The Ultimate Guide for Running a New LLP in Malaysia

For those of you who are starting your very own micro business in Malaysia, a Limited Liability Partnership (a.k.a. Perkongsian Liability Terhad, PLT) is likely your best business model to start with.

I started mine about 1.5 years ago, and while I’m not a certified expert or anything — I’ve spent too many hours reading obscure documents by various government agencies to let it go to waste. This post covers the 5 Wives and 1 Husband on new LLPs in Malaysia. Who, What, When, Where, Why and How?

It’ll cover the “first cycle” of your new baby LLP’s life. Hopefully after you’ve gone through this first cycle, you’ll know what to do and just focus on running your core business smoothly.

Here’s the ultimate guide to starting your own LLP in Malaysia.

 

Why Limited Liability Partnerships?

Simon Sinek says great leaders start with “Why,” so we’ll start with that too.

If you recall what you learned in high school during Kemahiran Hidup, you’ll know that there are a few forms of businesses, each with their set of advantages and disadvantages. Of course, instead of listening to Puan Mariah, you were busy playing Command and Conquer with your pretty classmate Siti. So let me break it down for you:

There are sole proprietorships (Milikan Tunggal), partnerships (Perkongsian), cooperatives (Koperasi), private limited companies (Sendirian Berhad) and public limited companies (Berhad).

Know why you never heard of Limited Liability Partnerships when you were in school?

No, it wasn’t because Siti was flirting back with you, (she was actually just bored). It was because LLPs didn’t exist back then. They’re a new type of business entity — and they’re fascinating. Here’s why.

 

The Concept of Separate Entities

Okay, I actually hate the word entity because it doesn’t bring up the image of anything in my head. WTF is an entity?

In layman’s language, an entity is a thing that is independent. So for example: you’re an entity, I’m an entity, and Ah Chong Auto Services where you service your car is an entity. But here is where it gets interesting: some businesses are separate entities from their owners.

Now this doesn’t feel natural. Maybe because we’re brought up with traditional values that businesses are made up of the people that run them. So if you think of Tesla, you think of Elon Musk. If you think of Virgin (not that one perv), you think of Richard Branson. If you think of Tesco, you think of the kind Nepali guard named Bishal who helped secure your plastic bag.

But the great thing about separate entity is it allows you to keep your personal life and business life separate. And allows for some really cool things — like say, for the company you created to continue living on even after  you’re gone. Since it’s a separate entity from you — it doesn’t need you to be around. This is called continuity of existence.

Here’s another example: Rich Dad, Poor Dad author Robert Kiyosaki’s supposed bankruptcy. Some people have been saying recently, “Oh, he’s a fraud — if he knows so much about money, how come he can go bankrupt?”

He didn’t go bankrupt, silly. One of his many companies declared bankruptcy. Note the difference: Kiyosaki’s company declared bankruptcy, not Kiyosaki. And it probably hasn’t affected his wealth much. He’s likely got it all stored in other safe places.

But if he had been running a business that wasn’t a separate entity from himself (e.g. a sole-proprietorship), then yes — he’d be in deep shit.

 

Man with no money
Most of the time, starting a new business feels like this

 

Deep Shit vs Limited Liability

Just like in Kiyosaki’s case, there are always risks that business will go bad, and you need to make things right.

The lawyers call this liability, but I prefer to call it “being responsible for deep shit.”

The good news is there are business forms that protect you from going bankrupt even if your business does. And as you’ve probably guessed by now — a Limited Liability Partnership does exactly that (like the much more common Sendirian Berhads). At worst, you’ll lose all the money you invested into your business — but nothing more.

“Why not a Private Limited (Sendirian Berhad) company then? My friend says this is the best business format!”

Because Private Limited companies are expensive to start and more difficult to maintain (~RM 1,500 to start, ~RM 2,500 per year to maintain). If you have lots of capital though, they might make sense for you.

If you’re getting confused by my long-winded explanations, TL;DR: Choosing the correct business model can protect you and your money.

 

The Who’s Who of LLPs

Feel free to skip this paragraph if you’re an experienced business owner. If you’re a noob like me though — it’s important to understand who the players are:

  • Suruhanjaya Syarikat Malaysia, SSM (Companies Commission of Malaysia, CCM) — where you register your LLP, get its “birth certificate,” and do your annual declarations.
  • Lembaga Hasil Dalam Negeri, LHDN (Inland Revenue Board, IRB) — who you pay your taxes to and where you register for tax filing.
  • Other Government Agencies (e.g. Employees’ Provident Fund, EPF; Social Security Organization, SOCSO; Human Resources Development Fund, HRDF).

We’ll get into more detail on what you need to do with each of these agencies, but the point I wanted to make is this: a one-stop portal/counter where you can do everything does not exist. You will be dealing with multiple parties — each with their own ways of doing things. So please don’t get upset when the counter lady gives you the classic Malaysian line: “Oh, ini kena pergi jabatan lain…

Again, the above will seem painfully obvious if you’re already a seasoned Jabatan runner. But sometimes I have people asking me, “Why can’t I open a bank account for my LLP at SSM?”

Because they’re separate entities.

“But why not just run my side business quietly, don’t declare anything, and keep all the income? My friend’s aunt teaches tuition quietly and she’s damn rich! It’s the ultimate life hack!
F*ck the government. Hihi.” 

Yes, I totally understand your desire to pay as little tax as possible, and there are completely legal ways to do that. But I also believe in running legitimate businesses that are properly registered. It’s the ethical thing to do. Besides, you don’t want to mess with LHDN. I hear they can mess your life up pretty bad.

