Sole Proprietor vs Sdn Bhd Malaysia — Which Structure Should You Choose?

The question of whether to stay as a sole proprietor or incorporate as an Sdn Bhd is one of the most consequential decisions a Malaysian freelancer or small business owner will make. Get it wrong in either direction and you either overpay tax for years or carry compliance costs that eat into margins before you are ready for them.

This guide walks through both structures systematically — not to tell you which one to pick, but to give you the information to make that call clearly. The right answer depends on your revenue level, your liability exposure, your client profile, and how much administrative overhead you are prepared to carry. Let's look at the full picture before moving.

Last updated 25 October 2026 · money.com.my Editorial

The Two Structures at a Glance#

Sole Proprietorship (Enterprise / Perniagaan Tunggal)

A sole proprietorship is the simplest business form in Malaysia. You register under the Register of Businesses (ROB) at SSM (Suruhanjaya Syarikat Malaysia / Companies Commission of Malaysia). The business is legally you — there is no separation between the owner and the entity. Profits are your income, and debts are your debts.

You register online with SSM. SSM's table of fees for business registration gives RM30 a year for a personal name and RM60 a year for a trade name, the same for renewal, plus RM5 a year for each branch. The guide's earlier "free registration for Malaysian citizens", "one to three days" and "RM60–120" are not in SSM's table, so they are withdrawn (SSM's fee page carries the note "Last updated on 12 March 2018", so confirm the current fee when you register).

Sdn Bhd (Sendirian Berhad / Private Limited Company)

An Sdn Bhd is a separate legal entity, incorporated under the Companies Act 2016 and registered with SSM under the Register of Companies (ROC). As a shareholder and director, you are legally distinct from the company — the company owns its own assets, enters its own contracts, and bears its own liabilities.

Setting up an Sdn Bhd costs more and takes longer. SSM's guidelines (Guidelines for the Incorporation of Local Companies under section 14 of the Companies Act 2016) give three ways to apply on its CRS portal. Each costs RM1,000 for company incorporation plus RM10 for "Company data shares to relevant agencies". Only if you apply "Through Company's Name Reservation" is there a separate fee of RM50 to reserve the name first; Direct Registration and Guaranteed Incorporation (where the system generates the name) are RM1,000 + RM10. Professional formation fees from a company secretary firm vary, so get quotes. Ongoing compliance requires a company secretary, which SSM's guidelines say must be appointed "within thirty (30) days after the company is incorporated", and annual returns filed with SSM. A private company must also appoint an auditor each financial year unless it qualifies for SSM's audit exemption (see the compliance section below for the thresholds and conditions).

SSM's fees are the only setup cost this guide can source. Professional fees for setting up and for the company secretary after that vary by firm, so get quotes.

Side-by-Side Comparison#

Tax Rates: The Core Difference#

This is where the choice gets consequential, and it is worth being precise.

Sole Proprietorship: Personal Income Tax Rates#

As a sole proprietor, your business profit is your personal income. After deducting business expenses and personal reliefs, your chargeable income is taxed at Malaysia's progressive personal income tax rates:

Source: LHDN (Lembaga Hasil Dalam Negeri Malaysia), resident individual rates for Year of Assessment 2023, 2024 and 2025 (hasil.gov.my/en/individu/kadar-cukai/, last updated 26 June 2026).

A sole proprietor earning RM250,000 gross who takes RM30,000 in business deductions and RM25,000 in personal reliefs has a chargeable income of RM195,000. That puts them in the 25% band for the income above RM100,000. Tax is RM9,400 to RM100,000 plus 25% of RM95,000 (RM23,750), so RM33,150, an effective rate of 13.3% on RM250,000 gross. (The worked example below assumes RM15,500 of reliefs, so its chargeable income is RM204,500.)

