If you are thinking about starting a Limited Liability Partnership (LLP) in Malaysia, or you have recently gone down this route, it is imperative to adhere to all of your bookkeeping requirements. To do this, you will need to know about the compliance requirements for LLC in Malaysia. Read on to discover everything you need to know about this business structure and what it means for you.
What are the benefits of opting for a Limited Liability Partnership?
Before we take a further look at the compliance requirements for this sort of business, it is important to assess why a limited liability partnership makes a good choice. This type of business model is the perfect balance between a partnership and a conventional private limited company. An LLP provides the benefits of a private limited company, yet you do not have to deal with the extensive reporting requirements. Plus, private limited companies cost a huge amount of money in terms of set-up costs as well as accounting, auditor, and secretary fees. An LLP can be a lot more cost-efficient too.
What records and reports do you need to keep as an LLP?
Now that we have established what an LLP is, we’re going to take a look at what you will need to do, and when you need to do it. LHDN and SSM are the two main governmental agencies that you will need to report to.
So, how do you get started if you want to operate an LLP? Well, this begins by submitting an application for an LLP to SSM. Once you have received your LLP certificate, this is effectively your first day of being in business. Therefore, you will need to ensure that your LLP is registered for a Tax File at your nearest LHDN branch. To do this, you can use the CP 600PT form. You are also going to need to send copies of your LLP certificate, as well as a stamped LLP agreement. The agreement can be stamped at any LHDN branch. It only takes a few minutes, and it will cost RM 10. It is very straightforward, but if you need any assistance, you can always ask the people at the counter.
After your tax file has been registered, you will receive a letter from KHDN that will tell you your Income Tax Number. This will be a 10 digit number that has ‘PT’ in front of it. Once you have this, you will be able to file your LLP Income Tax Estimate. Form CP204 is required for this. As this is going to be your first year in business, you are granted 90 days for your income tax estimate to be submitted. If you have employees, you are also going to need to register them. With the EPF, employees must be registered within seven days of them being hired. You get more time with SOCSO; 30 days.
You are also going to need to register for an Employer’s File. This is actually the case irrespective of whether you have anyone else working for you or not. Every year, an Employer’s Return Form needs to be submitted. You can register for an Employer’s File at your local LHDN branch. Don’t forget to bring copies of your ID and your LLP certificate as well.
When it comes to submitting your Employer’s Return Forms, the date that you started your business is what matters. It needs to be submitted by the 31st of March in the following year from the date you started your business. Therefore, if you started your business in November 2020, you need to submit your form by the 31st of March in 2021. However, if your business was set-up in January 2021, you will need to submit your form by the 31st of March in 2022.
There are some other forms that you are going to need to submit once your business is in operation. An annual declaration is one of these. Your first annual declaration to SSM must be done within 18 months of the registration date of your LLP. In the years that follow, the annual declaration must be completed within 90 days of the end of the financial year for your LLP. This gives you the ability to select a financial year that makes sense for you. Therefore, it is important to think about what financial accounting period is going to be the most beneficial and logical for you.
Another important requirement for your business is your tax declaration. This can be complicated because LLPs are fairly new, which means there is not a lot of documentation out there to provide you with a helping hand. This is why a lot of businesses decide to outsource this for their peace of mind.
When it comes to submitting your tax declaration, this needs to be done within seven months of the conclusion of your accounting period. This is a completely manual process for LLPs. You will need to submit form PT 20xx. Basic accounting knowledge is going to be required if you are to complete this form by yourself. If you are unsure, the best thing to do is to hire the services of another company to assist you.
Once you have made it through the first cycle, there are four things you are going to need to continue to submit. This includes the following:
Your Tax Declaration, which should be done within seven months of you closing your books
Annual Declaration, which should be done within three months of the end of your accounting period
Employer’s Return Form, which should be done by March 31st each year
Tax Estimate, which should be done within one month prior to your financial year starting
To conclude, while there are a lot of benefits that are associated with setting up a Limited Liability Partnership in Malaysia, you also need to ensure you adhere to the requirements in place. We hope that this guide has helped to shed light on the compliance requirements for LLC in Malaysia today. Should you need any further help or assistance, please do not hesitate to get in touch.