A business organization is an entity created with the intent of conducting a type of commercial enterprise. Despite some being set up as non-profit charities, most businesses are set up to make profits. When it comes to business structures, all countries have a legalized system which is common but unique to individual country hierarchy. When starting a business in Malaysia, it is important to differentiate one business vehicle from the other. In this article, we will focus on the difference between PLT vs SDN BHD in Malaysia.
PLT vs SDN BHD: Tips for Choosing a Business Structure
Running a business requires selecting the proper legal structure to suit your business needs. Understanding your alternatives is also essential whether your organization is just starting or expanding. We believe each business structure has its benefits and drawbacks and none is superior to the other. Your specific business needs should be a priority when selecting a business structure. You should also look into your needs for managing taxes, distributing income, and minimizing liability. Also take into account any relevant personal requirement. In Malaysia, PLT and Sdn Bhd are some of the typical choices to think about.
PLT vs SDN BHD in Malaysia
| PLT (Limited Liability Partnerships) | Sdn Bhd (Private Limited Company) | |
| Ownership | At least two or more members, Individual Partners owns the business | Can be owned by one or more Shareholders own shares in the business |
| Capital contribution | Partners contribute to business | Shareholders contribute to capital |
| Registered name | “PLT” or Perkongsian Liabiliti Terhad | “Sdn Bhd” or “Sendirian Berhad” |
| Profit sharing | Specified in Partnership Agreement | Issuance of Dividend to shareholders |
| Number of partners shareholders | Minimum of 2 with no maximum amount | Minimum of 1 and a maximum of 50 for private limited company |
| Business management | Business is managed by the joint partners | Business is managed by the Board of Directors |
| Auditing requirement | Not mandatory unless stated in agreement | Auditing is required to have an annual statutory audit, member meetings, etc. |
| Governing & Controlling Law | Limited liability partnerships Act 2012 and Limited Liability Partnership Regulations 2012 | Companies Act 2016 and Companies Regulation 2017 |
| Formation | Less paperwork, less formalities and simple to carry out | Requires a lot of paperwork and a bit complex to formalize |
PLT Business Structure
A PLT company is a novel business structure that has recently gained popularity in Malaysia. It combines ease of business with the safe corporate features of a typical private limited (Sdn Bhd) firm. A PLT business provides the Sdn Bhd Company‘s security without the burdensome and expensive auditing obligations.
The Limited Liability Partnerships Act 2012, passed in Malaysia in 2012, governs PLTs. PLT which is Perkongsian Liability Terhad in full is known as Limited Liability Partnership (LLP) Company in the US and other countries.
PLT vs SDN BHD: Who Needs to File Their Company as a Partnership?
Those who are Malaysians or permanent residents of Malaysia who are looking to work with business partners can file for PLT. Investors with a large amount of capital and willing to invest a huge amount of money with a projected profit expectation fit well for the PLT business in Malaysia.
Pros
- It offers personal liability protection
- Easy to run
- Has tax options that fits well with small businesses operation and grow
- The process of registering A PLT is simple and easy
- Compliance procedures are simplistic
- Liability on business can be shared with other partners
- Flexible organizational structure
- Assets of partners are shielded from corporate obligations and liabilities.
Cons
- It needs annual renewal
- It presents a relatively expensive personal income tax
- It is not easy to scale
PLT vs SDN BHD: Sdn Bhd Business Structure
Sdn Bhd can be a private corporation or a company limited by shares. It is a distinct legal entity that can generate profits, hold property, enter into contracts, and involve in legal actions against third parties separate from its owners. Sdn Bhd businesses are usually small or midsized enterprises. It can be incorporated by a local person or a foreigner with or without any additional business partners as per the implementation of the Companies Act 2016 Amendments.
PLT vs SDN BHD: Who Should Form a Sdn Bhd for Their Business?
Suitable for anybody who wants to operate a Small Medium Enterprise in Malaysia. The important requirement is that at least one director must live in the country foreigner.
Pros of a Sdn Bhd.
- Registration is inexpensive and easy.
- It provides a flexible organizational structure
- It divides your obligations from those of the business
- It can easily raise paid-up capital and issue shares to investors
- It may be owned entirely by foreigners and shares are transferrable
Cons of Sdn. Bhd.
- It can only have up to 50 shareholders.
- It cannot solicit money from the general public.