 

When Do I Need to Do What (First Cycle)?

Here’s where it gets exciting. Because here’s where we talk about what needs to be done, and when.

SSM and LHDN make up the majority of this section — because they’re the two major government agencies that you’ll need to report to.

(I don’t have experience running a business with employees, so my knowledge on dealing with the EPF and SOCSO is almost zero. If you know about that, and would like to add to this article — please comment below!)

Here’s a timeline of what needs to be done and when:

Timeline of tasks for new LLPs
Looks easy eh? (Wasn’t so easy to find out)

 

1. Application

Start by submitting your LLP application to SSM. Detailed instructions here.

 

2. Start

Once you’ve gotten your LLP certificate — we’ll call that Day 0.

 

3. Tax File

Register your LLP for a Tax File at a nearby LHDN branch:

  • Use Form CP 600PT.
  • You’ll also need to submit copies of your LLP certificate (from Step 1) and stamped LLP agreement.
  • You can stamp your  LLP agreement at any LHDN branch. It costs RM 10, and takes just a few minutes. Won’t go into detail on how to fill up the form here, but it’s really simple — just ask the helpful LHDN people at the counter.

Not sure how to do an LLP agreement?
Enquire here, or email my partner at info@axecute-consultancy.com;
and get a discount because I referred you:
LLP agreement packages start from RM 1,200.

Caution: When I went to LHDN Petaling Jaya, they said it’d take 3 working days, and in addition to LLP certificate and LLP agreement — they also needed IC copies of all the partners. That sucked, as I didn’t have the IC copies with me.

Pro Tip: So I went to LHDN Jalan Duta instead. And got it done within 15 minutes. (No IC copies required.)

Once you’ve registered your tax file, LHDN will issue you a letter which tells you your “No. Cukai Pendapatan” (Income Tax Number). It should look like this:

PT xxxxx xxxxx (10 digit number)

With your Income Tax Number, you can now do the next step: which is to file your LLP’s Income Tax Estimate:

  • Use Form CP204.
  • Since this is your first year in business, you have 90 days to submit your income tax estimate.
  • For some reason, you can only submit Form CP204 (for LLPs) to the LHDN Branch in Bangi (by post/hand). Still waiting for their online system to be ready!

Pro Tip: If you’re an SME (less than RM 2.5 million paid-up capital, and not related to a company > RM 2.5 million capital), you don’t need to fill up the tax estimate portion for the first 2 years. As in, you fill submit Form CP204 anyway, but leave sections 2 and 6 blank.

Reference: CP204 for SMEs

 

Optional: If You Have Employees

I don’t have experience dealing with the EPF and SOCSO (because I don’t have any employees), but if you do, register them according to the timelines below:

  • EPF — within 7 days of hiring an employee.
  • SOCSO — within 30 days.

 

4. Employer’s File & Employer’s Return Form

Here’s where it got a bit confusing for me. Since I have no employees, I thought I could skip this step. But apparently LHDN wants all LLPs to still register for an Employer’s File, and submit Employer’s Return Forms (Borang E) every year.

How to register your LLP for an Employer’s File (Fail Majikan)? You’ll need to head to a nearby LHDN branch and submit this form. (Remember to bring copies of your LLP certificate and ID too.)

For Employer’s Return Forms, it depends on when you start your business. You’ll always have to submit Borang E by 31st March of the following year. For example:

  • If you start in November 2016, you’ll need to submit Borang E to LHDN by 31st March 2017.
  • But if you start in January 2017, you’ll need to submit Borang E to LHDN by 31st March 2018.

Download Borang E at LHDN’s website.

 

Finance sheet, pen and calculator
Hint: Learning about financial statements will serve you well for a long time…

 

5. Annual Declaration

If you’ve made it to this point, you’ve already been running a (hopefully) successful business for some point now. It’s time to do your first annual declaration to SSM.

Your first annual declaration needs to be done within 18 months from your LLP’s registration date.

For subsequent years, it needs to be done within 90 days from the end of your LLP’s financial year.

This allows you the flexibility to choose a financial year that makes sense. So for example, if your LLP was registered on 12th July 2017, here’s an example of a financial year that doesn’t make sense:

Financial year: 12th July – 11th July
First accounting period: 12th July 2017 – 11th July 2018
First Annual Declaration: 12th July 2017 + 18 months = by 11th Dec 2018
Future Annual Declarations: 11th July + 90 days = ???
Tax submission (more on that in section below): 11th July + 7 months = ???

Here’s a more straightforward financial year:

Financial year: 1st Jan – 31st Dec
First accounting period: 12th July 2017 – 31st Dec 2018
First Annual Declaration: 12th July 2017 + 18 months = by 11th Dec 2018 (the only time you’ll have a weird deadline)
Future Annual Declaration: 31st Dec + 90 days = by end March every year
Submission of Tax Declaration: 31st Dec + 7 months = by end July every year

So please make sure to choose a sensible financial accounting period.

Annual declarations cost RM 200, and can be done fully online at MyLLP Customer Portal. If you have all your documents and information ready, I’ll bet you can do it within an hour.

For SSM’s comprehensive guide on how to do Annual Declarations, click here.

 

6. Tax Declaration

This is perhaps the most complicated part of all. Why? Perhaps because LLPs are new business structures — good documentation on how to do things is lacking.

