Limited Liability Partnership (LLP) in Malaysia: A Complete Guide

When starting a business in Malaysia, entrepreneurs often feel torn between the simplicity of a Sole Proprietorship and the protection of a Sendirian Berhad (Sdn Bhd). The Limited Liability Partnership (LLP), or Perkongsian Liabiliti Terhad (PLT), was introduced to bridge this gap.

Governed by the Limited Liability Partnerships Act 2012, an LLP is a hybrid legal entity that combines the flexibility of a traditional partnership with the limited liability status of a company. In 2026, as digital compliance becomes more rigorous with e-invoicing, the LLP remains a highly attractive option for professional services, startups, and small businesses looking for legal protection without the high administrative costs of an audit.

This guide provides a detailed look at the LLP structure, its benefits, registration requirements, and how it compares to other entities.

Key Takeaways

• Separate Legal Entity: Like a company, an LLP is a legal “person” that can own property and enter into contracts independently of its partners.
• Limited Liability: Partners are protected from the debts of the business; personal assets are generally safe.
• No Mandatory Audit: Unlike a Sdn Bhd, an LLP is not required to have its accounts audited annually, significantly reducing compliance costs.
• Flexibility: Internal management is governed by a partnership agreement rather than strict statutory rules.
• Perpetual Succession: The LLP continues to exist regardless of changes in partnership (e.g., death or resignation of a partner).
• Taxation: LLPs are taxed as a separate entity at corporate tax rates, but with specific SME incentives.

Why Choose an LLP? Key Advantages

1. Protection of Personal Assets

The most critical feature of an LLP is limited liability. If the business fails or is sued, the partners’ liability is limited to their capital contribution. Your personal house, car, and savings are protected from business creditors.

2. Lower Compliance and Maintenance Costs

For many SMEs, the cost of a Sdn Bhd is prohibitive due to mandatory annual audits and high secretarial fees. An LLP offers the same liability protection but requires no annual audit. You only need to file an Annual Declaration with the SSM.

3. Internal Management Flexibility

LLPs are not bound by the rigid board structures required by the Companies Act. Partners can decide how to share profits and manage the business through a private Partnership Agreement.

4. Perpetual Succession

A traditional partnership dissolves if a partner passes away. An LLP, however, has “perpetual succession,” meaning the business entity stays alive even if the partners change.

Comparison Table: LLP vs. Sdn Bhd vs. Enterprise

Feature	LLP (PLT)	Sdn Bhd (Co.)	Enterprise (Sole Prop)
Legal Status	Separate Legal Entity	Separate Legal Entity	No separate legal status
Liability	Limited	Limited	Unlimited
Audit Required?	No	Yes (Mandatory)	No
Annual Filings	Annual Declaration	Annual Return & Audit	Annual Renewal
Taxation	Corporate Rate	Corporate Rate	Personal Income Tax
Best For	Professional firms, SMEs	Scalable startups, VCs	Small micro-traders

Registration Requirements: Step-by-Step

To register an LLP in Malaysia, you must utilize the MyLLP Portal managed by the Suruhanjaya Syarikat Malaysia (SSM).

1. Partners: Minimum of two (2) partners. Partners can be individuals or corporate bodies.
2. Compliance Officer: You must appoint at least one Compliance Officer, who must be either a partner or a person qualified to act as a company secretary. They must be a resident of Malaysia.
3. MSIC Code: Select a 5-digit MSIC code that defines your primary business activity.
4. Registered Office: You must have a physical registered office address in Malaysia.
5. Registration Fee: The SSM fee for registering a new LLP is RM500.

Tax and Compliance in the 2026 Digital Era

Even though LLPs are simpler than companies, they are still subject to strict digital tax regulations in 2026.

• Tax Identification Number (TIN): Upon registration, an LLP must register with LHDN for a TIN (starting with prefix ‘PT’).
• Corporate Tax Rate: LLPs generally pay 17% on the first RM600,000 of income (subject to SME criteria) and 24% on the balance.
• LHDN E-Invoicing: LLPs are not exempt from the mandatory e-invoicing mandate. Every B2B transaction must be validated via the MyInvois portal to remain tax-deductible for your clients.

Did You Know?

Unlike a Sdn Bhd, where you must appoint a Company Secretary from day one, an LLP allows one of the partners to act as the Compliance Officer. This eliminates the monthly retainer fee typically paid to secretarial firms, making the LLP the most cost-effective “limited liability” structure in Malaysia.

Ready to Scale Your LLP with Modern Payments?

Setting up your legal structure is the first step. The next is ensuring your business can get paid professionally and stay compliant with LHDN’s e-invoicing standards. Streamline your financial operations with a unified payment gateway designed for Malaysia.

Explore Payment Solutions from Razorpay Curlec.

Conclusion: Is an LLP Right for You?

The Limited Liability Partnership is an ideal “middle ground.” It offers the corporate veil and professional image of a Sdn Bhd while maintaining the simplicity and low cost of a partnership. If you are a group of professionals (like lawyers or accountants) or a small team of entrepreneurs who don’t plan on raising Venture Capital (VCs usually prefer Sdn Bhd), the LLP is likely your best choice for doing business in Malaysia.

Frequently Asked Questions (FAQs)

1. Can a single person start an LLP?

No. An LLP requires a minimum of two partners. If you are a solo entrepreneur, you should look at a Sole Proprietorship or a Sdn Bhd (which allows a single director/shareholder).

2. Can an existing Partnership convert to an LLP?

Yes. SSM provides a process for conventional partnerships to convert into an LLP to gain limited liability protection.

3. Do LLPs need to file taxes every year?

Yes. LLPs must file Form PT with LHDN annually. Since they are taxed as separate entities, the profits belong to the LLP first before being distributed to partners.

4. What happens if an LLP fails to file its Annual Declaration?

SSM can strike off an LLP from the register if it fails to lodge its Annual Declaration for two or more consecutive years. This would result in the loss of its legal status.