Family businesses form an essential part of the Malaysian economy, and it is estimated that family businesses contribute more than half of Malaysia’s Gross Domestic Product<\/b>. These businesses are the backbone of the economy, not only responsible in creating employment to general public at large but also instrumental in providing goods and services and stimulating consumer spending and drive demand.<\/p>\n
Despite its importance to the economy and some stood the test of time, many family businesses, especially those in the “Small and Medium Enterprise” category, fail to keep its accounting records and bookkeeping up to date.\u00a0 Many still practice cash-base transactions without keeping sufficient accounting records and continue assessing the health of the business or performance by simply quantifying the amount of money left in the bank account, while others had invested in high-cost accounting software but struggle to execute proper journal accounting entries and maintaining proper ledgers to form a meaningful document, largely due to the hiring of unqualified or bogus accountants.\u00a0 Accounting software is designed to be manned by qualified accountant as it requires precise input and correct classification of financial data based on accepted accounting principles, a misconception that still exist among business owners that they truly believe the said software can solve accounting matters on a stand-alone basis.\u00a0 This issue relates to the idea in computing and software, where an incorrect or <\/span>poor-quality<\/a><\/span>\u00a0input will produce\u00a0<\/span>faulty<\/a><\/span>\u00a0output.<\/span><\/p>\n Family businesses must seriously acknowledge that accounting and bookkeeping are equally important as the business itself.\u00a0 It was recently reported by Lembaga Hasil Dalam Negeri (LHDN) of the Penang Branch that sole proprietorships in Penang have the highest non-compliance rate on tax evasion matters (The Star, 18th September 2023), and their accounts are not well-maintained compared to other types of businesses.<\/p>\n Here, we listed some common issues facing or will be facing family businesses with no proper accounting and bookkeeping.<\/p>\n Proper accounting and bookkeeping are essential for business, thus avoiding unnecessary summons and legal actions issued by the authorities that can increase overall business operational costs.\u00a0 Furthermore, it helps considerably in tracking the profitability of the businesses over period of time.\u00a0 Based on the above, we strongly suggest business owners to take a step back and rectify the weaknesses of the accounting and bookkeeping function of their respective businesses to avoid serious and costly implication in the future.\u00a0 Outsourcing the accounting function to public accounting firm licensed by Malaysian Institute of Accountants is highly recommended in the absence of qualified in-house accountant.\u00a0 In Malaysia, the accounting profession is regulated by Malaysian Institute of Accountants (MIA) and only public accounting firm with a valid public practice license issued by MIA can provide accounting services to the general public and businesses in Malaysia.<\/p>\n This article is the property of the firm.\u00a0 Written approval is required from the firm for personal and\/or commercial use by third party\/parties.<\/p>\n We are a multilingual firm, proficient in English, Malay, and Chinese languages.<\/p>\n For English\/Malay speaking clients, please contact:<\/strong><\/p>\n E-mail:\u00a0megat.faizal@mfmco.my<\/a><\/p>\n Mobile: +6010 372 6830 (Call\/WhatsApp)<\/p>\n For English\/Chinese speaking clients, please contact:<\/strong><\/p>\n\n
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