So let me try my best to explain LLP tax declaration in plain language:

  • When to submit? Within 7 months from the end of your accounting period. For example, if your accounting period is 1st Jan to 31st Dec (like in previous section), you need to submit your tax declaration by end July. If your accounting period is 1st July to 30th June, you need to submit your tax declaration by end February.
  • How to submit? For LLPs, tax submission is a fully manual process. Online tax submission for LLPs is not possible for now.
  • What to submit? Form PT 20xx. For reference, here’s Form PT 2016 in Bahasa and English. (The English form is for reference only.) You need to submit the Bahasa Malaysia version of the form to LHDN.
  • Where to submit? Submit Form PT 20xx by post/hand to the address below:
    Pusat Pemprosesan Maklumat,
    Lembaga Hasil Dalam Negeri Malaysia,
    Menara Hasil,
    No. 3, Jalan 9/10, Seksyen 9,
    Karung Berkunci 221,
    43659 Bandar Baru Bangi,
    Selangor.

Note: Please do not submit the following for LLPs:
Form B (that’s for if you’re a sole proprietor) or
Form P (that’s for a partner in a conventional partnership).

For your personal income tax (remember that?), you still need to submit Form e-BE online. Remember, LLPs are separate entities from their partners. So they file tax separately.

What do you need to know to do LLP tax filing by yourself (i.e. without paying a tax agent to do it for you)? Basic accounting knowledge, and knowing how to read financial statements.

And here’s LHDN’s Guide on how to fill up Form PT 2016.

 

The next Cycle and the Future

Now that we’ve made it through Cycle 1 (phew!), it’s pretty smooth sailing from here onwards:

Timeline for LLP submissions
The first year is always the hardest. Then it gets easier…

 

For subsequent years:

  • Submit Tax Estimate (Form CP204) needs to be submitted at least 1 month before the start of your financial year.
  • Employer’s Return Form (Borang E) needs to be submitted by 31st March of every year.
  • Annual Declaration needs to be done within 3 months of the end of your accounting period.
  • Tax Declaration needs to be done within 7 months after you’ve closed your books.

And just to demonstrate how this looks, here’s an example for an LLP whose financial year is from 1st January to 31st December for next year:

Timeline for LLP in 2018
Could this be you? Why not start your own business today?

 

How Can I Get More Information?

LHDN has a pretty good website, where you can download all the forms necessary, and read official documentation regarding tax.

SSM‘s website is pretty good too, though not as well-maintained as LHDN’s one. But the reporting requirements for LLPs are simple — so you probably only have to deal with SSM once every year.

If you have any other burning questions, comment below and I’ll try to answer asap. Plus, some of my beloved readers sometimes help answer questions too. Thanks guys!

Finally, if you’ve made it this far, you either work for SSM/LHDN, you’re writing a thesis on LLPs in Malaysia, or you’re genuinely interested in starting a DIY business.

Whichever it is, I wish you the best — and hope you make tons of money.

 

– – –

 

Of course, if all the above sounds like a lot of boring, meaningless work — you can always pay someone to do it for you. Reach out to my partner here, or email info@axecute-consultancy.com for a quote; and get a discount just because you know mr-stingy. LLP packages start from RM 1,200.

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140 comments

  • Hi Stingy,

    Can I know on the tax declaration to LHDN, column B1 Aggregate Statutory Income from Business is it the net Profits after deduct all the expenses?

    Thanks,
    Ong

  • I would like to share my experience regarding Borang PT 2017. That day i went to LHDN Sarawak to ask regarding on how to fill the form, page one (Bahagian B: pendapatan berkanun, jumlah pendapatan etc). The staff there told me to leave the columns blank if we’re not sure on what to fill in and make sure to fill in page 2 information Bahagian C: Maklumat Kewangan. And just send the form to Bangi. It my first time to send the form and he said for Tax estimate just wait for them to send the form to my company.

    I kept note of the name of the lhdn staff that advise me in case of any problem in the future.

  • Hi Mr-Stingy
    Thank you for sharing all these information. So far i have successfully registered an LLP using your steps.

    Q: Can i develop my own partnership agreement based on sample from the internet? Is it acceptable by LHDN?

    Thank you

    • Thanks Zul,

      Hmmmm… Quite a tough question. Perhaps something that lawyers/tax advisors would be better suited to answer I think…

  • Thanks for having this portal and your sharing. Very useful information indeed.

    Does anyone manage to obtain a loan from banks when an LLP is newly set up and is able to purchase a property under LLP?

  • Great sharing. Very informative. Thank you!

    But I think there’s a slight mistake on the annual declaration part.

    “Your first annual declaration needs to be done within 18 months from your LLP’s registration date.”
    I think not necessarily. It is UP TO 18 months from the LLP’s registration date, BUT must be within ninety (90) days from the end of the financial year.

    So based on your example, if the LLP was registered on 12th July 2017, and financial year end is 31st Dec 2017, the first annual declaration will be due 90 days from 31st Dec 2017 i.e. 31 March 2018, instead of 11th Dec 2018.
    And if financial year end is 31st March 2018, the first annual declaration will be due 90 days from 31st March 2018 i.e. 30 June 2018, and so on.

    In short words, the annual declaration must be submitted within 90 days from the end of the financial year of the LLP, AND not later than 18 months from the date of the registration of the LLP for the first annual declaration.

