Do sole proprietors and partnerships in Malaysia need to keep books?
Yes. The Income Tax Act requires anyone with business income to keep sufficient records to work out their income. LHDN has a separate public ruling for businesses that are not companies. The Companies Act rules apply only to companies.
A sole proprietorship or partnership registered with SSM under the Registration of Businesses Act is not a company, so section 245 of the Companies Act does not apply. The tax law still does:
- Anyone required to file an income tax return must keep sufficient records to allow their income to be determined
- LHDN's Public Ruling 6/2000 covers persons other than companies or individuals, such as partnerships: they must keep records, including a cash book and sales, purchases and general ledgers as the business needs, to work out income readily. Sole proprietors are individuals and are covered by the same sections of the Act
- Under section 82A, documents are kept for seven years from the end of the year of assessment, or from the end of the year the return is actually filed if it was late
Simple books for a small business can be a cash book plus a folder of invoices and receipts, but keep it organised by month. Many small traders keep only bank statements and later struggle to prove expenses.
Benefits of better books:
- Accurate profit figure for tax
- Evidence for bank loans or grants
- Ability to separate personal and business spending
The rules differ in detail for sole proprietors and partnerships, so read the relevant LHDN public ruling or ask a tax adviser.
Legal basis
- Income Tax Act 1967, s.82
- Income Tax Act 1967, s.82A
Sources
Applies to 2026 · Last reviewed 29 October 2026
General information for business owners, not legal, tax or professional advice. Rules change, so check the sources or ask a licensed professional before you act.
Related questions
- Is a Sdn Bhd legally required to keep accounting records?Yes. Section 245 of the Companies Act 2016 requires every company, including its directors and managers, to keep accounting and other records that explain its transactions and financial position. This applies even to a new, dormant or loss-making company.
- Is there a simpler accounting standard for very small or micro companies?MPERS is already the simplified standard, and it is the lightest framework in common use for Malaysian companies. There is no further exemption that lets a very small company skip financial statements or the accounting framework, though some disclosures and audit rules differ for small companies.
- What is a chart of accounts and how should I set one up?A chart of accounts is the list of categories you use to record every transaction, grouped into assets, liabilities, equity, income and expenses. Set it up so it matches your business and the headings you need in the financial statements and tax computation.
- What is the difference between bookkeeping and accounting in Malaysia?Bookkeeping is the day-to-day recording of transactions: sales, purchases, payments and receipts. Accounting uses those records to prepare financial statements, interpret results and support decisions and tax filing. Good bookkeeping comes first, because accounts can only be as reliable as the entries beneath them.
- How long must a Malaysian company keep its accounting records?A company must keep accounting records for seven years after the transactions they record were completed. For tax, documents must be kept for seven years from the end of the relevant year of assessment. Use whichever period ends later.