{"id":60927,"date":"2024-01-23T17:08:11","date_gmt":"2024-01-23T09:08:11","guid":{"rendered":"https:\/\/www.imoney.my\/articles\/?p=60927"},"modified":"2024-01-24T02:08:32","modified_gmt":"2024-01-23T18:08:32","slug":"pros-cons-sole-proprietorship","status":"publish","type":"post","link":"https:\/\/www.imoney.my\/articles\/pros-cons-sole-proprietorship","title":{"rendered":"The Pros And Cons Of Sole Proprietorships"},"content":{"rendered":"

Starting a business is no easy feat. New business owners are always being faced by taxing decisions. One of the most important decisions one can make is deciding on the appropriate business structure. One of the most common business structures that small founders choose is a sole proprietorship, an unincorporated entity in which the business and owner are one and the same. This means that a sole proprietor will receive all the profits of their business, but will also be personally responsible for all the losses, liabilities, and debts.<\/span><\/p>\n

In order to determine if sole proprietorship is the right choice for your business, it is important to learn more about what it is, how it works, how to get it started, and the advantages and disadvantages of doing so.<\/span><\/p>\n

<\/span>What is a sole proprietorship?<\/b><\/span><\/h2>\n

As mentioned earlier, sole proprietorship basically means that the owner and the business are one and the same. Everything earned through the business is considered personal income. This also means that personal assets and belongings are liable if any outstanding debts need to be paid.<\/span><\/p>\n

<\/span>How to register for sole proprietorship?<\/b><\/span><\/h2>\n

The first thing you need to do to register as a sole proprietorship is to register with the Companies Commission of Malaysia (SSM). This can be done at your local SSM branch.<\/span><\/p>\n

You will then need to name your sole proprietorship, either as your personal name, or with a\u00a0 name under which you trade. If using your personal name, you do not have to wait for approval, and your business can start immediately.<\/span><\/p>\n

If you want to register a business in Malaysia under a trading name, you will have to submit a request to the SSM. You will also have to adhere to some guidelines. Following this, you will need to wait for your name to be approved. Generally, businesses can be registered for any amount up to five years.<\/span><\/p>\n

However, there are certain costs associated with this registration. There is a fee of RM60 every year if you register under a trading name. Similarly, there is a fee of RM30 every year if you register under your personal name.<\/span><\/p>\n

<\/span>Pros and cons<\/b><\/span><\/h2>\n\n\n\n\n\t\n\n\t\n\t\n\t\n\t
Pros<\/th>Cons<\/th>\n<\/tr>\n<\/thead>\n
Minimal paperwork<\/td>Liability lies with owner<\/td>\n<\/tr>\n
Simplified taxes<\/td>Funding issues<\/td>\n<\/tr>\n
Relatively low maintenance<\/td>Long-term survival<\/td>\n<\/tr>\n
High degree of control<\/td>Lack of support<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n\n

<\/span>Advantages<\/b><\/span><\/h2>\n

Minimal paperwork<\/b><\/p>\n

As mentioned previously, setting up a sole proprietorship is not exactly hard. With low set-up costs and minimal paperwork, it is the easiest and cheapest type of business to set up in Malaysia, according to the SSM.<\/span><\/p>\n

Simplified taxes<\/b><\/p>\n

With sole proprietorship, you don\u2019t need to separate your taxes. Any profit you make is simply treated as your own income. However, there are two important things to consider:<\/span><\/p>\n