(source: www.photonpaint.com)
When you want to conduct an online business, if you are doing it alone then we can form a sole proprietorship.
If you have partner(s), you may opt to form a:
(1) partnership (usually known as “enterprise”) or
(2) a company (usually known as Sdn Bhd/Private Limited)
Before you make your mind as to which type of business organisation suit you better, below are some comparison between a partnership and a company:
1. Number of members
Partnership: 2 - 20 members (except for professional body, e.g. law firm)
Company: 2 - 50 members (except is a wholly-owned subsidiary)
2. Ability to hold property
Partnership: property is owned by the partners collectively
Company: property is owned by the company not the members/shareholders as company and the members are 2 separate legal entity.
3. Members’ liability for debts
Partnership: partners are collectively and jointly responsible for all the debts of the “enterprise”. That means if the enterprise has insufficient money to settle the debts then the partners must pay for the debts personally. Such liability is unlimited.
Company: the liability of the shareholders of a company can be limited and usually is limited.
(In fact, this is one of the main reason why one chooses to incorporate a Sdn Bhd)
4. Duration and dissolution
Partnership: can be dissolved by agreement between the partners. A partnership “dies” when the partners die.
Company: must comply with the procedure under the law. A company still exist though the shareholders die.
5. Cost of setting up
Partnership: Registration of Business (ROB) Fees is RM60 per year. You can register it online.
Company: If you appoint a company secretary to set up a company, his professional fees and others relavant charges may cost you around RM1,500 to RM3,000. You will also need to pay auditor and company secretary fees yearly.
Of course there are many others differences, which are not able to be covered herein.
3 responses so far ↓
1 Lee Shih // May 23, 2008 at 8:03 pm
Related to this issue, especially in the practice of law, is that the CCM is currently considering the implementation of the Limited Liability Partnership (LLP). This will mainly have application to the legal and the accounting professions.
This hybrid vehicle will enjoy many of the benefits of a corporation, in that it can own property as it has a separate legal identity as well as the aspect of the limited liability of the individual partners. At the same time, proper safeguards will have to put in place, for instance, adequate indemnity insurance to protect the interest of the clients.
The move towards the adoption of the LLP is to be lauded.
2 Eddie Law // May 23, 2008 at 8:43 pm
Lee Shih - Yes, I heard that too but don’t know when they are going to implement it in Malaysia. Singaporean law firm is under LLP type of organisation as such, some name the partner position as Dirtector and LA as Manager.
Don’t know how about Canadian law firm? Perhaps Michelle can enlighten us.
3 How to choose a company name? (Legal Prespective) // Jun 28, 2008 at 11:21 am
[…] have decided what kind of business entity that you want to use to start your business (refer to my previous post), now it is the time you need to pick a good name for your business or […]
Leave a Comment