Hiring Staff or Freelancers for an Online Store in Malaysia

Employees

• Register with the Employees Provident Fund (EPF) and PERKESO (the Social Security Organisation, SOCSO), and pay statutory contributions each month.
• Employer EPF contributions are generally 13% of monthly wages up to RM5,000 and 12% above, with 11% from the employee. Check the latest rates and wage-ceiling rules with EPF and PERKESO.
• Employment terms must follow the Employment Act 1955.
• The Inland Revenue Board (LHDN) requires employers to give employees an EA form (the employee remuneration statement) and to file Form E (the employer's annual return). Form E was due by 31 March 2026 for 2025.

Freelancers and contractors. A person who runs their own business, uses their own tools, and decides how work is done is usually an independent contractor, paid against an invoice. They declare their own income. If the freelancer is a non-resident, payments for services can be subject to withholding tax under section 4A of the Income Tax Act, so ask before paying overseas freelancers.

Misclassification risk. If a freelancer works set hours under direction like an employee, the authorities may treat the relationship as employment.

Books. Wages, contributions and freelancer fees are deductible business expenses when supported by records.