Sdn Bhd: Corporate Tax Rates#

A qualifying SME Sdn Bhd pays 15% on the first RM150,000 of chargeable income, 17% on the next RM450,000 (RM150,001 to RM600,000), and 24% on the balance above RM600,000. Paragraph 2A of Schedule 1 to the Income Tax Act 1967 gives these rates to a company resident and incorporated in Malaysia that has paid-up capital in respect of ordinary shares of RM2.5 million or less at the beginning of the basis period and gross income from a business of no more than RM50 million for that basis period. Paragraph 2B withdraws them if more than 50% of the company's ordinary share capital is directly or indirectly owned by a related company; if more than 50% of the related company's ordinary share capital is directly or indirectly owned by the company; if more than 50% of the ordinary share capital of both is directly or indirectly owned by another company; or, for the 2024 year of assessment onwards, if more than 20% of the company's ordinary share capital at the beginning of the basis period is directly or indirectly owned by one or more companies incorporated outside Malaysia or by one or more individuals who are not citizens of Malaysia. Under paragraph 2C a related company is one with paid-up capital in respect of ordinary shares of more than RM2.5 million at the beginning of the basis period. LHDN's company tax-rate page (hasil.gov.my/en/syarikat/kadar-cukai-syarikat/, last updated 25 June 2026) gives these rates in its "Year Assessment 2023 - 2024" column for a "Company with paid up capital not more than RM2.5 million and gross business income of not more than RM50 million"; "Company other than the above category" pays 24%.

This is the source of the tax advantage — at the same revenue level, a company paying 15–17% on retained profit is paying materially less than an individual paying 25% on the same income.

The catch: money stays inside the company. To pay yourself, you take a director salary (taxed at personal rates) or declare dividends (tax-exempt under Malaysia's single-tier dividend system, but only paid from after-tax company profit). The full picture of personal tax you pay on money you withdraw matters, not just the headline corporate rate.

For a full breakdown of personal reliefs that affect your chargeable income, see Income Tax Reliefs Malaysia 2026. For step-by-step filing instructions, see the Income Tax Filing Malaysia Guide.

Worked Example: RM250,000 Revenue Consultant#

This is the most useful way to see the real-money difference. Take a freelance IT consultant earning RM250,000 gross per year, with RM30,000 in legitimate business expenses (equipment, software, professional fees, home office proportion).

Shared assumptions: RM30,000 business expenses. Personal reliefs under both structures: individual relief RM9,000, EPF contribution relief RM4,000, lifestyle relief RM2,500. Total personal reliefs: RM15,500.

Sole Proprietor — Tax Calculation#

Tax on RM204,500 (progressive):

• 0% on first RM5,000 = RM0
• 1% on RM5,001–20,000 (RM15,000) = RM150
• 3% on RM20,001–35,000 (RM15,000) = RM450
• 6% on RM35,001–50,000 (RM15,000) = RM900
• 11% on RM50,001–70,000 (RM20,000) = RM2,200
• 19% on RM70,001–100,000 (RM30,000) = RM5,700
• 25% on RM100,001–204,500 (RM104,500) = RM26,125

Total personal income tax: RM35,525

Sdn Bhd — Tax Calculation (Conservative Salary Scenario)#

The director takes a RM84,000 annual salary (RM7,000/month — a reasonable market rate for the role) and leaves the remaining profit in the company.

Employer SOCSO and EIS, from PERKESO's contribution tables. A RM7,000 monthly salary is above the RM6,000 wage ceiling, so the top row of each table applies (wages above RM6,000 are treated as RM6,000). This assumes the owner-director is an employee under a contract of service with the company (if not, SOCSO and EIS may not apply; see below), is under 60 and has never received an invalidity pension (SOCSO First Category). The rates are the First Phase rates under the Employees' Social Security (Amendment) Act 2026 (Act A1788), in force from 1 June 2026 (P.U.(B) 196/2026, as cited in our SOCSO EIS guide; the gazette itself was not read for this guide). The employer's 1.75% rate is the same in each phase (per our SOCSO rate notes, citing Act A1788 and PERKESO's FAQ). This is a 2026 First Phase example. The tables: employer SOCSO is RM104.15 a month (Act 4 table, row 65, "RM104.15 ... RM29.75 ... RM44.65 ... RM178.55" across the employer, invalidity, non-employment-injury and total columns) and employer EIS is RM11.90 a month (Act 800 table, row 65, "When wages exceed RM6,000 ... RM11.90 ... RM11.90 ... RM23.80"). RM104.15 + RM11.90 = RM116.05 a month; RM116.05 × 12 = RM1,392.60 a year, shown above as RM1,393. Chargeable income: RM250,000 − RM84,000 − RM30,000 − RM10,080 − RM1,392.60 = RM124,527.40; at 15% the company's tax is RM18,679.11, shown as RM18,679. (The earlier "approximately RM900" had no source.)