- High compliance requirement
PLT vs. SDN BHD: Opting for a Suitable Business Structure
Understanding the Right Fit for Your Business
A PLT (or LLP) tends to appeal to smaller operations and professional practices because its administrative and governance demands are generally lighter than those of an Sdn Bhd. LLPs do not, for instance, require a company secretary in the same way an Sdn Bhd does, and the registration and compliance procedures are relatively streamlined.
Why Does Sdn Bhd Appeal to Growth-Oriented Companies
As a business scales, the features of an Sdn Bhd become more advantageous in terms of its ability to issue shares, attract external capital, and present a formal corporate profile, making it more suitable for investments, partnerships, and broader expansion. Because an Sdn Bhd is a separate legal entity, personal liability is better insulated, which boosts confidence for stakeholders dealing with corporate clients, creditors, or financial institutions.
Choosing Based on Long-Term Objectives
When deciding between PLT vs Sdn Bhd, the critical factor is your vision for growth, funding needs, and operational complexity. A small professional partnership may be perfectly served by a PLT, but if your ambition includes raising capital, expanding operations, or perhaps listing or merging later, an Sdn Bhd offers a more robust structure. Weighing your goals against your capacity for compliance and governance helps determine the better fit.
PLT vs. SDN BHD: Common Issues to Navigate
Underestimating Tax and Liability Nuances
One frequent error is misjudging the tax treatment and liability aspects of a PLT. Under Public Ruling 8/2022, a limited liability partnership is taxed at the entity level, and distributions to partners are generally not taxed again at the partner level (thus avoiding double taxation). However, partners in an LLP may still be personally liable for their own wrongful acts or misconduct, which must be managed carefully in agreements and practice. Because a PLT cannot issue shares, bringing in new investors or scaling through equity financing may be constrained, which limits flexibility in capital structure.
Overlooking Compliance Burdens of Sdn Bhd
A Sdn Bhd often faces heavier regulatory requirements, such as audits, statutory reporting, maintenance of company secretarial records, and stricter corporate governance under the Companies Act, which are standard expectations. Failing to manage these obligations can lead to penalties, delays, or legal exposure. Decision-making in an Sdn Bhd is also less freeform, as shareholders and directors must adhere to formal procedures and regulatory constraints.
Locking Into a Structure Too Early
Choosing the wrong structure at the start is another common misstep. Transitioning from a PLT to an Sdn Bhd later is more complex than it may seem and may trigger tax, legal, or administrative consequences. It is often better to anticipate your growth path from the beginning rather than deal with restructuring challenges later on.
Premia TNC’s Assistance
The choice on using an PLT vs. an SB depends on your specific objectives. To avoid unforeseen issues, you should always confer with the necessary professionals before your decisions. Premia TNC is a professional consulting firm that can help you with incorporation on all types of business structures.
Contact us immediately if you have any queries or require assistance forming an LLP or an Sdn Bhd. We can assist in identifying your business requirements, making picking a business structure simpler, and better position you for success. Schedule an appointment to speak with one of our business experts.
FAQs On the Differences Between PLT vs. Sdn Bhd in Malaysia
Am I stuck, or can I subsequently alter my business?
Even though it's crucial to establish your Company's structure correctly from the beginning, keep in mind that things might change in the future. Your evolving firm may no longer fit in well with the current business structure and could require an upgrade. If this is the case, you can still change your business structure in Malaysia with Premia TNC – a professional consulting firm in Malaysia.
What are the steps to opening a private limited company?
• Choosing a business name
You need to first conduct a name search for the business to see if the suggested company name is available.
• Registration
You then need to do registration of the corporation with the Malaysian Companies Commission (“SSM”).
• Establishing a business bank account
In Malaysia, you have the option of opening a bank account with any local or foreign bank.
• Obtaining licenses and permissions
Depending on the nature of your business transactions, this may or may not apply to your company.
• Fulfilling fiscal responsibilities
Completing and submitting Form CP 600C to the Malaysian Inland Revenue Board in order to register the business for corporation tax.
• Annual report & Annual Return
Every year, annual returns, tax returns and audited financial statements must be submitted to SSM and Malaysia's Inland Revenue Board.
What are the auditing requirement PLT vs Sdn bhd?
In PLT, auditing may not be mandatory unless stated in agreement. However, PLT must file an annual declaration with SSM within 90 days at the back of each fiscal year. Such declaration will contain certain financial information, including company profit and taxation.
