This document summarizes and compares three common forms of business entities: sole proprietorship, partnership, and private limited company. It outlines the key characteristics of each, including advantages and disadvantages. A sole proprietorship is owned and managed by one individual with unlimited liability. A partnership involves two or more partners jointly owning and operating a business. A private limited company is a separate legal entity from its owners, with limited liability and ownership represented by shares.

1. PREPARED BY : NORSYARIZAINI BT ABD MUTALIB

2. Sole proprietorship
Partnership
Company/ Private Limited
Company

3. SOLE PROPRIETORSHIP
Is formed under the Business Act 1956. This form of
business structure is solely owned by one person, where
management rest on that person whose liability is
unlimited.
Simplest business structure. But that does not mean the
sole proprietorship has to be small.
May have many number of employees or may grow to
any level in sale revenue.

4. ADVANTAGE
Easy to manage bcause the owner or
proprietor can make decision by himself
Easy to form and dissolve with minimum
formalities.
The owner pays income tax based on his
total individual income

5. DISADVANTAGE
Difficult to raise bank finance.
Unlimited liability.
The life span of the business is also
uncertain.

6. PARTNERSHIP
A partnership is legal business entity with two or
more partner.
A business is carrier out by more than one
person but not exceeding 20 persons.
 In a partnership, partner agree to undertake a
joint business and jointly own the business.

7. ADVANTAGE
Easy to set up with few formalities.
A lot of ideas talents and skilss can be
pooled together for better management.
Business risk can be reduced and
distributed among partners.

8. DISADVANTAGE
Business liabilities are unlimited, which may
involve personal assets of all partners of the
company.
The life span of the partnership business
depends on the life span of the partners passes
away or is declared a bankrupt, the business is
automatically dissolved, unless there is an
agreement otherwise.
Risk of personal clashes among partners.

9. Private Limited Company
Limited company is one of the business
entities set up under the companies Act
1965.
As a corporate body, characteristics that
differentiate it from a sole proprietorship
and partnership.

10. Cont…
The characteristics of a Private Limited
Company are as follow :
1. Right and responsibility.
2. Life Span.
3. Liabilities.
4. Membership.

11. Cont…
Terms and Conditions..
Private Limited Company must fulfil the following terms
and conditions:
1. The number of members does not exceed 50 people.
2. It has specific authority to transfer ownership of
members shares with the approval of the company’s
Board of Directors.
3. A company must use the word “Sdn Bhd” or
“Senderian Berhad” at the end of its name.

12. ADVANTAGE
Funds are easy to acquire through the exchange
of share ownership or loan from a financial
institution.
All shareholders are legally protected by law.
Shareholders are not burdened with the
management of the business is held by the
Board of Directors, who are appointed by the
company’s shareholders.

13. Disadvantage
The company’s share cannot be
transacted through the share market.
The company must pay corporate tax.
The qualified Auditors must audit the
company’s yearly financial statement and
the statement must be complete and
regularly updated.