Business

Entity

Characteri
stics

Liability

Taxation

Sole Proprietorship

Partnership

Company/Corporatio
ns

Limited Liability
Partnerships (LLP)

- Owned by one person who

is called a sole proprietor
- There is no audit and
annual filing requirement

- Legal form of business

with two or more owners
Partner
share
the
management
responsibilities

- Owned by at least 2
persons,
up
to
any
number and it can be
either a private limited
company or public limited
company.
The
business
is
managed by directors.

- Unlimited liability
- If the sole proprietorship
cannot meet its liabilities,
the creditors may go after
the owners personal assets
- There is no protection to
the owners personal assets
- Tax at scale rate of 0% 26%
(where chargeable income
exceeds RM 100 000)
- The business has no
distinction
from
the
individual and income from
the business will be charged
to tax on the individual

- Unlimited liability
- The partners are equally
responsible for the entire
debts of the business

- Limited liability
Protection
for
the
shareholders
personal
assets
against
commercial risk

- Tax at scale rate of 0% 26%

(where chargeable income
exceeds RM 100 000)
- The business has no
distinction
from
the
individual partners and
their share of salary and
profit will be assessed to
tax on the respective
partners

- Tax at 20% tax rate on

the first RM 500 000
chargeable
income,
balance at 26%
- A company is taxable
entity separate from its
shareholders; and the
shareholders are only
assessed on the profits
that flow to them in the
form of dividens

Hybrid
between
company
and
conventional
partnership
- A separate legal entity
which has the unlimited
capacity
to
hold
property
while
the
partners
enjoy
the
limited liability status
- A partner is not
personally
liable,
directly or indirectly for
an obligation of an LLP
solely by reason of
being a partner of the
LLP
- Tax at 20% tax rate on
the first RM 500 000
chargeable
income,
balance at 26%
- The partners are only
assessed
on
the
remuneration
receive
from the LLP
- Distribution of profits
are not taxable on the
partners.

Governing
Law

- Registration of Business Act

1956

- Partnership Act 1961

- Registration of Business
Act 1956

- Companies Act 1956

Limited
Liability
Partnerships Act 2012

References
[1] Forms of Business Entity and Business Support System. Lecture Notes. UTM
[2] Low Jenny. Types of Business Ownership in Malaysia. Academia.edu. Retrieved from
http://www.academia.edu/7219427/Types_of_business_ownership_in_Malaysia
[3] Richard Oon (2013). Business Structure. Retrieved from http://www.slideshare.net/richardoon5/business-structures-inmalaysia

Prepared by: MOHD RADZEE BIN AZMAN

ID MATRIX: A12KM0160
Course:
ENTREPRENEURSHIP & ENTERPRISE DEVELOPMENT (Section 20)