Director's personal tax on RM84,000 salary:

• Less personal reliefs RM15,500 → chargeable income RM68,500
• Progressive tax: RM0 + RM150 + RM450 + RM900 + RM2,035 (11% on RM50,001–68,500, RM18,500) = RM3,535
• Plus: Director's EPF deduction (11% × RM84,000) = RM9,240 saved (out-of-pocket salary is RM74,760 net of EPF)

Total tax (company + personal): RM18,679 + RM3,535 = RM22,214

At RM250,000 revenue, the Sdn Bhd saves roughly RM13,300 before company secretary, audit and SSM costs (which vary, so get quotes), in this illustration where RM124,527 of profit stays in the company and is taxed at 15%. That is real money. Profit withdrawn later as dividends or extra salary is not counted here. At RM400,000–500,000 gross, more income sits in the 25% and 26% personal bands versus 15–17% corporate rates.

Important: This is an illustrative calculation, not tax advice. Director salary level, allowable business expenses, and available personal reliefs all affect the outcome. Consult a licensed tax agent or chartered accountant (MIA member) before making the decision.

Liability: The Argument the Tax Numbers Don't Capture#

The tax calculation above tends to dominate the conversation. It should not — liability is often the more important factor.

Sole Proprietor: Your House Is on the Line#

When you operate as a sole proprietor, there is no legal distinction between you and your business. If a client sues you for professional negligence, breach of contract, or project failure — they are suing you personally. Your personal bank accounts, your car, your home, your investments — all are accessible to creditors if the business cannot pay.

For a graphic designer making logos, this risk may feel abstract. For a consultant who signs contracts worth hundreds of thousands of ringgit, or a contractor who manages third-party money, it is not abstract at all.

Professional indemnity insurance mitigates this risk but does not eliminate it. Insurance has policy limits, exclusions, and the insurer's own discretion on claims.

Sdn Bhd: Liability Stops at the Share Capital#

As a shareholder of an Sdn Bhd, your personal liability is limited to the amount of your paid-up share capital. If you incorporated with a small share capital, that is the extent of your personal financial exposure — in theory. The company's debts are the company's debts.

In practice, this protection has caveats:

• Director guarantees: Banks and landlords routinely ask directors of small Sdn Bhds to sign personal guarantees. If you sign one, you have voluntarily taken on personal liability for that specific obligation.
• Director liability provisions: The Companies Act 2016 contains provisions under which directors can be personally liable, for example for fraudulent trading (s540), or if they breach their duties. The guide's earlier references to trading while insolvent and "wrongful trading" are not tied to a section here, so confirm them with a lawyer.
• LHDN director liability: If the company fails to remit employees' withholding tax (PCB) or EPF contributions, directors can be held personally liable for those amounts.

The protection is real — but it requires running the company properly. Commingling personal and business funds, signing personal guarantees casually, or ignoring director obligations erodes the shield.

EPF: The Structure Changes Everything#

EPF contributions work fundamentally differently under the two structures, and the implications run in both directions.

Sole Proprietor: Voluntary via i-Saraan#

As a sole proprietor, you have no employer. EPF contributions are entirely voluntary under the i-Saraan scheme. You can contribute any amount at any time. The government provides a special incentive of 20% of your voluntary contributions in the current year, capped at RM500 a year, with a lifetime cap of RM5,000 or until you turn 60, whichever comes first. Contributing about RM2,500 in a year earns the full RM500. KWSP does not publish a monthly-income ceiling for i-Saraan.

The flexibility is valuable — you can align contributions with cash flow. The risk is behavioural — without the forced discipline of automatic deduction, many sole proprietors contribute inconsistently and arrive at retirement with significantly less than employed peers.

For the full EPF contribution mechanics and i-Saraan details, see the EPF Complete Guide 2026.

Sdn Bhd: Mandatory on Director Salary#

Once you take a director salary from your Sdn Bhd, EPF becomes mandatory — the same as for any employee. The employee contributes 11% and the employer (your company) contributes 12% (for salaries above RM5,000) or 13% (for salaries of RM5,000 and below).

On an RM84,000 annual director salary: the director contributes RM9,240 (11%) and the company contributes RM10,080 (12%, because RM7,000 a month is above RM5,000). The company's EPF contribution is a deductible business expense — it reduces corporate chargeable income, which partially offsets the cost.

The mandatory nature of employer EPF is both a cost (the company must fund it) and a benefit (the director accumulates EPF at employed-person rates). If building retirement savings is a goal — which it should be — mandatory EPF under the Sdn Bhd structure is a discipline mechanism that sole proprietors have to replicate through willpower alone.

