Malaysia has several legal forms your company can take, but the private limited company is by far the most popular. There are several reasons for this, and depending on how you plan to run your business, they might be enough to make this form of corporate organisation the right one for you.
Private limited companies have legal advantages over other ways of doing business. For one thing, the law considers them separate entities from their owners. This is true even if you’re the only person who works there. Say your company, a land management firm, buys land. That land, its liabilities and its income, flow through the company, rather than yourself. This has obvious benefits if your business is highly speculative or if there’s a tax advantage to owning the property through the company.
Malaysia’s tax code is also very friendly toward private limited companies. In fact, income for this type of entity is lower than even the personal tax rate citizens pay on their wages. This may be one reason banks are generally more willing to lend to a private limited company. There’s also a certain amount of respect that foreign and domestic trading partners have for the Sdn Bhd form, which is how your company indicates its status on official documents. This respect is perhaps less tangible than a lower tax rate, but it’s still a major factor driving Malaysians’ choice in corporate forms.
You have several organisational forms to consider when you’re setting up your small business in Malaysia. The private limited option offers plenty of advantages, which is why the majority of local entrepreneurs choose it.