According to SSM data (dated 3 January 2020), there are in total 1,345,546 companies incorporated in Malaysia, composed of 1,340,702 local companies and 4,844 foreign companies.

Generally, there are 5 types of business vehicles where businessmen can use to carry out their businesses in Malaysia.

They are known as:-

‐ sole proprietorship,

‐ conventional partnership,

‐ limited liability partnership (LLP),

‐ private limited company (Sdn Bhd), and

‐ public listed company (Berhad/ Bhd).

While individual tax rate has reached maximum 30%, more businessmen have opted to operate their businesses using a Sdn Bhd as the corporate tax rate applicable for Sdn Bhd is 17% to 24% only.

Whatmore under the new Companies Act 2016, Sdn Bhd is allowed to be incorporated with single shareholder and single director. Sole proprietorship who is being taxed at 26% to 30% tax rate are strongly advisable to be transformed into a Sdn Bhd. Besides tax saving, Sdn Bhd provide protection on owners’ personal assets due to its limited liability concept.

Other benefits of having Sdn Bhd are:-

1. Separate legal entity with owners
2. Limited liability
3. Perpetual succession
4. Transferable ownership (the company can be sold at certain value established)
5. Higher confidence that eases business dealing, i.e. to business partners, suppliers and customers
6. Ease up fund raising among friends and families
7. Easy access to government grant and loans or other financing
8. Dividend distribution is tax exempt for owners