Private Limited Company
A private limited company is a separate legal entity from its shareholders and directors. It offers limited liability protection and is one of the most popular business structures in Malaysia.Pro
- Separate legal entity
A Sdn. Bhd. is legally separate from its owner. This means the company can own property, enter into contracts, and sue or be sued in its name. - Flexible Ownership
A Sdn. Bhd. can be owned by locals or foreigners. It can also start with just one (1) shareholder and up to 50 shareholders, which makes it flexible for small businesses, growing businesses, and long-term planning. - Stronger Business Credibility
Operating as a Sdn. Bhd. gives your business a stronger and more professional image, as this legal structure is widely recognised and trusted by banks, investors, suppliers, and government agencies in Malaysia. - Business Continuity
A Sdn. Bhd. is easier to transfer, sell, or pass on to the next generation. This makes it a better option for owners who want to build a business with long term value. - Better Tax Planning
Sdn Bhd offers flexibility in how you manage income:- You can pay yourself a salary, which becomes a deductible expense for the company.
- You can receive dividends from the company’s profit — and sometimes, you pay no tax, or with a cap at 2%.
- Lower Corporate Tax Rates and Tax Planning
A Sdn. Bhd. can enjoy lower corporate tax rates for the first portion of chargeable income. This can help business owners keep more profit in the business and plan growth more wisely. May refer to the tax structure as per below:
Personal Tax Rate
| Chargeable Income (RM) | Tax Rate |
|---|---|
| First 100,000 | Effective rate ~ 9.4% (but marginal rates go up to 21% within this band) |
| 100,001 – 250,000 | 24% |
| 250,001 – 400,000 | 24.5% |
| 400,001 – 600,000 | 25% |
| 600,001 – 1,000,000 | 26% |
| Above 1,000,000 | 28% – 30% |
Once chargeable income exceeds RM100,000, the marginal tax rate jumps to 24% and continues rising.
Corporate Tax for Sdn Bhd (SME)
| Chargeable Income (RM) | Tax Rate |
|---|---|
| First RM150,000 | 15% |
| Next RM450,000 (RM150,001 – RM600,000) | 17% |
| Above RM600,000 | 24% |
Want to know more? You may schedule a virtual meeting with us.
While a Sdn. Bhd. offers many advantages, it also involves higher setup and maintenance costs, along with more compliance work to keep the company properly managed and legally up to date.
Cons
- Compliance requirement
A Sdn. Bhd. requires regular administrative work, like filing annual returns with SSM, submitting audited account, and keeping company records in proper. Most business owners work with a company secretary, accountant, and tax agent to keep everything running smoothly. - Cost
Because of compliance requirements, running a Sdn. Bhd. costs more than simpler business structures. Closing down the company also takes more time and additional costs.
