The main reason of setting up a Malaysian company is to separate your personal liabilities from your business(es). A Sdn Bhd is an entirely separate legal entity, meaning that it can potentially receive income, acquire properties, enter a contract with any third party, and even be part of any legal actions.
Have you ever heard of the perks of corporate tax? If you are running a Sole Proprietorship or a Partnership business, you will be paying the same tax bracket as your personal income tax. A Sdn Bhd has a lower tax rate in comparison. However, if you run a Sdn Bhd business, the personal income tax rate is only applicable to the salary you receive from your business while your registered company will pay the company tax rate.
In the event that you would like to get funds to expand your business, you will have more options as compared to a Sole Proprietorship or Partnership – in which these two are limited to only business loans from banks or P2P lending platforms. You will be able to raise funds by selling shares in your company to investors as a Sdn Bhd. You will also have more credibility, as a Sdn Bhd is managed usually by a board of directors and is backed by shareholders.