SOCSO and EIS contributions are due on a director's salary if the director is an employee under a contract of service with the company; neither Act 4 nor Act 800 has a director-specific rule, so coverage turns on that definition, and a sole director-shareholder should confirm coverage with PERKESO. Directors who do not draw a salary under a contract of service are not covered (see the SOCSO guide). For the full breakdown of SOCSO and EIS rates and coverage, see the SOCSO EIS Malaysia Complete Guide.

Banking and Client Perception#

Banking Access#

Both structures can open business bank accounts in Malaysia. A sole proprietor can open a business current account with their SSM Enterprise registration certificate and MyKad. An Sdn Bhd requires the Certificate of Incorporation, M&A or Constitution, resolution authorising the account, and director identification documents.

The practical difference is credit. Banks are significantly more willing to offer business loans, trade financing, and invoice financing to Sdn Bhd companies than to sole proprietors. If your business model requires working capital financing, bridging facilities, or trade credit lines, an Sdn Bhd structure makes those conversations substantially easier.

Client Requirements#

Many large Malaysian corporates, government-linked companies (GLCs), and publicly listed companies have procurement policies that restrict or prohibit contracting with sole proprietors. If you are targeting Petronas, Khazanah investees, Telekom Malaysia, CIMB, Maybank, government ministries, or statutory bodies as clients, expect to be asked for an SSM company registration number — not an Enterprise number. The Sdn Bhd registration satisfies this requirement; the Enterprise registration does not.

This is not universal — many SMEs and private companies contract with sole proprietors without issue. But if enterprise clients are part of your growth plan, the client access argument for Sdn Bhd can outweigh the tax argument on its own.

Compliance Burden: The Annual Administrative Reality#

Sole Proprietor — What You Actually Have to Do Each Year#

1. SSM annual renewal — Renew your Enterprise registration every year via Ezbiz (ssm.com.my). Cost: RM60/year for a trade name, RM30/year for a personal name, plus RM5 a year for each branch (SSM's table of fees). The consequence of missing the renewal date is not stated in the SSM pages we hold.
2. Personal income tax return (Form B) — File by 30 June each year (LHDN's filing programme as read on 11 October 2026; not re-checked, so confirm the date) via the MyTax portal. Include your business income under Section 4(a).
3. CP500 instalments — If LHDN directs you to pay tax by instalments (a CP500 notice), pay them at the times and in the amounts it sets (Income Tax Act s107B). See the Freelancer Self-Employed EPF and Tax Malaysia Guide for full CP500 mechanics.
4. Record-keeping — Keep sufficient income and expense records for seven years from the end of the year to which the business income relates (Income Tax Act s82(1)).
5. e-Invoice compliance — If your annual turnover exceeds the applicable threshold (phased implementation, starting with larger businesses in 2024, expanding progressively in 2025–2026), you must issue and receive e-Invoices via MyInvois. See the e-Invoice Malaysia Guide 2026 for current threshold applicability.

Total annual compliance time for a well-organised sole proprietor: 20–40 hours (record-keeping throughout the year, tax return preparation, SSM renewal).

