SJ & Co. PLT, Chartered Accountants

💡 Can You Claim Tax Deduction for Director’s Remuneration?

This is a common question among SME owners — and the answer is yes, but with some conditions.

👔 What is Director’s Remuneration?
It includes salary, bonuses, fees, EPF contributions, and other benefits paid to company directors.

📋 Is it tax-deductible?
✅ Yes, provided the payment is reasonable and incurred wholly for business purposes

⚠️ LHDN may challenge the deduction if:
🚫 No formal board approval or resolution
🚫 Payment is excessive or unrelated to business role
🚫 Paid to dormant directors with no active involvement
🚫 Not declared in company records or tax returns

💡 Tip for SME Owners:
Always document director payments properly in board minutes, and ensure they align with market standards and actual work performed.

📞 Need help reviewing your tax deductibility and director payments? Our tax consultants are here to help.

🔍 How to Prepare for a Statutory Audit in Malaysia

A statutory audit doesn't have to be stressful — with proper preparation, it can be smooth and beneficial for your business.

✅ Here’s how to get ready:

1️⃣ Ensure all accounting records are complete and updated

Sales invoices, purchase bills, bank statements, petty cash records, etc.

2️⃣ Reconcile your bank accounts and balances

Make sure there are no unexplained differences

3️⃣ Keep proper supporting documents

Contracts, tenancy agreements, asset purchase receipts, loan documents

4️⃣ Check compliance documents

Resolutions, directors’ reports, Form C (tax return), Form E (employee return), etc.

5️⃣ Respond quickly to auditor queries

Timely replies avoid delays and additional audit costs

💡 Tip for SME Owners:
Don’t wait until year-end. Keeping your books clean throughout the year saves time and reduces audit issues.

📞 Want to make your next audit seamless? Talk to our audit team today!

&Co.

📈 Why Every SME Should Have a Financial Forecast

A financial forecast isn’t just for big corporations — it’s a powerful tool for SMEs to plan, grow, and stay financially healthy.

🔍 What is a Financial Forecast?
It’s an estimate of your company’s future income, expenses, and cash flow — usually projected monthly, quarterly, or yearly.

💼 Why is it important for SMEs?
✅ Helps in cash flow planning
✅ Supports loan or grant applications
✅ Assists in investment and expansion decisions
✅ Tracks progress against targets
✅ Increases financial discipline and visibility

🚨 Without a forecast, your business may struggle to identify upcoming cash shortages or over-investment risks.

💡 Tip for SME Owners:
Update your forecast regularly and use it to guide your decision-making, not just react to past performance.

📞 Need help creating a tailored financial forecast? Our advisory team is ready to assist.

&co.

📘 Cash Basis vs Accrual Basis – Which Accounting Method is Right for Your Business?

Choosing the right accounting method is critical for accurate financial reporting and decision-making.

🔹 Cash Basis Accounting
✅ Revenue is recorded when cash is received
✅ Expenses are recorded when cash is paid
👉 Simpler and suitable for micro or small businesses
❌ Doesn’t show money owed or owing

🔹 Accrual Basis Accounting
✅ Revenue is recorded when earned (even if not yet paid)
✅ Expenses are recorded when incurred (even if unpaid)
👉 Provides a more accurate picture of financial health
✅ Required for audited financial statements in Malaysia

💡 Tip for SME Owners:
While cash basis is easier to manage, accrual basis is preferred for companies seeking bank loans, investments, or preparing for IPO.

Still unsure which method suits your business? Our accounting professionals can guide you based on your industry and growth plans.

📞 Reach out today to book a free consultation.


&Co.

📊 What is Withholding Tax in Malaysia?

If your company makes payments to non-resident individuals or companies, you may be required to withhold a portion of that payment and remit it to LHDN.

💸 Common payments subject to withholding tax include:

Royalty payments

Interest payments

Technical or management service fees

Rental of movable property

Contract payments to non-resident contractors

📑 Key Points to Know:
✅ The tax rate depends on the type of payment and any applicable Double Tax Agreement (DTA)
✅ Payment must be remitted to LHDN within 1 month from the date of payment or crediting
✅ Failure to comply may result in penalties and disallowed tax deductions

💡 Tip for Business Owners:
Always check the residency status of your payee before making any payment. You might be liable to withhold tax even if the invoice doesn’t mention it!

Have questions about withholding tax and how it affects your cross-border transactions? Message us today — our tax experts are here to help!

&Co.

🧾 What is the Difference Between Statutory Audit and Internal Audit?

In Malaysia, many business owners confuse statutory audits with internal audits, but they serve different purposes:

✅ Statutory Audit

Required by law under the Companies Act 2016 for all private limited (Sdn Bhd) companies.

Conducted annually by an external licensed auditor.

Objective: To provide an independent opinion on the financial statements and ensure compliance with applicable accounting standards and regulations.

🔍 Internal Audit

Not mandatory, but highly recommended for medium to large companies.

Conducted by internal staff or outsourced professionals.

Objective: To evaluate the effectiveness of internal controls, risk management, and governance processes.

💡 Tip for Business Owners:
If you're preparing for fundraising, IPO, or M&A, both types of audits can help build investor confidence and uncover financial blind spots early.

Follow our page for more daily insights on accounting, audit, and financial best practices in Malaysia.
📞 Need help with your next audit? Message us today for a free consultation!