    Got the information from here (Page 3 & 4): http://www.ssm.com.my/Pages/Register_Business_Company_LLP/LLP/LLP-Document/LLP%20-%20Practice%20Note%20on%20Annual%20Declaration%20(Final).pdf

    Correct me if I’m wrong! 🙂

    • Hey Nabil,

      Thanks very much! Appreciate it.

      Yeah, I think what you’ve put here is the most accurate way to describe it: “the annual declaration must be submitted within 90 days from the end of the financial year of the LLP, AND not later than 18 months from the date of the registration of the LLP for the first annual declaration.”

  • Hi Mr Stingy, great information. by the way, how do we get the resolution format for LLP? so difficult to get it.

    • Thanks kevin. Some of the banks might give it to you if you ask them. There’s also a link in my article for a sample.

  • Hi, thanks for the great writeup! Have a question here, may i know where can i find the list of deductible/exempted expenses for LLP, so that i can pay lesser income tax? Or is there anyway to distribute higher profit sharing to the partners before paying the tax?

    • Hey JR,

      You can only distribute profits after tax. As for the list of deductible expenses, it should be any legitimate expenses when running a business. Look for Sdn. Bhd. guidance — it should be similar.

  • What a great information. I have a concern here, how we terminate the LLP license online? I can’t find any link there. Thanks.

    • Thanks Rex. The procedure is actually listed in the LLP Act. If you give the SSM a call also, I think they can explain the process further.

  • Hi there,

    If a partner decides to leave the company, how do we get their name off LLP?

    • Hey Miza, I’m not entirely sure. Perhaps a company secretary can help you with this, or you can directly ask the SSM?

  • Hi Mr-Stingy,
    What are the steps for change of partners? Say the existing partner A is selling/transferring his existing share to new partner C. How to determine the value of the share?

    • Hi SL,

      Unfortunately since I haven’t gone through this process, I don’t really know. Perhaps a company secretary can help?

    • Hi SL,

      Is there a LLP Agreement entered between the partners? If there is LLP Agreement, you may check whether is it stated in the Agreement on the procedures for change of partner. Methods to determine the value of the holdings might be listed in the Agreement too.

      Thanks.

  • Hi Mr-Stingy.

    I learned so much from this.
    But I have one boring question.
    Do we need to submit the tax declaration only to LHDN Bangi?
    Why can’t we submit it to other branch?
    Is it because LHDN Bangi is easier to deal with?

    • Hello Fadhilah! Tax declaration for LLP, last time I checked needs to be submitted to Bangi. I think you can post it there if it’s too difficult to go. Or you can also call them up and ask where to submit…

  • Hi Mr Stingy,

    As i know the LLP biz registration cert only have the registration date and company name but do not have the partners name and company address, so what would be the other documents required to show these? is it LLP agreement ( i don’t have yet)? I am asking this as i foresee that the bank officer would request these info when i open bank account.
    Thanks in advance.

    • Hi Shawn,

      There is a document you can purchase which shows things like address and partners name. I think it’s called “business profile.”

  • Great Info. I have one ultimate question. For all the forms CP204, PT20XX, should we just wait for LHDN to send the forms to us or personally download from lhdn website and submit the documents?

  • Hi All, just want to share my experience, as my situation is not same with author so somethings not the same, just want to share my experience as I notice a few people in the comment section may have same situation as me.

    If you setup a LLP and have not started to trade yet, unlike most people, day 0 is what you make of it in your CP600PT form, not day 0 of the day you receive your registration from SSM as far as LHDN is concerned.

    If you had a LLP setup in SSM and did not use it as planned like me, you do not need rush to get your tax file number within 90 days, you can submit later. I made the error of submitting the CP600PT form in LHDN Bangi and put in the trading date as the same day I went there as I thought i’m late (like 10 months late). Since it is Bangi, I can submit the CP204 in the same place. the CP204 officer ask me if I havent start trading why I go get tax file number, now I have to submit CP204 and then do so yearly. I only need to get tax file number and submit cp204 when start business. The company can lie dormant. To remove my “tarikh mula operasi” I have to send letter now to the branch where my registered address is. So I just let it be, guess I’ll just have to do yearly submission to LHDN. . (also LHDN Bangi do need copies of IC, but dont need the LLP agreement for me)

    So if you are like my case, setup the company but the business got postpone, dont need go LHDN yet.
    just do the annual declaration for SSM using the online account (it tell you when the submission is expected as well online). That what was advise by me by the officers doing the CP204 forms.

    18 Sep 2018

    (I dont visit this site often, so i might not reply, sorry)

  • Hi Mr. Stingy,
    Thank you so much for the articles and the information provided. Very, very helpful indeed.
    I am seeking a clarification with regards to the Monthly Tax Deduction (MTB or PCB).
    I have just started an LLP and I understand points 2 & 6 in CP204 does not need to be included (for SME’s) until 2 years of operation. But the Explanatory Notes in CP 204 also state that new companies need to start paying MTD by the 6th month of operation.
    This is a little contradictory, I thought and was hoping if you could share some of your experiences in dealing with this scenario.
    Thanks.
    Sugan

  • Hi Mr Stingy,

    First of all thanks for this awesome guide on setting up a LLP. My partner and I got ours running pretty much based on the advice here.

    We have now submitted our first LLP’s tax estimates and is supposed to start paying for the monthly installments. Question is, I’m kind of stuck at the “Kod Jenis Bayaran” or “Payment Code”. Basically, I got lost trying to choose the right code…

    Reference: http://www.hasil.gov.my/bt_goindex.php?bt_kump=5&bt_skum=1&bt_posi=2&bt_unit=5000&bt_sequ=7

    Could you kindly advise whether I should use “095 – Income Tax Payment (excluding instalment scheme)”?