Sdn Bhd — What You Actually Have to Do Each Year#

1. Annual Return (Section 68, Companies Act 2016) — Filed with SSM within 30 days of your company's anniversary date. Confirms directors, shareholders, and registered office details.
2. Audit, unless exempt — Section 267(1) of the Companies Act 2016 says "A private company shall appoint an auditor for each financial year of the company", and subsection 267(2) gives the Registrar power "to exempt any private company from the requirement stated in that subsection according to the conditions as determined by the Registrar". The Registrar's conditions are in SSM Practice Directive 10/2024 (16 December 2024), which applies to financial statements with annual periods commencing on or after 1 January 2025 and revoked Practice Directive 3/2017; PD 3/2017 "shall continue to apply to financial statements with financial period commencing on or before 31 December 2024". It says "a private company qualifies for audit exemption if it fulfils at least two (2) of the following criteria": annual revenue, total assets and number of employees (full-time employees at the end of the year, excluding a director or a shareholder who also works full time as an employee, and "family members or friends who are unpaid or receiving irregular wages while working in the company"). Each is tested for the current financial year and the immediate past two, against thresholds that rise in phases: RM1,000,000 revenue, RM1,000,000 assets and 10 employees for financial periods commencing on or after 1 January 2025 until 31 December 2025; RM2,000,000, RM2,000,000 and 20 for periods commencing on or after 1 January 2026 until 31 December 2026; and RM3,000,000, RM3,000,000 and 30 for periods commencing on or after 1 January 2027. Companies "dormant since the time of incorporation", or dormant in the current and immediate past financial year, "continue to be exempted". The exemption does not apply to a private company that is a subsidiary of a public company, to a foreign company, or to an exempt private company that has lodged a section 260 certificate. An exempt company must still lodge unaudited financial statements with a director's certificate, and must have its accounts audited if it receives written notice, not later than one month before the end of the financial year, from members holding in aggregate not less than 5% of the issued shares, from not less than 5% of the members eligible to vote, or from the Registrar, who "directs the company to have its accounts audited".
3. Company tax return (Form C) — Filed with LHDN, due seven months after the company's financial year-end. The company may also need to make estimated tax payments (CP204) throughout the year.
4. Director's personal tax return (Form B or BE) — The director still files a personal return for their salary and any other income.
5. PCB deduction and remittance — If you pay yourself a salary, the company must deduct PCB (Monthly Tax Deduction) from your salary and remit it to LHDN. We could not confirm the remittance date (HELD), so ask LHDN for the current due date.
6. EPF, SOCSO, EIS contributions — Monthly remittance to EPF and PERKESO. EPF must be paid within the period the Minister prescribes (EPF Act 1991 s.43(2), s.45(3)); we could not confirm the date (an earlier version said the 15th of the following month; HELD).
7. Company secretary obligations — Maintain statutory registers (register of members, directors, charges), keep meeting minutes, file prescribed forms for any changes in directors, shareholders, or registered office.
8. e-Invoice compliance — Same obligation as sole proprietors, applied to the company's turnover.

Total annual compliance cost for a well-run SME Sdn Bhd: professional fees for a company secretary and an auditor, which vary by firm and by company, so get quotes, plus your own time.

When to Incorporate: Four Decision Points#

Rather than a revenue threshold alone, use four questions:

1. Is your personal tax rate materially above the SME corporate rates (15% and 17%)? If your chargeable income is above RM100,000, where the personal rate is 25%, the corporate rates start generating real savings. This typically kicks in at gross revenue above RM200,000 once business deductions are accounted for. Below RM150,000 gross, the tax savings rarely justify the compliance cost.

2. Does your work carry material liability risk? Consulting, legal, engineering, financial advisory, IT systems implementation, construction subcontracting — any work where errors or project failure could lead to large claims. If the answer is yes, and you are not adequately covered by professional indemnity insurance, the liability argument for Sdn Bhd is strong regardless of revenue level.

3. Do your target clients require a company registration? If you are losing tenders or being turned away from preferred vendor lists because you are an Enterprise, the revenue impact of not incorporating may far exceed the compliance cost of incorporating. Check whether your target clients have this requirement before the next proposal cycle.

4. Are you planning to bring in partners or investors? Sole proprietorships cannot have co-owners. A two-person business runs as a Partnership (ROB registration), not a sole proprietor. Sdn Bhd structures allow multiple shareholders, equity allocation, vesting schedules, and investor entry. If you are building something you want to grow beyond yourself, an Sdn Bhd is the appropriate vehicle from the outset.

Common Mistakes to Avoid#

Starting as Sdn Bhd before the revenue justifies it. Many consultants incorporate in year one on the assumption they will quickly hit RM200k+ revenue. If that revenue does not materialise in 12–18 months, they pay company secretary and audit fees for an entity that produces no tax benefit. Start as a sole proprietor, validate revenue, then incorporate when the numbers make the conversion worthwhile.

Staying as a sole proprietor well past the crossover point. The opposite mistake. Once you are consistently earning above RM300,000 gross, the annual tax overpayment from staying as a sole proprietor compounds quickly. Running the calculation once every 12 months (or asking a tax agent to do it) takes less than an hour. The decision not to incorporate at the right time costs far more than the cost of doing the work.

Treating Sdn Bhd bank accounts as personal money. The legal protection of an Sdn Bhd depends on maintaining the distinction between the company and the person. Withdrawing cash for personal expenses directly from the company account, paying personal bills through the company, or treating company revenue as your spending money — all of these erode the corporate veil. In a legal dispute, a court that finds the company is a shell can "pierce the corporate veil" and hold the director personally liable.

