Sole Proprietorship or Sdn Bhd for an Online Store in Malaysia?

The two structures differ on five points a seller usually cares about. A Sdn Bhd is a private limited company.

Liability. A sole proprietorship is not a separate legal person, so the owner answers for the business debts with personal assets. A Sdn Bhd is a separate legal person and shareholders' exposure is generally limited to unpaid share capital, apart from personal guarantees they sign.

Set-up cost. SSM's EzBiz page lists a personal-name registration at RM30 and a trade-name registration at RM60. Incorporating a company limited by shares costs RM1,000 plus RM50 for the name reservation, per the Companies Commission of Malaysia (SSM) fee table.

Tax (year of assessment 2025). Sole-proprietor profit is added to the owner's other income and taxed at progressive individual rates. A company pays 15%, 17% and 24% in bands if it meets the SME conditions, otherwise 24%.

Running cost. A company needs a company secretary and a resident director, files annual returns with SSM, and normally keeps formal accounts. A sole proprietor files Form B (the income tax return for individuals with business income) and keeps sufficient records.

Eligibility. Only Malaysian citizens and permanent residents aged 18 or above can register as sole proprietors.