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Limited Company |
Sole Proprietorship |
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Setup Cost & Process |
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More complex and expensive to set up when comparing with sole proprietorship. |
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Simple and quick to set up, plus the setup cost is low. Good for people who just want to test the market first. |
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| Legal Entity |
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It has a separate legal entity from its director / shareholder, so it can enter into contract, buy asset on its own. |
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It is not a separate legal entity and so the owner and the business are considered as one. |
| Personal Liability |
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The director and shareholder liability is limited to the amount of their investment. |
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The personal liability is unlimited. If the company incurs debts, there is no protection for personal assets. |
| Company Image |
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The public perception is good because it projects a long-term image. Investors would be more confident in it. |
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As there are certain risks involved and people are less confident in this kind of entity, it is not easy to find investors. |
| Company Maintenance |
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It needs to comply with several on-going requirements like filing of annual return, arranging audit, etc. |
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No need to audit its financial statements or file annual return with the companies registry. |
| Discontinuance of Business |
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Required to follow deregistration procedures. Generally the whole process will take around 6 - 9 months. |
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Easier and less expensive process to close down the business. |
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