• Enterprise is one type of business organisation in Malaysia which is the formation bound by the Registration of Business Act.
    There are two type of enterprise � i.e. Sole Proprietorship and Partnership.

  • There is no legal status for the enterprise as it is one-man show business where the owner and the business considered as one entity. The owner will run the business by himself and that is the reason why the business fortune depend on how good he is running the business. After all fund, effort and hard work devoted to the business in return the owner would entitled for all of the net profit generated from the business as a reward. But, one thing to bear in mind is that the enterprise is not liable to pay tax, as all income will be taxed personally to the owner.

  • However, to maintain the enterprise is easier and cheaper compared to company as there is no obligation to appoint secretary and to do audited account. And the most important thing is that it does not require more legality to conform especially when it involves the raising of capital for the business because there is no requirement to inform the Registrar.

  • Normally enterprise, whether sole proprietor or the partnership running the business in a small to medium industry compared to company because the business risk is lower, but the effect is small profit margin generated from the business. One of the main reason for remaining as a small business is because of limited source of fund. i.e. from the owner's saving or from the borrowings. That is why most people converting from running the enterprise to company because where there are more choices of getting the funds for the business.

  • Compared to enterprise, operation of business as a company giving more advantages as the owner of the company, i.e. the shareholders and the company are two different entities. It can be considered artificial human being and may act as natural human being such as buy and sell properties in its own name, enter into any agreement, may se or be sued except for being a director at any time.

  • That means the company also would be liable for all of the debts and it would not affected the shareholders at all. However, in the case of the company be wound up, he will only be liable for the unpaid shares to the company and if the shares are fully paid, then there is no obligation to contribute his personal assets to settle the company's debt.

  • The shareholders of the company don't have to worry for the business risk or the financial risks, as those are the director's responsibility and accountability to make sure that the company is making profit. Since the directors is the officer of the company and he must work to the utmost good faith for the benefit of the company as a whole, and not for the interest of shareholders only. So, any profit generated from the business is belong to the company and not the shareholders and the shareholders only entitled for the dividend declared out of the distributable net profit and not from the capital of the company.

  • Even though to maintain the company is costly as it must hire company secretary and the auditor and it must follow the company law, which is governed under the Companies Act, 1965 and it is duty of the directors to ensure that the company is following the Act and regulations. That is why the directors must appoint company secretary to ensure that all requirements had been complied with and to take care of all statutory books and records.

  • Sole   Proprietor   -  Issues To Consider  !!!



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