Ignoring the EPF implication of the salary decision. Directors who set their salary very low (RM2,000–3,000/month) to minimise EPF deductions and tax also minimise their EPF accumulation. At retirement, this matters. The calculation of optimal director salary needs to balance the short-term tax consideration against the long-term retirement impact. See EPF Complete Guide 2026 for contribution accumulation projections.

The Verdict by Profile#

These are generalisations — the numbers in your specific situation determine the answer:

Stay as a sole proprietor if:

• Annual gross revenue is below RM150,000
• Your work carries low liability risk and clients do not require a company registration
• You want to stay administratively simple while validating your business model
• You are in the early phase and want to preserve cash for operations rather than compliance

Consider incorporating as Sdn Bhd if:

• Annual gross revenue consistently exceeds RM200,000 and is growing
• Your chargeable income is above RM100,000 (the 25% personal band)
• You carry liability risk that professional indemnity insurance does not fully cover
• Clients — current or target — require a company registration number
• You are bringing in co-founders, employees, or eventually outside capital

The transition is not irreversible. Many Malaysian business owners run as a sole proprietor for two to four years, prove out their revenue model, then incorporate once the tax math and client requirements make it unambiguous. The key is running the calculation explicitly rather than deferring the decision by default.

When you are ready to look at the tax return mechanics on the Sdn Bhd director side, the Income Tax Filing Malaysia Guide covers the personal return process, and your company's Form C will be prepared by your tax agent in tandem.

Amendment, 6 August 2026. This guide stated the i-Saraan government incentive as a 15% match. It is 20% of your voluntary contributions for the year, capped at RM500 a year and RM5,000 over a lifetime (or until you turn 60), per KWSP. The rate was raised from 15% to 20%. Any cap of RM250 or RM9,000, and any claim that the incentive is limited to people earning below RM4,000 or RM6,000 a month, was wrong. KWSP does not publish a monthly-income ceiling for i-Saraan. Contributing roughly RM2,500 in a year earns the full RM500.

Amendment, 10 October 2026. The tax bands in this guide were the old YA2022 schedule (8%, 13%, 21%, 24%, 24.5%, 25%, 26% in a full ten-band table). They now show LHDN's resident-individual bands for Year of Assessment 2023, 2024 and 2025: 0%, 1%, 3%, 6%, 11%, 19%, 25%, 26%, 28% and 30% (hasil.gov.my/en/individu/kadar-cukai/, last updated 26 June 2026). Tax at the top of each band is RM150, RM600, RM1,500, RM3,700 and RM9,400 (to RM100,000), then RM84,400, RM136,400 and RM528,400. The 'RM195,000 chargeable income' paragraph first quoted RM35,525 (the tax on RM204,500); tax on RM195,000 is RM9,400 + 25% × RM95,000 = RM33,150, 13.3% of RM250,000. The worked example is recalculated: personal tax on RM204,500 is RM35,525 (RM9,400 to RM100,000 plus 25% of RM104,500), not RM35,780. The company-tax rates were also wrong: LHDN's company tax-rate page (hasil.gov.my/en/syarikat/kadar-cukai-syarikat/, last updated 25 June 2026) gives, for a "Company with paid up capital not more than RM2.5 million and gross business income of not more than RM50 million", 15% on the first RM150,000, 17% on RM150,001 to RM600,000 and 24% on the balance, not 17% on the first RM600,000. In the example the company's RM124,180 of chargeable income is all within the first RM150,000, so company tax is RM18,627; the director's tax on RM68,500 is RM3,535 (RM1,500 to RM50,000 plus 11% of RM18,500); total RM22,162, a saving of RM13,363 and about RM11,563 after the RM1,800 secretary cost, not RM29,396, RM6,384 and RM4,584. The SME conditions about control by a larger company and professional-services companies were removed because LHDN's page does not state them. Still outstanding: LHDN's company page shows no Year of Assessment 2025 column (its newest is "Year Assessment 2023 - 2024"), so the SME rates are confirmed for YA2023–2024 only; the SME definition is quoted from LHDN's page (paid-up capital of RM2.5 million or less, gross business income of RM50 million or less) and was not checked against the Income Tax Act's own definition, which may carry further conditions (for example on control by larger companies); the example's employer EPF of 13% on an RM84,000 salary (12% applies above RM5,000 a month), the RM1,800 secretary cost and the personal reliefs were not re-checked.

