Bhd), Limited Liability Partnership (LLP), Sole Proprietorship, and partnership.

What is Private Limited Company (Sdn Bhd)?

Private Limited Company (Sdn Bhd) is the most common form of entity in Malaysia and is suitable for small and medium enterprises (SMEs).

Sdn Bhd is a separate legal entity formed by several persons who can own property, draw up contracts and employ staff. However, a Sdn Bhd company cannot sell shares to the public.

Common examples of Sdn Bhd include family-owned businesses, and small engineering and manufacturing firms.

In terms of liability, it is limited liability. In other words, if the company fails to meet its liabilities, its creditors cannot seize the owners’ personal assets.

The estimated cost of setting up a Sdn Bhd company is RM1,060++ (yearly maintenance is RM2,500) and the time for registration is seven working days.

As for income tax compliance, Sdn Bhd enjoys a preferential tax rate of 18% for the first RM500,000 chargeable income. This leads to better tax planning and savings.

As for business continuity, the company will still exist even after the key owner has passed on.

In addition, as Sdn Bhd is perceived as more reliable and sustainable, it enjoys easier and higher credibility for financing opportunities.

According to SME Corp, Sdn Bhd is recommended for owners wanting the liability protection of a company with less corporate formalities, and the simplicity of pass-through taxation of income.

Sdn Bhd is the best choice for SMEs as customers prefer to trade with Sdn Bhd due to higher commitments and responsibilities in operation.

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