5 Common Types of Business Entities in Malaysia: A Beginner’s Guide

Choosing the right business structure is an important step when starting a business in Malaysia. The type of entity you choose affects your legal liability, taxation, ownership structure, and compliance requirements.
March 11, 2026 by
5 Common Types of Business Entities in Malaysia: A Beginner’s Guide
CONZLAB BERHAD 202301040401 (1534320P), Jeffrey Eh

Sole Proprietorship

A Sole Proprietorship is the simplest and most common business structure for small businesses and individual entrepreneurs. It is owned and operated by a single individual, meaning the business and owner are legally considered the same entity.

This type of business is registered with the Companies Commission of Malaysia (SSM) under the Registration of Businesses Act 1956.

Key features:

  • Owned by one individual only
  • Simple and low-cost registration process
  • Minimal compliance requirements
  • Profits taxed as personal income

Limitation:

The owner has unlimited liability, meaning personal assets may be used to settle business debts.

Partnership

A Partnership is a business structure owned by two or more partners, with a maximum of 20 partners (except certain professional partnerships).

Partners share responsibility for managing the business and also share profits and losses according to the partnership agreement.

Key features:

  • Minimum of two partners
  • Simple and inexpensive to register with SSM
  • Shared management and decision-making
  • Profits taxed at individual income tax rates

Limitation:

Partners have joint and unlimited liability, meaning each partner may be responsible for the partnership’s debts.

Limited Liability Partnership (LLP)

A Limited Liability Partnership (LLP) combines features of both partnerships and companies. It allows partners to run the business while enjoying limited liability protection.

Introduced under the Limited Liability Partnerships Act 2012, LLPs provide flexibility with fewer compliance requirements compared to companies.

Key features:

  • Separate legal entity from partners
  • Partners have limited liability
  • No maximum limit on the number of partners
  • Lower compliance requirements compared to companies

This structure is often used by professional firms such as lawyers, consultants, or accountants.

Private Limited Company (Sdn Bhd)

A Private Limited Company (Sdn Bhd) is one of the most popular business entities in Malaysia, especially for startups and growing businesses.

A Sdn Bhd is a separate legal entity, meaning the company can own assets, sign contracts, and take legal action independently from its shareholders.

Key features:

  • 1 to 50 shareholders
  • Limited liability for shareholders
  • Ability to raise capital through share issuance
  • Higher credibility for investors and financial institutions

Limitation:

Companies must comply with regulatory requirements such as appointing a company secretary, filing annual returns, and preparing financial statements.

Public Limited Company (Berhad / Bhd)

A Public Limited Company (Bhd) is typically used by large corporations that want to raise funds from the public. These companies can offer shares to the public through mechanisms such as an Initial Public Offering (IPO).

Key features:

  • Unlimited number of shareholders
  • Ability to raise capital from public investors
  • Strong corporate structure and governance

Limitation:

Public companies face strict regulatory requirements and higher compliance costs, especially if listed on the stock exchange.


5 Common Types of Business Entities in Malaysia: A Beginner’s Guide
CONZLAB BERHAD 202301040401 (1534320P), Jeffrey Eh March 11, 2026
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