The journey of entrepreneurship begins with establishing a business company. Once you have decided to start a business, you also need to make up your mind about the business type you want to pursue, whether you wish to register your company as a sole proprietor, limited liability partnership or SDN BHD incorporation, among other options.
While you are weighing these selections, it is best to consider the determinant factors as well as their pros and cons. You have probably heard of company incorporation in Malaysia, but what are the benefits? Why would you want to incorporate your business instead of just starting it as a sole proprietorship?
Contrary to a common conception, company incorporation procedures are indeed an easy process. Should you decide to incorporate your company, you will get to enjoy various benefits that are not available to sole proprietorships or partnerships. On top of that, incorporation also plays a pivotal role in your company’s success. It is an essential step for any company and offers numerous perks in the long run.
There are many reasons why you should consider incorporating your company. Let’s discuss more on the significant advantages of company incorporation in Malaysia that you should know.
Company Incorporation like SDN BHD Creates a Separate Legal Entity
One of the top benefits of company incorporation is that it serves as a separate legal entity from the stakeholders, including shareholders, directors, and promoters. That means it allows the incorporation of existing as an entity whereby the members cannot be held liable for the company’s acts.
Apart from that, the members’ assets are separated from the company’s. It means that the company’s debt is limited to what can be paid via the company’s assets – the company’s members would never have to pay off the debt using their personal assets. In other words, company incorporation can provide protection against personal liability. The company also can sue and be sued in its name.
This prominent feature undoubtedly makes the difference between company incorporation, sole proprietorship and limited liability partnership.
Tax Incentives for Company Incorporation
There are myriads of tax relieves for company incorporation in Malaysia. For instance, individual tax rates can go up to 30%, but corporate tax is only 24% for company incorporation.
The tax-saving benefits for incorporation are usually granted via exemption or allowances. In regards to that, it could be direct tax incentives, granted partially or in full from income tax payment for a specified period. On the other hand, there also could be indirect tax incentives such as exemption from import duty, sales tax or excise duty. In addition to that, various industry-specific tax incentives are available for local company incorporations to apply.
Company Incorporation for Succession
In comparison, a partnership, sole proprietorship and limited liability partnership are susceptible to cease business operation, and the risk of close-down in the case of the owner ceases to exist, or no successor can be found. However, it is quite the opposite for company incorporation.
The ownership of incorporation is transferable. The company would not simply cease to exist due to some changes in the status of the owner, i.e. bankruptcy, death or resignation. The company incorporation continues to exist through the transfer of shares and still run with the same privileges, liabilities, properties and responsibilities.
Greater Ability to Generate Capital with Incorporation like SDN BHD
One of the top concerns is raising adequate capital and fund when speaking about business. When a company is incorporated, it is considered more reliable as compared to other business types. Thus, company incorporation has better access to capital funding, tender and finding partners.
On top of that, company incorporation possesses a more remarkable ability to raise funding through the issue of shares for a better potential for growth and expansion. The advantages of issuing shares may include less debt as compared to bank loans and the ability to repay back the funds at a later date, either through stock growth or dividend payments.
Boss Boleh: One-Stop Solution for SDN BHD Company Incorporation in Malaysia
According to the Companies Act 2016, a company incorporation in Malaysia, such as a private limited (Sdn. Bhd.) company, is required to appoint at least one company secretary. The company secretary serves as the official liaison party on behalf of the incorporation to communicate with the Companies Commission of Malaysia (SSM).
Equipped with cloud technology, Boss Boleh is a one-stop solution for company secretary services for the convenience of entrepreneurs. You can skip through the complicated process with Boss Boleh! Get your company incorporated and registered with SSM hassle-free. Drop us a message for inquiry.
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