How is payroll recorded in the accounting books in Malaysia?
Record gross salary as an expense, then record what you owe to employees and to the authorities: net pay, employee deductions, and the employer's EPF, SOCSO, EIS and HRDF contributions. Pay the liabilities when due and clear the payable accounts.
A typical monthly payroll journal has these parts:
Expense side (debit)
- Gross salaries, allowances, overtime, bonuses
- Employer contributions: EPF, SOCSO, EIS and the HRD Corp levy where it applies
Liability side (credit)
- Net salary payable to employees (becomes a bank payment)
- EPF payable (employer plus employee shares)
- SOCSO and EIS payable
- PCB (monthly tax deduction) payable to LHDN
- Any other deductions, such as advances or zakat
Routine
- Prepare the payroll sheet and payslips
- Post the journal for the month
- Pay salaries
- Pay the statutory bodies by their due dates (the 15th of the following month for EPF, SOCSO, EIS and PCB)
- Reconcile the payable accounts to zero after payment
Controls
- Compare the payroll register to staff lists every month
- Keep payslips, timesheets and signed contracts
- Year-end: prepare Form EA for employees and the employer's return
The following questions cover each contribution in turn.
Legal basis
- Employees Provident Fund Act 1991
- Employees' Social Security Act 1969
- Employment Insurance System Act 2017
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
- 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.
- How soon must transactions be recorded in the books?Under section 245 of the Companies Act 2016, entries must be made in the accounting records within 60 days after the transaction is completed. Leaving the books for a full year-end rush is therefore not compliant.
- What do a company's financial statements contain?A company's financial statements normally include a statement of financial position, a statement of profit or loss and other comprehensive income, a statement of changes in equity, a statement of cash flows and notes with accounting policies. The set must give a true and fair view.
- Who prepares and approves a company's financial statements?Directors are legally responsible for the financial statements. An in-house accountant or external firm often drafts them, but the board approves them by resolution and signs a directors' statement. The statements are then presented to the members.
- What is the difference between MPERS and MFRS?MFRS is the full set of Malaysian standards, aligned with IFRS, used by listed and regulated entities. MPERS is a shorter, simplified framework based on the IFRS for SMEs standard, designed for private entities. Both give a true and fair view; MPERS has fewer disclosures and simpler rules.