    Thanks!

    • Thanks for the kind words Seet!

      Personally, I think it should be this one:
      086 Bayaran Ansuran Cukai Syarikat

  • First time submitting LLP tax.
    I need to submit tax for last year (Jul-Dec2017).
    They sent me PT2018 to fill in to submit by 31July2018.
    Using PT2018 form and not PT2017?

    • Sounds a bit off to me. If it’s your first year of business, you could potentially combine it to be Jul 2017 to Dec 2018 and just do it one shot next year (up to your own strategy of course).

      I believe PT2018 is for tax years ending in 2018 BTW. If you wanna submit for 2017, can ask for PT2017 I think.

  • B13 Apportionment of Chargeable income

    My chargeable income is roughly RM28,500.
    How and where do I find out how to apportion? 18%, 24% ?
    Where do to get the Jadual 1 ACP 1967?
    Mind explaining how this works?
    First time doing this.
    Thanks a lot. Have to submit by 31 Jul 2018.

    • Hey Jerry — for an LLP there are only two rates. Either it’s 24%, or 19% if your LLP is classified as an SME.

  • Hi, i submiting plt tax for the 1st year. I found that pt2017 form need certified firm to sign?
    If the accountant prepared by our own staff internal accountants,can we sign ourself?

    • Are you not supposed to be using PT2018 instead of PT2017 for 2017 tax?
      They just sent me PT2018 for my 2017 tax.

      • I think this might depend on when your accounting period ends?
        But I submitted PT 2016 for year 2016 and PT 2017 for 2017. My accounting period is Jan-Dec though, so it’s very clear cut.

  • Great write up, i am just about to register a new business under LLP. Hope everything goes smoothly. 🙂

  • Hi Mr Stingy – love the website, Thanks a lot for the enlightment
    1 question does PLT gives out divend once the year end?
    Any idea for Sabah rules and regulation which is different for PLT opening ?

    • Hey Jason, thanks.

      PLT doesn’t declare dividends as such, but it can do sharing of profits with its partners. Not aware of any difference in Sabah rules…

  • Thank you SO MUCH for taking the time to write this post. It’s been extremely helpful. I can’t thank you enough!

    I have 3 questions. If you’re able to answer these I would be extremely grateful!

    a) Are LLP partners considered employees of the business for Borang E purposes?
    b) Do LLP partners have to pay EPF?
    c) Can LLP pay out a profit (before tax) to partners and partners then pay personal income tax on the respective profit?

    • Thanks Rhea,

      A. Not necessarily. However if you wanna appoint them as an employee also can.
      B. If you appoint them as an employee, then you have to pay them EPF.
      C. Nope, you only get to share after-tax profit with your partners.

  • Dear Mr. Stingy,
    Great piece ! Thank you.
    I registered my PLT in late 2015.
    I have a signed Partnership agreement but it was not tendered to SSM or LHDN . It was not stamped. It states the amount of salaries and allowances payable to a partner.
    Is this agreement valid ?
    Will the salaries / allowances paid to partners be treated as allowable expenses for tax purposes or have i made a mistake in my tax filing? I did my own taxes .
    What remedial action , if any, can i do?
    Also , must i pay the same amount of salaries / allowances each year to partners even if the business fluctuates
    i.e. can i change the salaries payable year to year ?
    thanx.

    Kanjoos.

    • Hi, thanks for the kind words!

      Is this agreement valid? >> not sure, but why not get it stamped then?
      Will the salaries / allowances paid to partners be treated as allowable expenses for tax purposes or have i made a mistake in my tax filing? I did my own taxes. >> salaries and allowances are allowable expenses for the LLP’s tax filing (but doesn’t include EPF/SOCSO/insurance).
      What remedial action , if any, can i do? >> I think you can always put in any undeclared income to “remedy” it in next year’s tax filing.
      Also , must i pay the same amount of salaries / allowances each year to partners even if the business fluctuates
      i.e. can i change the salaries payable year to year ? >> you can probably change the salaries with proper documentation in the LLP agreement.

      *please feel free to double check my suggestions above with a professional tax person. I’m not one. 😀

  • If the LLP company is dormant does it still need to submit income tax etc?

  • Hi there. I am a foreigner and me and my investor friends ( 70% Malaysian and 30% foreigner) are planning to buy property under LLP as we want to hold for 5 years and yearly maintenance of LLP is cheaper. Only issue we require Malaysian compliant officer! It seems my Malaysia friends are reluctant to be compliant officer as if anything goes wrong responsibility come on them.

    Mr. Stingy Any other way to form LLP by a foreigner?

    • Hi Abby,

      Perhaps you can hire a company secretary (or a company that provides secretarial services) to be your compliance officer.

    • Hi Abby, we are chartered company secretary. We might able to assist you. If interested, please communicate further to my email. Thanks

  • Hi, love your article!
    I have a question – does part time employees count? Do I need to declare them as my employees? They do not receive EPF or SOCSO.

    • Hi Cass,

      Thanks for the support. Ermmmmmm — gut feeling is probably No, but I don’t know enough about this to give a confirmed answer though…

  • I registered my LLP last year June 2017. It has been dormant since then and I actually started business operations on January 2018. Will I be penalised for not submitting any files to the relevant authorities until now?

    • Hi Eddie,

      As a matter of practice, I think you still need to declare the minimum documents. There are some penalties for failing to be compliant.

