LLP is a hybrid between Sdn Bhd and Partnership and, according to SME Corp, LLP is a suitable form of entity for startups and small businesses.
Startups are young companies, or early-stage companies, founded to develop a unique product or service that society needs but not created yet. Such a company or venture is focused on a product or service that the founder or entrepreneur wants to bring to market.
Meanwhile, common examples of small businesses are professional service businesses.
As for liability of LLP, there is protection of limited liability to its partners with flexibility of internal business regulation similar to that of a conventional partnership.
The estimated cost of setting up an LLP company is RM500++ (yearly maintenance is RM200) and the time taken for registration is four to seven working days.
Income tax compliance for LLP is treated like a Sdn Bhd, with similar preferential tax treatment on the first RM500,000 of chargeable income.
Business continuity-wise, the LLP company will still exist after the key partners have passed away.
LLP is recommended for owners wanting the liability protection of a company and intends to run a small-scale business.
Furthermore, LLP has lesser compliance requirements and is, therefore, a more affordable business vehicle.
However, this form of entity is not sustainable once the scale of operations gets big and you need to infuse additional stakeholders, SME Corp added.