The LLP made its appearance in the US in the 1980s, in the aftermath of the collapse of the real estate and energy industries in Texas. This collapse led to a wave of failures of banks, savings and loan facilities due to the huge claims against partners in businesses that were affected. LLPs were introduced to protect the
"innocent" members of these partnerships from liabilities.
Since then, use of this business vehicle has steadily grown across the globe. In Asia, the LLP has been introduced in various countries such as India, China, Singapore and Thailand.
Starting a business...
When you want to start a business, you will need a business vehicle, you can either choose to register with ROB (under SSM) as Sole Proprietor or if you have another business partner, Partnership or form a Sdn Bhd.
With the introduction of LLP Act 2012, you can form a Limited Liability Partnership, which effectively is a hybrid of Partnership and Sdn Bhd.
LLP enjoys almost the same tax treatment like a Sdn Bhd. For high-income earners venturing into business, this is definitely better option because your tax will be capped at 20% (for next RM500,000 on top of your existing income) as compared to Partnership or Sole Proprietorship.
Cost of Compliance
LLP is way cheaper than Sdn Bhd as there will be lesser compliance as compared to a Sdn Bhd.
No audited financial statement is required.
No AGM is required.
Conversion into LLP
If you are on Partnership or Sdn Bhd now, you can opt to convert to LLP.
Benefits of LLP
- Lower compliance cost yet enjoy limited liability like a Sdn Bhd
- Tax saving (for high income bracket person) as compare to Partnership
1) SSM Website for LLP
2) PWc Alert (Nov 2013)
3) LHDN, Public Ruling for LLP (May 2014)