  • Great jon Mr Stingy.
    I wld like to highlight and get reaffirmation that GST is a separate subject and will also be applicable to LLP if it decides to register so. .? Thx

    • Thanks Al,

      Yeah GST is a totally separate subject. And if LLP decides to register for it then it’ll be applicable too.

  • Thanks for the details. I started my LLP a year ago but didn’t submit CP204 but have registered as employer with LHDN. What should I do now? Should I just submit CP204 now? Thanks!

  • Hi Mr Stingy,

    Great blog. But I’ve encounter some problem when I pay my visit to LHDN.

    I got SSM certificate as well as the LLP agreement. But the counter says I need a list of partners. May I know where I can get this document?

    • Hey Jackson,

      Erm — I’m unsure if there’s an “official” document for this. Maybe all they need is for you to write down your partners names on a piece of paper?

    • You could get it online on your ssm portal, it is called the LLP current profile enlisting details of all your partners and their addresses

  • Hi Mr. Stingy,

    1. In Section 3: Registering for Tax File

    Question: Can it be done in 1 day?

    “Getting the tax file number and submitting the tax estimate”
    Or does it take a while to do a tax estimate?

    I have no idea how well or not well the business will do so how is an estimation done?

    2. In Section 4: EMPLOYER’S FILE & EMPLOYER’S RETURN FORM

    Question: To register for LLP for an Employer’s File, I have to go to LHDN and not KWSP center?

    I called KWSP and Mila, who attended to me said if I don’t have any employees or if I as Director of the Company is not withdrawing any salary, I do not need to register and contribute to EPF.

    If I register too early, I will get penalized.

    3. What is the best way to manage company and personal taxes?
    I’ve had advice to charge living expenses and write it as company expenses and pay ourselves a minimal salary.

    4. Do you know what can be charged and labelled as company expenses?

    • Hi Kenneth,

      1. Registering tax file — definitely can be done in one day (if you go the right place). Try Jalan Duta one. I got it in fifteen minutes. Tax estimate — you might need to ask a tax consultant on this. Good question.
      2. Correct, if you do not have employees — then no need to do the employer’s part.
      3 & 4. Hmmm, the best way is to understand what is allowed under company expense, and what should be under personal expense. May need to do some research here, or again — maybe hire a tax professional to help.

  • Hello there,

    Your page has been incredibly handy in helping me get everything in order 🙂

    I was wondering if you would happen to know if there are any implications or penalty for a delay in filing for tax file and CP204 Form. According to LHDN there are none, but business owners are advised to file ASAP. Wondering if you have come across this in your research..

    • Hey Sha,

      Thanks for the comment!

      Nope — I’m really not aware of any delay penalties. I’m thinking since LLPs are so new, they’re probably not very strict on them yet (especially if just a small business). However, I also think if you already have a tax file, and you delay tax submission — that would likely be more severe.

  • Hi Mr. Stingy,

    Thank you so much for putting this up. I have been following your blog on-and-off, from the last year when I first set up my LLP, until today when I’m scratching my head, trying to figure out how to file my taxes properly.

    Unfortunately the only thing I didn’t do is submit CP204. Honestly, I didn’t know that needs to be done. The LHDN site does not give you a proper to-do list.

    Your articles are incredibly simplistic to understand, and also left me chuckling while handling my taxes. Again, my gratitude for your aid, and hope for success in your endeavors!

  • Hi Mr-Stingy,

    Thank you so much for your time and effort in putting this guide up.

    Questions.

    As a company owner of a LLP, how do you withdraw the profits? If income is banked in from COMPANY to PERSONAL account, would the PERSONAL account be taxed as well?

    Or does the company owner register himself as an employee of his own company and receive a monthly salary?
    Would that not also be TAX on LLP level and PERSONAL level?

    • Hello Kenneth,

      Thanks for the kind words. Partners of LLP can get paid from profits of the LLP (after tax). If done that way, then the partner doesn’t need to pay tax on the profits.

      If the partner is paid a normal salary, then that is taxed like normal income.

  • Thanks for your article, it’s been of great help!

    So… we went to LHDN Bangi yesterday to submit our CP204 and took the opportunity to ask some questions (since we usually cant get a straight answer from anyone). The person at the counter connected us to a pegawai in charge through the phone and to our surprise, she said that for LLPs, the SME category does not apply. SMEs only apply to Sdn Bhds. Meaning we still have to submit our tax estimates with sections 2 and 6 filled up. This obviously doesn’t make sense to us since there’s no need to submit the PT form for the first 2 years right?

    • Thanks Trixie,

      Hmmm… this is the first time I’m hearing SME category doesn’t apply to LLPs. If it’s true that it doesn’t apply — then you would need to submit PT form every year.

