When to Switch from Sole Proprietorship to Sdn Bhd Online Store?

There is no turnover figure that forces a switch. Reasons sellers weigh up:

• Liability. A sole proprietor is personally liable for business debts.
• Tax. Individual rates rise faster than SME company rates as profit grows; the saving depends on how much profit stays in the company and how the owner is paid.
• Investors or co-founders. Shares are simpler to issue than partnership interests.
• Larger customers and platforms. Some programmes and B2B buyers prefer a company.
• E-invoicing. A company with a corporate shareholder that has RM3 million turnover or more loses the exemption.

What a switch involves

• Incorporating the company (RM1,000 plus RM50 name reservation) and opening a company bank account.
• Transferring stock, equipment and contracts to the company, which may have tax consequences.
• Updating platform store details, payment gateway, courier accounts, domain and licences.
• Terminating the sole proprietorship registration with SSM and informing the Inland Revenue Board (LHDN), with a final Form B.
• Registering the company for tax and keeping accounts.

Because the answer depends on the numbers, a tax agent can model both options.