Sdn Bhd VS LLP: A Definitive Guide
According to SSM statistics, a total of 48,221 new Sdn Bhds were incorporated in 2022 compared to just 3,661 new LLPs. On average, that’s just over four thousand new companies every month, and we at MISHU aren’t surprised – in most situations a Sdn Bhd makes more sense than an LLP.
Convinced? Then check out MISHU’s incorporation services to see how we can help.
If you’re still on the fence, read on.
Sdn Bhd VS LLP: Not a difficult choice!
Because both entities offer limited liability, it can be harder to decide between them compared to, say, a Sdn Bhd versus a Sole Proprietorship. In this post, we’ll do our best to explain other key differences and why nine times out of ten, a Sdn Bhd is the better choice.

Here’s how we’ll break down our argument:
- We’ll start with a quick table on the high-level differences between a Sdn Bhd and LLP.
- Based on those differences, we’ll suggest when a Sdn Bhd or LLP might make more sense.
- We’ll shamelessly plug our incorporation and registration team – they’re just that good.
Let’s begin.
Differences between LLP and Sdn Bhd
For professional advice on choosing between LLP and Sdn Bhd, MISHU recommends the latter. Here are key differences between the two:
Criteria | LLP | Sdn Bhd |
---|---|---|
Formation costs | ~ RM1,500 for a typical LLP, though a specially tailored LLP agreement can increase the costs. | ~ RM4,000 for a typical incorporation; once again a custom setup can increase costs. |
Annual maintenance | Less as no obligation to appoint Company Secretary or Auditor. | Higher due to legal obligation to appoint: |
Liability protection | Limited to paid-up capital of LLP. Partners are partially protected against liabilities of the LLP but can be personally liable for individual actions. | Limited to share capital. Shareholders are liable by extent of shareholding, and directors are protected but can be personally liable for individual actions. |
Administration structure | Simpler. Only mandatory appointment is a Compliance Officer which can be filled by a partner. | More complicated, involves several mandatory appointments and changes in company details must be reported to SSM through correct channels. |
Privacy | Less due to mandatory filing of annual declaration containing key financial details such as revenue and net profit for the year. | More for certain Sdn Bhds which are exempt private companies, as there is no need to file accounts with SSM. |
Tax on entity | ||
Tax on owners | ||
Ease of growth | Harder to secure loans / grants due to perception of being a ‘small business’ with less compliance requirements. Cannot raise funds via share sales. | Easier to obtain loans / grants due to higher credibility from mandatory annual audited accounts. Can raise funds through sales of shares to new investors, especially if public. |
That table was big enough to have a picnic on, so here’s a summary of what you need to know:
- It’s more expensive to form and maintain a Sdn Bhd
- Sdn Bhd’s are subject to stricter record keeping and compliance requirements
- Both grant owners liability from debt borne by the business entity
- Both are subject to similar tax rates (but Sdn Bhds enjoy more tax incentives)
- It’s significantly easier for Sdn Bhds to grow and scale due to perceived trustworthiness and ability to issue shares
You probably already see why we recommend Sdn Bhds, but just to be sure, let’s put it in writing.
The biggest difference that matters
For most entrepreneurs, MISHU believes that a Sdn Bhd is better than an LLP for one reason: growth.
Yes, the incorporation and maintenance costs are higher and the compliance requirements stricter, but the four thousand new Sdn Bhds every month know it’s a small price to pay for the ease of securing financial backing and tax deductions.

With a Sdn Bhd, there’s practically no limit to how big you can scale the business (of course you still need to make sure you are providing an in-demand service / product) while an LLP will eventually be limited by the nature of its structure – and then guess what? You need to incorporate a Sdn Bhd anyway!
Also, those strict compliance requirements are precisely why it’s easier for a Sdn Bhd to secure loans, grants, and investments. It’s widely understood that for a Sdn Bhd to operate, it must meet a satisfactory threshold of reporting, while it’s less clear with LLPs.
If you intend to grow into a million-dollar business and beyond, answer this:
Is it more common to come across an LLP or Sdn Bhd generating that kind of revenue?
When is an LLP a better choice?
The number one situation is when it’s a choice between an LLP and a conventional partnership.
Certain sectors in Malaysia are not allowed to form Sdn Bhds, namely those providing specialised professional services like legal and accounting services. For them, better to form an LLP as it offers some measure of protection compared to a conventional partnership where they bear unlimited liability.
If a lawyer faced unlimited liability, you’d never get a word out of him!
Another niche use for LLPs is for investment holding purposes or small businesses that are confident they do not want to grow or scale, and so don’t really need to secure bank loans or attract investors.
If any of these describes your situation, MISHU can help you register an LLP too!
Decide based on your business vision
Remember this picture at the start?

If business entities were chess pieces, the queen would be a Sdn Bhd and the king an LLP.
Both can head in any direction, but the queen can travel as far as the board allows in one move, while the king is limited to one square at a time. It’s non-negotiable – that’s just how the game works.
If you’re hungry for success, we recommend the option that gives you the freedom to strategise and move as many steps as you want, in any direction you want, and as fast as you want.
Either way, it’s your move – we’re here to support you either way.
Let MISHU help setup your new business

Sdn Bhd or LLP, MISHU’s team of professionals is here to help you incorporate your new business and navigate the various legal requirements to begin operating as quickly as possible.