  • I just opened a PLT in August 2017. Now I’m trying to open a bank account. Went to Bank Islam and there a lot of documents I have to prepare. The manager of the bank told me it will take about a month or so to approve as it will involve getting some kind of info from SSM by the bank (as a counter-check measure). The Bank Islam branch I approached told me, so far only 2 PLTs have opened a bank account with them (for that particular branch) because without proper documentation, it will be rejected. The documents needed to open an account with them is as follows:

    * MyKAD of compliance officer and partner(s) – no issue here
    * Extract of Minutes of LLP Meeting(s) – huh? never did any official meetings.. All meetings have been over teh tarik
    * Resolution of Limited Liability Partnership – the only resolution I know is my monitor. Its 1920×1080.
    * Business Information (original and photocopy) – no issue here.. but as mentioned in ur article, it has to be purchased separately
    * Information of current partner(s) (original and photocopy) – also no issue. can be purchased separately
    * Registration Certificate issued by Registrar of Limited Liability Partnership (original and photocopy) – see above. need to be purchased.
    * Latest Annual Declaration – just opened business.. declare what??
    * Limited Liability Partnership Agreement – although i understand this should be officially done by a lawyer, having a template should save money and time.
    * Annual Practicing Certificate / Annual Certificate of Registration issued by the Registrar of the profession’s governing body eg. if local LLP is a frim of professionals governed by specific legislation
    * All documents must be Certified True and Accurate by the Compliance Officer of the LLP
    * SSM Search (ROB) which is printed by the bank

    The question is? Are all Banks required such an extensive amount of documents before a bank account can be opened? Is there a bank which requires only a minimum amount of documents?

    • Thanks Nik,

      Appreciate the detailed comment very much. Some other readers have been saying that RHB is very easy. My partner also has had very good experience with Public Bank. You might wanna try those?

  • Does anyone know if an LLP agreement is mandatory ? I called LHDN, and one person says yes n one says no. I can understand if partnership with friends/colleagues, but plan to have PLT with husband.

    • Hey Nurin,

      It depends on which LHDN branch you go to. I went to Jalan Duta one — they didn’t ask for the LLP agreement, even though the form asks for it.

  • MR Stingy,

    Probably the best write up explanation for PLT/LLP. Perhaps you have something similar for SDN BHD, Partnership and Sole Proprietor?

    • Thanks Long,

      Unfortunately I don’t have any personal experience on any of the other 3 — so it would be hard for me to write…

  • Hi Mr-Stingy, thanks for your detailed explanation on LLP. They are all very informative.
    Do you know if it is a must for partnership agreement for an LLP for tax filing to LHDN ?

    • Hey KC,

      Thanks for your kind words. Officially need partnership agreement. In actual practice, it depends on which LHDN office you go to…

  • Hi Mr Stingy,

    For the LLP, since you mentioned about separate entity, that means you can acquire Shares, Vehicles, and property under LLP’s capacity, similar to Sdn Bhd i suppose? In your example will be Mr Stingy PLT’s name to buy these assets and any other loans. Is that right?

      • Hi guys, just want to share that I have successfully applied car loan (2 cars) and home loan (1 approved and 3 pre-approved) with Public Bank and these guys are not fussy as long as your income for 2 years are solid with proof of financial documentation.

  • Hi Mr Stingy,
    I enjoyed reading your blog and find it very helpful. Thanks for sharing.

    Under No.3 Tax File, the form CP600PT and CP204 are no longer available and the link is broken. Would you be able to share the working links?

    Also do you know if the bank would need the Income Tax Number in order to open a company bank account?

    Does employer have to submit the Employer’s EPF and SOCSO number too to the bank?

    How much would you charge for drafting a LLP agreement?

    Appreciate your feedback.

    • Hi Ivy,

      Thanks for your comments. Have updated both links to be working.

      I don’t think bank needs any of the following to open bank account: Income Tax Number, EPF, SOCSO Number.

      Reach out to my partner at info@axecute-consultancy.com for a quote on LLP agreement.

  • Hey Aaron! I keep coming back here for updates and references… haha! Wanted to ask if you knew of any insurance companies that are able to register LLPs for corporate plans. I’m trying to buy one for my employee but GE has told me that they only accept Sdn Bhds. Checking with some agent friends too.

    Never tried to park your own plan under your LLP?

    • Thanks Jonathan,

      Nope I haven’t tried parking my own plan under my LLP yet. But let me check and see if I know anyone who can help.

  • Mr. Stingy,

    Thanks a lot and it is an superb guide and a lot friendly compared to SSM’s guide. By the way, do you have any experience in registering LLP with Ministry of Finance? Please share if you have any. Cheers

    • Thanks Chan!

      Unfortunately no — I don’t have any experience with MOF and LLP. Are you registering a financial-related business?

  • Hi Mr-Stingy,

    This is the best writeup I’ve ever seen on Malaysia LLP. Thank you so so much for writing this up and sharing with us. You’re awesome! Thanks to you, I now know that Malaysia has LLP structures.

    I’m pretty new to this and have a quick question. This is about fund/capital raising for a LLP. Apparently, you are allowed to issue debentures, raise capital or create charges over the LLP’s assets. This is according to a technical consultative document published by SSM found here (pg 39, Section 67): http://www.maicsa.org.my/download/technical/technical_clr_partnership.pdf

    May I know how true is that? From my limited understanding and reading of the LLP Act 2012, the issue of capital raising was not addressed in the Act. Would you mind clarifying?

    Thanks!

    • Hey John,

      Thanks for your kind words. Hmmm… I agree with you — I don’t recall seeing any issue of capital raising in the LLP Act 2012; and am in no position to give a good answer on that. Perhaps a written query to SSM might help clear things up? Thanks!

  • Very good write up for young entrepreneur like myself who have no idea how to set up a partnership. Before this, I visited SSM and learnt about LLP but there’s isn’t as much info given other than the website write up. This article should be featured in SSM guideline.

    • Thanks Bryan, appreciate it! Perhaps if enough people wrote to SSM — then this article would appear there. Haha. 😛

  • Dear Stingy,

    Thank you so much for your guide .
    One question , when dealing with LHDN , SORSO and EPF does all the partners of LLP need to be there or only the compliance officer can do it by himself ?

