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18 JUN 2021
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4:14 PM

Operating Your Business As A Sdn Bhd – Is It Right For You?

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SDN BHD incorporation services or a Sendirian Berhad (SDN BHD) company in Malaysia is a private limited business entity that can be started by both locals and foreigners. All businesses in Malaysia are required to be registered with the Companies Commission of Malaysia (SSM). The SSM is the governing body that oversees the companies operating in Malaysia, and an SDN BHD in Malaysia is no exception to the rule.

Eligibility to Incorporate a Sdn Bhd Company

It takes a minimum of one director and one shareholder to incorporate a company in Malaysia where the director and shareholder can be the same person. You need to meet the following criteria to be a director for a company:

  • 18 years old and above
  • Residing in Malaysia
  • Not excluded under Section 198 of the Companies Act 2016

Before incorporating a company, it is necessary to understand the roles of directors and shareholders to ensure that you carry out your responsibilities and protect your rights in the company

Why You Should Consider Operating Your Business as a Sdn Bhd Entity

There are several benefits to starting a business in Malaysia. Aside from the country’s strategic location which places it close to several other major Asian markets, Malaysia was also ranked by the World Bank in 2016 as the 18th easiest country in the world to do business. 100% foreign ownership is also allowed for a company SDN BHD in Malaysia, which has appealed to many foreigners. An SDN BHD company is among the most popular business entity options in Malaysia because it is considered a separate legal entity from its owners. As one of the most established business entities in the country, its excellent reputation has made acquiring a loan much easier. Here are the top four reasons to incorporate an SDN BHD and get support from SDN BHD incorporation services in Malaysia as the business entity.

1. To operate a business as a foreigner residing in Malaysia

Foreigners have limited choices when it comes to setting up a business entity to operate a business in Malaysia. The incorporation of a Foreign Company is costly as it requires a high share capital and high incorporation charge, so your best bet would be to incorporate an SDN BHD, or in other words, a private limited company. The requirements for a foreigner to incorporate an SDN BHD are the same as a Malaysian where only 1 director and shareholder (which can be the same person) is needed to form an SDN BHD. You only require to provide your proof of residency in Malaysia. However, you might not be allowed to operate certain types of businesses according to the regulations of the local authorities.

2. To operate a business in regulated industries

The manufacturing sector, construction sector, medical sector, oil & gas sector, finance sector, and telecommunication sector are some of the examples of regulated industries in Malaysia. Apart from registering your business entity with SSM, you might require to get a specific license from the respective governmental authority to operate your business legally. That often requires your business to be registered as an SDN BHD with a minimum paid-up capital; hence, it is advised to check out the MalaysiaBiz portal for suggestions on the business licenses that you require based on types of industries and locations of your business before deciding on which business entity to register.

3. To separate your personal and business liabilities

Your SDN BHD is a separate legal entity. Just like an independent individual, it can earn income, acquire properties, begin a contract with a third party, and be a part of legal actions. Even though you own the SDN BHD as a shareholder and manage it as a director, the SDN BHD itself bears accountability for compliance matters and other day-in-day-out operations. Your personal property is protected should the business fail or suffer losses. For example, if your SDN BHD is accused by a business or an individual, they are only entitled to compensation based on the available funds and assets of the SDN BHD, not the personal assets of directors and shareholders. However, you can still be held responsible if you are found to be negligent towards your business.

4. To enjoy corporate tax advantages

If you are operating your business as a Sole Proprietorship or a Partnership, there is no differentiation between personal income tax and taxes for your business; in other words, if your estimated annual profit is RM 150,000, this taxable business income of a Sole Proprietorship or a Partnership will be taxed at a personal income tax rate of 24% instead of the company tax rate of 17%. So, by operating your business as an SDN BHD, the personal income tax rate just applies to the amount of salary you receive from your business while your company will pay the company tax rate for its taxable income each year.

To incorporate Company in Malaysia with SSM (Companies Commission of Malaysia) but this needs to be done through a certified company administrator. We’d like to share our expertise with you about company registration in Malaysia and how to set up a new company in Malaysia. As a premier provider of SDN BHD registration services, we are in a unique position to offer you a full array of company formation agent services at the most attractive rates, best value for money, and support you open a company in Malaysia or register SDN BHD in Malaysia.

For comprehensive business and financial solutions for small and medium-sized enterprises (SMEs) in Malaysia, including accounting, tax compliance, company incorporation and financial due diligence, Bispoint Group is here to help. Our team of highly skilled professionals can swiftly and expertly implement solutions to meet your business needs. Currently, we have over 70 dedicated teams, including Chartered Accountants, managers, supervisors, and junior associates in our offices serving over 1,000 private companies. Speak to us to explore how we can provide long-term support for your business growth.

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