Amendment, 17 October 2026. Four corrections, each read against the primary text. (1) Employer EPF in the worked example. The example applied 13% to an RM7,000 monthly salary. The Third Schedule, Part A, to the Employees Provident Fund Act 1991 (Act 452) sets the employer's share at RM650.00 for wages of RM4,980.01 to RM5,000.00 (13%) and RM840.00 for wages of RM6,900.01 to RM7,000.00 (12%), so RM7,000 a month is a 12% case. Employer EPF on RM84,000 is RM840 × 12 = RM10,080, not RM10,920. The company's chargeable income is therefore RM250,000 − RM84,000 − RM30,000 − RM10,080 − RM900 = RM125,020, company tax at 15% is RM18,753, the director's tax is unchanged at RM3,535, and total tax is RM22,288 (was RM22,162). The saving against RM35,525 is RM13,237, not RM13,363. The director's own 11% is RM770 × 12 = RM9,240, as before. (2) Company secretary cost. The guide gave a range of RM1,200–2,400 a year, a RM1,800 figure and a total of RM2,500–5,000 (with an auditor range of RM1,500–3,000), none with a source. They are removed: fees vary by firm, so get quotes. The example's "net advantage" is now the saving before company secretary, audit and SSM costs, RM13,237, not about RM11,563. (3) SME definition. The guide quoted two conditions from LHDN's page. Paragraph 2A of Schedule 1 to the Income Tax Act 1967 (Act 53, AGC text as at 1 November 2023) adds that the company must be resident and incorporated in Malaysia, and states the capital test as paid-up capital in respect of ordinary shares at the beginning of the basis period. Paragraph 2B withdraws the rates where more than 50% of the company's paid-up capital in respect of ordinary shares is directly or indirectly owned by a related company, where more than 50% of the related company's is directly or indirectly owned by the company, where more than 50% of both is directly or indirectly owned by another company, or where more than 20% of the company's, at the beginning of the basis period, is directly or indirectly owned by one or more companies incorporated outside Malaysia or by one or more individuals who are not citizens of Malaysia; paragraph 2C defines a related company as one with paid-up capital in respect of ordinary shares of more than RM2.5 million at the beginning of the basis period. The 20% limb (2B(d)) was inserted by section 16(c) of the Finance Act 2023 (Act 845), which section 3(3) of that Act makes effective "for the year of assessment 2024 and subsequent years of assessment". The 10 October amendment above removed the control conditions because LHDN's page did not state them; the Act does. Still outstanding: the text is the 1 November 2023 reprint; the Finance (No. 2) Act 2023 (Act 851), the Finance Act 2024 (Act 862) and the Finance Act 2025 (Act 874) were read and none amends paragraphs 2A to 2C, but any Finance Act after 2025 was not read; LHDN's own company tax-rate page could not be reached on 17 October, so the sentence quoting it is unchanged. The RM1,500–3,000 setup range, the RM500–2,000 formation-fee range and the personal reliefs were not re-checked.

Amendment, 17 October 2026 (audit, setup costs and SOCSO/EIS). (1) Audit. The guide said Sdn Bhds need "audited financial statements" with exemptions "under Section 267A of the Companies Act 2016", and elsewhere "above certain thresholds". There is no section 267A in Act 777 (AGC text as at 1 August 2022). Section 267 is the rule and its subsection (2) the exemption power; the conditions are in SSM Practice Directive 10/2024, summarised above, with its effective date (annual periods commencing on or after 1 January 2025) and phased thresholds. (2) Setup cost. The "RM1,500–3,000 all-in" range, the "RM500–2,000" professional-fee range and the statement that RM1,000 applies to "companies with share capital not exceeding RM400,000" had no source and are removed. SSM's guidelines (July 2026 edition) give RM1,000 for incorporation and RM10 for "Company data shares to relevant agencies" on all three application routes, and RM50 for name reservation only on the "Through Company's Name Reservation" route. Professional fees vary, so get quotes. (3) Employer SOCSO and EIS in the worked example. "Approximately RM900" is replaced by RM116.05 a month (RM104.15 SOCSO plus RM11.90 EIS), RM1,392.60 a year, from PERKESO's tables, with the arithmetic shown above. Company chargeable income is RM124,527 (was RM125,020), company tax RM18,679 (was RM18,753), total tax RM22,214 (was RM22,288) and the saving RM13,311 (was RM13,237), "roughly RM13,300". Director's tax is unchanged at RM3,535. The SOCSO/EIS figures assume the director is an employee under a contract of service, and the First Phase label cites Act A1788 / P.U.(B) 196/2026 as given in our SOCSO guide. Evidence and hashes: docs/verification-log/guide-followups-oct17/.