    Thank you

    • Hey Isaac,

      You’re welcome. I don’t think the partners need to be there. But they should sign the documents and whoever is there should have IC copies ready…

  • Hello Mister. I would like to ask the following:-
    1) If an LLP company is paying mileage e.g. 0.6/km for the business trip , does this need to be specify in the business/partner agreement?
    2) Nowadays with the use of Touch&Go for parking and toll charges, there is no receipt issued, can the amount still be claimed?
    Thanks.

    • Hello Juni,

      1. I don’t think such details need to be specified in the agreement.
      2. While there are no receipts, perhaps you can download the reports from Touch n Go website as documentation.

  • Awesome write up.

    I just went to LHDN and SSM in UTC, both not able to give me answer on the tax and declaration steps. If I read this earlier then can save my trip.

  • Hi, MR-STINGY,

    How to fill up section 3, 4, 5 and 7 on CP204.Confusing on the date to fill in. Example i just started the operation 01 Jun 2017.

    Thanks,
    Ong

    • Hi Ong,

      Difficult for me to advise here. It really depends on the time period you want to set as your accounting period. Whether it’s 1st June to 31st May, or otherwise.

  • Hi,
    Can I know if I register for LLP (i’m solopreneur), and you mentioned 2 partners needed – can I be one of the partners?

    Currently, I do tax filing under my sole proprietor business and done by my accountant. For LLP filing, can I continue to use the service of accountant to submit on my behalf, or do I need to submit on my own?

    Thanks a lot!

    • Hi Regina,

      You can register for an LLP as one of the partners. You will need one more partner.
      For LLP tax filing, yes you can use an accountant to submit (or also submit on your own).

      All the best!

  • Distribution of profits to partners
    LLP can distribute profits to its partners. Paragraph 12C of Schedule 6 of the
    ITA provides that profits paid, credited or distributed to partners in the LLP
    are exempt from tax. There is no withholding tax on profits paid, credited or
    distributed to the partners.

    Does this mean that after deducting the expenses, whatever profit that we distributes to the partner are exempted from tax? eg. the partner gets 10K from profit sharing, he doesn’t need to declare in his borang B?or is it exempted from the company tax?

    • Hey Meg,

      Whatever after-tax profit from the LLP can be paid out to the partners (which they then do not have to declare in their borang BE).

  • Hi Mr Stingy,

    Thanks for the great write up again. I have three questions:
    1. If I don’t use a tax agent, do I leave Bahagian H empty or do I put my name & signature in there?
    2. I’ve just learnt about the employee file, I too have no employees. Did they reject your PT form when you tried to submit with empty employer no?
    3. Do you submit practically empty E return form every year? (since you said you have no employees)

    Thanks.

    • Hello Zul,

      No problem:
      1. I left the tax agent portion, Bahagian H completely empty.
      2. Nope — they accepted my PT form, even without empty employer number.
      3. Haven’t submitted Form E yet, but next year I’ll submit it showing 0 employees. Just fill up whatever info I have.

  • Good write up. I missed the registration with LHDN part. Luckily not penalised.

    QUOTE “If you’re an SME (less than RM 2.5 million paid-up capital, and not related to a company > RM 2.5 million capital), you don’t need to fill up the tax estimate portion for the first 2 years” UNQUOTE

    if my company is not SME because it doesn’t fall under the MOF definition of SME, does it mean that I still don’t have to submit the tax estimate. I have clarified this with Kluang branch, and they said not required. However, I`m not convinced.

    On a different note, do we need to submit tax declaration to LHDN? I thought one of the benefit of LLP is that we don’t have to have Audited account. What if my accounting is wrong and I submit them submit tax wrongly?

    Anyway,

  • Hi,
    I don’t understand the remuneration part which is taxable if not declared in the LLP Agreement.
    Supposed I am the partner and also the employee that draws salary because I am working, how does it become non taxable if i declare it in the LLP Agreement?
    Care to elaborate more?
    Thanks!

    • Hey Suraya,

      If your LLP is paying the partners/employees salary, it must be declared in the LLP Agreement.
      If it is not declared in the LLP Agreement, then you do not get to deduct this remuneration/salary as part of the costs of running the LLP.

      All the best!

    • But for such an important/legal document that might eventually be used one day in court — wouldn’t it be better to get professional legal help to do this?

  • Kudos on the good article. Will bookmark this for reference on the day I decide to BMOB.

  • how about working permits for your partners in your LLP how that works ? is it event possible to apply a working permit under LLP ?

    • Unfortunately I don’t know enough about this to help you Saleh. Perhaps someone else reading this can help?

  • Thanks for the great info! May I know which tax form should the partner of LLP filed for the “salary” received, form EA or form B? Or Should the partners of LLP received monthly salary or dividend?

    Instead of LLP, have you consider the new type of Sdn Bhd which is so call Single Person Company? The new requirement for Sdn Bhd is much more simple and cheaper now?

    Appreciate you can share more on the pros & cons between LLP and “Single Person Company”. Thanks.

    • Hey Kevin,

      Isn’t Form B an income tax return form? I think you’re comparing apples to oranges here. Anyways, if the partner of the LLP is receiving salary, then the LLP should issue EA form to the partner.

      I’ve not considered the new form of the Sdn. Bhd. As far as I understand, all the requirements are still the same — only that you don’t need two directors now. That makes me think an LLP is still superior if it’s a simple micro-business.

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