Enterprise vs. Sdn Bhd : Tax Comparison for Johor Bahru SME Startups
Key Takeaways
👉Tax rates vary significantly: Enterprises pay personal income tax (0-30%), Sdn Bhd SMEs pay corporate tax (15-17% on first RM600K, then 24%).
👉Registration cost difference: Enterprise costs RM30-60 yearly, while Sdn Bhd costs RM1,000+ to set up plus ongoing secretary fees.
👉Legal protection matters: Sdn Bhd protects your personal assets from business debts; Enterprise risks personal assets.
👉Audit exemptions expanded: New 2025 rules exempt small Sdn Bhd (under RM1M revenue/assets, 10 employees).
Introduction
You’ve got a business idea. You’re ready to start. But then someone asks: “Are you registering an Enterprise or Sdn Bhd?”
The choice affects your taxes, risk, and costs. Also, a wrong choice could cost you thousands in extra taxes, or put your personal savings at risk if something goes wrong.
Tax rules changed in 2025. SME incentives make Sdn Bhd more attractive for startups. Liability and audits also differ a lot. Read on for a clear comparison and you’ll know which fits your business startup at Johor Bahru.
What’s the Difference Between Enterprise and Sdn Bhd?
Enterprise is a sole proprietorship, you and your business are the same legal entity with unlimited personal liability. If your business owes money, creditors can take your house or car to pay it back.
Sdn Bhd is a private limited company, a separate legal entity that protects your personal assets from business debts. If the company owes money, creditors can only take company assets, not your personal property.
In Johor Bahru, most small traders and service providers start with Enterprise. Manufacturers, tech companies, and businesses seeking investment usually register Sdn Bhd.
What Are the Tax Differences?
In 2025, Enterprise profits face personal income tax (1-30% progressive rates). However, Sdn Bhd pays corporate tax: 15% on the first RM150,000, 17% on RM150,001-RM600,000, and 24% after, often lower for SMEs under RM600,000 profit.
Enterprise Taxation
Your business income = your personal income. You file personal income tax with LHDN.
Personal Income Tax Rates (2024/25):
| Annual Income | Tax Rate |
| First RM5,000 | 0% |
| RM5,001 – RM20,000 | 1% |
| RM20,001 – RM35,000 | 3% |
| RM35,001 – RM50,000 | 8% |
| RM50,001 – RM70,000 | 14% |
| RM70,001 – RM100,000 | 21% |
| Above RM100,000 | Up to 30% |
Example: If your business makes RM80,000 profit yearly, you’ll pay about RM10,000 in personal income tax.
Sdn Bhd Taxation
The company pays corporate tax. You only pay personal income tax on the salary you take from the company.
Corporate Tax Rates (2024/25):
| SME (paid-up capital ≤ RM2.5M) | Percentage |
| First RM150,000 | 15% |
| RM150,001 – 600,000 | 17% |
| Above RM600,000 | 24% |
| Large Company (paid-up capital ≥ RM2.5M) | 24% |
Example: If your SME Sdn Bhd makes RM600,000 profit:
- First RM150,000 × 15% = RM22,500
- Next RM450,000 × 17% = RM76,500
- Total corporate tax = RM99,000
What Are the 2025 Audit Requirements?
Enterprises rarely need audits, you just need to keep proper accounts and file personal income tax yearly. Sdn Bhd requires an audit unless it qualifies for audit exemption in 2025.
New 2025 Audit Exemption Rules: Your Sdn Bhd is exempt from audit if you meet any 2 of these criteria for the current year and past 2 years:
Phase 1 (2025 – Financial years starting Jan 1, 2025):
- Annual revenue does not exceed RM1 million
- Total assets do not exceed RM1 million
- Number of employees does not exceed 10
The thresholds increase gradually:
- Phase 2 (2026): RM2M revenue/assets, 20 employees
- Phase 3 (2027): RM3M revenue/assets, 30 employees
(full implementation)
| Year | 2025 (Phase 1) | 2026 (Phase 2) | 2027 (Phase 3) | |
| Financial Period | Commencing on or after 1st January 2025 until 31 December 2025 | Commencing on or after 1st January 2026 until 31 December 2026 | Commencing on or after 1st January 2027 | |
| Submission Year | Beginning from 1 January 2026 | Beginning from 1 January 2027 | Beginning from 1 January 2028 | |
| Thresholds | Turnover | RM1,000,000 | RM2,000,000 | RM3,000,000 |
| Assets | RM1,000,000 | RM2,000,000 | RM3,000,000 | |
| Number of Employees | 10 | 20 | 30 | |
Pro Tip: Track thresholds yearly, looking for an audit firm in Johor Bahru who handles filings to stay exempt.
How Much Does Company Registration Cost?
Enterprise registration is cheap and fast. You only need to pay RM30-60 per year to register with SSM. May do it online through SSM’s EzBiz portal in one sitting. Approval often takes 1-2 working days.
Sdn Bhd registration costs more. Expect to pay RM1,000-4,000 total for the first year, including SSM incorporation fee, company secretary, office address registration, fillings and other professional service fees.
Which One Should You Choose?
Choose Enterprise if:
- You’re starting a small service business (freelancer, consultant, small trader)
- Your expected profit is under RM100,000 yearly
- You’re working alone with no plans for partners
- You want the lowest setup cost
Choose Sdn Bhd if:
- You’re starting with partners or plan to add them later
- Your business has financial risks (loans, contracts, liability exposure)
- You expect to make more than RM150,000 yearly
- You want to attract investors or funding
- You’re in manufacturing, tech, or export business
Conclusion
The choice between Enterprise and Sdn Bhd isn’t complicated once you understand the basics. For small, solo businesses with low risk, Enterprise saves you money and paperwork. For growing businesses with partners or financial exposure, Sdn Bhd protects you and provides tax flexibility.
Calculate your expected profit for the first year. If it’s under RM100,000, Enterprise probably makes sense. If it’s higher, or you have partners, go for Sdn Bhd.
Still confused? Contact an accounting firm in Johor Bahru (JB) today. Offering consultations to discuss your specific situation. Getting the structure right from the start saves you money and headaches down the road.