Amendment, 17 October 2026 (follow-up, evidence batch H). We re-read the parts of this guide that the 10 and 17 October amendments had not covered, against SSM's table of fees for business registration (ssm.com.my, saved in the verification folder), the Companies Act 2016 (Act 777, AGC text as at 1 August 2022), the Income Tax Act 1967 (Act 53, AGC text as at 1 November 2023) and the Ministry of Finance's Budget 2027 tax annex. hasil.gov.my returned a "URL blocked" page to us on 17 October, so LHDN's company tax-rate page and filing programme were not fetched again. Confirmed: the SME definition and rates (Act 53, Schedule 1, paragraphs 2A to 2C: resident company incorporated in Malaysia, paid-up ordinary share capital of RM2.5 million or less at the start of the basis period, gross business income of RM50 million or less, no more than 50% held by a larger related company, and no more than 20% held by foreign companies or non-citizens; 15% on the first RM150,000, 17% on the next RM450,000, 24% above RM600,000, which the Budget 2027 annex, Lampiran 11, repeats as the current position); the company return due within seven months of the end of the accounting period (s77A(1)); the annual return due within 30 days of the incorporation anniversary (Companies Act s68(1)); business records kept for seven years (Income Tax Act s82(1)); the 12% employer EPF at RM7,000 a month (Third Schedule, as already recorded); the guide no longer contains the RM1,800 company secretary figure (removed in the 17 October amendment above). Corrected: SSM's fee for registering a business is RM30 a year for a personal name and RM60 a year for a trade name, plus RM5 a year per branch, so the guide's "free registration for Malaysian citizens" and "RM60–120" were wrong; the Service Tax threshold is RM500,000 for most services but RM1,500,000 for some, such as private healthcare (P.U.(A) 172/2025). Removed as unsourced: "one to three days" to register and "1–3 working days (Ezbiz online)" (SSM's pages do not state it); "RM1 share capital (the minimum under the Companies Act 2016)" (the Act text has no stated minimum); "traded while insolvent" and "wrongful trading" as named director liabilities (the Act's section on fraudulent trading is s540); "Missing the renewal date results in a penalty". Held, unchanged: the Form B date of 30 June and its 15 July e-filing grace, which the 11 October amendment to our freelancer guide took from LHDN's filing programme (not re-fetched), the claim that directors can be held liable for unremitted PCB or EPF, the statement that sole proprietorships cannot have co-owners, and the client-perception table. Review-round fixes (17 October 2026): the Form B date of 30 June now carries the note that it is LHDN's filing programme as read on 11 October 2026, not re-checked; the saved Income Tax Act extract now holds the full Schedule 1 paragraphs 2A to 2C, including 2B(a) to (d) and the definition of a related company in 2C, so the SME confirmation rests on the saved text. Evidence and hashes: docs/verification-log/evidence-batch-h-oct17/evidence.md. Calculator follow-up (not changed here): none for this guide.

Amendment, 25 October 2026 (CP500, record keeping and EPF payment date). Corrected: the sole-proprietor checklist said "If LHDN has assessed you as owing tax, pay bimonthly instalments throughout the year"; section 107B of the Income Tax Act 1967 leaves the times and amounts of instalments to LHDN's direction, so the line now says to pay at the times and in the amounts in your CP500 notice. The record-keeping line now gives section 82(1): records kept for seven years from the end of the year to which the business income relates. The Sdn Bhd checklist said EPF is remitted "by the 15th of following month"; the EPF Act 1991 (s.43(2), s.45(3), AGC updated text as at 1 July 2022) leaves the period to the Minister and we could not read the regulation, so the 15th is now held, as in our EPF guides (evidence batch J). Removed: "LHDN can audit this far back" after the record-keeping line, because we hold no primary text for LHDN's time limit to raise an assessment. Not re-checked in this pass: the PCB remittance date in the line above the EPF line. Evidence: docs/verification-log/followups-tax-epf-oct25/evidence.md.

Follow-up amendment, 25 October 2026 (PCB remittance date). The company checklist said PCB must be remitted to LHDN "by the 15th of the following month". No saved primary file (the Income Tax Act extracts or LHDN) gives the remittance date, so the date is removed and the line says it was not confirmed (HELD) and to ask LHDN for the current due date. Evidence: docs/verification-log/followups-batch2-oct25/evidence.md.