Considering an LLP for Your Business?
Talk to our team about whether an LLP or Sdn Bhd suits you better.
When entrepreneurs think about starting a business, the choice usually jumps straight to a Sdn Bhd or a sole proprietorship. Many don’t realise there’s a third option — the Limited Liability Partnership (LLP) — which combines the advantages of both: limited liability like a Sdn Bhd, but simpler and cheaper to run.
What Is an LLP?
An LLP is governed by the Limited Liability Partnerships Act 2012. It is a separate legal entity, its partners enjoy limited liability, and its internal rules are set through a partnership agreement among the partners.
LLP Registration Requirements
- Partners: At least two, who can be individuals or corporate bodies.
- Compliance Officer: One required — must be a partner or someone qualified to act as a company secretary, and must reside in Malaysia.
- Business activity: A 5-digit MSIC code.
- Registered office: A physical address in Malaysia.
- Registration: Through the MyLLP portal run by SSM.
- Tax number: A TIN from LHDN upon registration, starting with “PT”.
SSM registration fee: RM500.
LLP vs Sdn Bhd: What’s the Difference?
- Liability: Both limit liability. A sole proprietorship does not.
- Audit: An LLP has no annual audit requirement. A Sdn Bhd must have its accounts audited every year.
- Company secretary: A Sdn Bhd must appoint one from the start. An LLP can use a partner as its Compliance Officer, avoiding a secretarial retainer.
- Governance: An LLP follows a private partnership agreement. A Sdn Bhd follows the board structure under the Companies Act.
- Fundraising: Venture capital investors usually prefer Sdn Bhds.
LLP Tax Treatment
An LLP is taxed as a separate entity at corporate rates — 17% on the first RM600,000 of income (subject to SME criteria) and 24% on the remainder. Profits are taxed at the LLP level before any distribution to partners.
Who Should Use an LLP?
- Professional firms, such as law or accounting practices.
- Small teams and SMEs that want liability protection without audit costs.
- Businesses not planning to raise venture capital.
- Not suitable for a solo operator — an LLP requires at least two partners.
Ongoing LLP Compliance Obligations
- SSM Annual Declaration: Must be lodged every year. Failing to do so for two or more consecutive years can lead to the LLP being struck off.
- LHDN Form PT: Filed annually.
- E-invoicing: LLPs must validate B2B transactions through MyInvois.
- Officers and office: Keep a qualified Compliance Officer and a Malaysian registered office in place.
How to Register an LLP Through the MyLLP Portal
- Search for your LLP name through the MyLLP portal run by SSM.
- Prepare partner details, Compliance Officer information, and the registered office address.
- Complete and submit the LLP Registration Form online via MyLLP.
- Pay the RM500 registration fee.
- Receive the Notice of Registration once approved — usually within 1–3 working days if documents are complete.
- Register a tax number (TIN starting with “PT”) with LHDN after SSM registration is complete.
Can a Sdn Bhd Be Converted to an LLP, or Vice Versa?
The LLP Act 2012 allows conversion from a conventional partnership or a private firm to an LLP, but there’s no provision for converting directly between a Sdn Bhd and an LLP. If your business is already registered as a Sdn Bhd and wants to move to an LLP structure, the usual route is to incorporate a new LLP and transfer assets/operations over, then strike off or declare the old company dormant if there’s value worth retaining.
LLP as a Joint Venture Vehicle
LLPs are increasingly popular as a joint venture (JV) vehicle between two or more parties, especially when partners want limited liability without the full compliance cost of a Sdn Bhd (annual audit, general meetings, and so on). Since an LLP requires at least two partners, this structure naturally fits a two-party JV.
Estimated LLP Incorporation and Annual Compliance Costs
| Item | Estimated Cost (RM) |
|---|---|
| SSM registration fee (one-time) | 500 |
| Registration service fee (if using an agent) | 800 – 1,500 |
| Annual outsourced Compliance Officer fee | 600 – 1,200 |
| SSM Annual Declaration | 200 – 400 (service charge) |
| Form PT tax filing | 500 – 1,200 |
Estimated total: around RM1,300 to incorporate (one-time), and RM1,300–RM2,800 a year for ongoing compliance — generally lower than a Sdn Bhd, which carries additional annual audit costs.
Partner Responsibilities in an LLP vs Shareholders in a Sdn Bhd
LLP partners are directly involved in day-to-day management through the partnership agreement, unlike Sdn Bhd shareholders who typically aren’t involved in daily operations (unless they’re also directors). This means LLP partners need to be more hands-on in operational decisions, but also have greater flexibility to change partnership terms without formal procedures like board resolutions.
Who Should Be the LLP’s Compliance Officer?
The Compliance Officer is responsible for keeping the LLP compliant with the LLP Act 2012 — including filing the Annual Declaration, updating the partner register, and keeping statutory records. If no partner is qualified or willing to take on this role, an LLP can appoint an external firm (such as SASCO) as an outsourced Compliance Officer, similar to how a Sdn Bhd appoints an external company secretary.
What Happens If an LLP Needs to Be Dissolved?
An LLP can be dissolved in two main ways: voluntary striking off, if all partners agree and the LLP has no outstanding debts, or winding up, if the LLP has debts that need to be settled in a structured manner. Voluntary striking off is generally faster and cheaper than formal winding up, but both routes require settling all tax obligations with LHDN first.
LLPs for Professional Firms: Additional Considerations
For law, accounting, and consulting firms previously operating as conventional partnerships, an LLP offers a natural path to limited liability protection without converting to a full corporate structure. However, certain professional bodies (e.g. the Bar Council, accounting bodies) may have additional conditions or restrictions for firms operating as an LLP — check with the relevant professional body before converting an existing firm’s structure.
How SASCO Can Help
Our team can help you determine whether an LLP or Sdn Bhd suits your business structure better, manage registration through MyLLP, and provide a Compliance Officer plus ongoing annual compliance for your LLP.
Frequently Asked Questions
How much does it cost to register an LLP in Malaysia?
The basic SSM registration fee is RM500. Additional costs such as professional service fees depend on the provider you choose.
Does an LLP need to be audited every year?
No. An LLP is not required to have its accounts audited annually, unlike a Sdn Bhd.
Can one person set up an LLP?
No. An LLP requires at least two partners.
Is an LLP suitable for a startup looking to raise venture capital?
Less so. Venture capital investors usually prefer a Sdn Bhd structure due to more standard share governance.
How long does LLP registration take through MyLLP?
Usually 1–3 working days after complete documents are submitted, depending on SSM’s workload.
Can a Sdn Bhd be converted directly into an LLP?
No direct conversion provision exists. The usual route is to incorporate a new LLP and transfer operations, then handle the old company’s status separately.
Can an LLP be used for a two-party joint venture?
Yes, an LLP suits a JV well since it requires at least two partners and offers limited liability without a Sdn Bhd’s annual audit requirement.
Who can be an LLP’s Compliance Officer?
Any LLP partner, or someone qualified to act as a company secretary, provided they reside in Malaysia.