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CHAPTER 2: REGISTRATION OF BUSINESS ENTITIES - Coggle Diagram
CHAPTER 2: REGISTRATION OF BUSINESS ENTITIES
Purpose of Registration
Legalise business activities
Fulfil business owners' responsibilities
Choose a suitable business structure
Compare ownership, capital, liability and continuity
Registration Agencies
SSM: Companies Commission of Malaysia
Sole proprietorship
Partnership
Limited Liability Partnership (LLP)
Private limited company
SKM: Malaysia Co-operative Societies Commission
Cooperatives
Registration information
SSM website: www.ssm.com.my
SKM website: www.skm.com.my
Sole Proprietorship
Characteristics
One owner
Personally funded and managed
Registration of Businesses Act 1956
Advantages
Easy and inexpensive registration
Full control over decisions and profits
Simple management
Private business affairs
Limitations
Limited sources of capital
Unlimited personal liability
Complex decisions rest with one owner
Continuity depends on owner
Owner pays applicable personal taxes
Partnership
Characteristics
2-20 partners
Professional partnerships: up to 50 in the notes
Shared capital and management
Registration of Businesses Act 1956
Advantages
More capital from partners
Combined skills and knowledge
Shared responsibilities
Joint decision-making
Private business affairs
Limitations
Unlimited liability
Partners may be liable for other partners' actions
Disagreements and disputes
Profits shared according to agreement
Partners pay applicable personal taxes
Limited Liability Partnership (LLP)
Characteristics
Minimum 2 partners; no maximum
Separate legal entity
Combines partnership and company features
Limited Liability Partnerships Act 2012
Advantages
Limited liability
Perpetual succession
Can own property and enter contracts
Simpler compliance than a company
Flexible contributions and management
Limitations
Lower recognition among some parties
Possible credibility concerns
Tax complications highlighted in the notes
Private Limited Company (Sdn Bhd)
Characteristics
Separate legal entity
Ownership through shares
1-50 members in the notes
Name ends with Sdn Bhd
Cannot offer shares to the public
Companies Act 2016 discussed in the notes
Advantages
Limited shareholder liability
Perpetual succession
Can own assets
Greater access to capital and financing
Structured management and professional image
Limitations
Complex registration and formalities
Higher setup and operating costs
Secretarial and reporting duties
Less privacy over company information
Company tax obligations
Complex winding-up procedures
Cooperative
Characteristics
Voluntary association
Joint ownership and democratic control
Common economic, social and cultural interests
Separate legal entity
Registered with SKM under cooperative law
Limited distribution of profits
Advantages
Open membership
Democratic participation
Limited liability, subject to exceptions
Government assistance
Eliminates middlemen's profits
Continuing existence
Limitations
Limited member capital
Management difficulties
Low motivation or cooperation
Possible conflicts between members
Dependence on government support