Annual Accounts of Limited Liability Partnership (LLP)

After Receiving a RM15,000 Compound Notice, I Panicked and Did the Annual Accounting

How to Do Annual Accounting for a Limited Liability Partnership (LLP)?

I restarted my business in 2019, after failing and having to close one of my LLPs in 2016. So, because of my own experience of opening a Limited Liability Partnership (LLP), I want to share how I prepared my Annual Accounts after receiving an email from the Companies Commission of Malaysia (SSM) in 2019.

The year 2020 was one of the years where I realised that failing to manage an LLP properly can affect the finances and stability of a business.

LLP Accounts Not Managed Properly and Neglected

It is indeed not easy to manage a business entity. So, I took it easy and didn’t manage it properly. After three years of not carrying out any business activities and not submitting any financial reports, I received an official email (compound and penalty) from the Companies Commission of Malaysia (SSM). SSM sent a payment notice of RM15,000.

At that time, I didn’t have any knowledge about how to prepare financial reports and annual accounts, opening an LLP without any commercial activity. After receiving the notice, I panicked because I imagined RM15,000 that needed to be paid because of my negligence and lack of seriousness in business management matters.

This is my advice to you who are reading: Do not arbitrarily open a company or business entity if you have no clear plan or objectives. Just a reminder, you are not opening an “Enterprise (business license)”, but opening a Limited Liability Partnership (LLP) or a company (Private Limited / Limited). It involves commitment and is not a matter that we can take lightly.

Time and Energy Spent Learning How to Do Annual Accounting Properly

Due to my negligence in the previous business, I entered a panic and anxious mode thinking about the RM15,000 payment that I had to pay if I failed to submit my LLP Annual Accounts for previous years.

I spent time and energy at first because I thought I didn’t want to spend money on preparing the document. But I was wrong, because the document I prepared did not meet what was requested by the SSM.

Accounting and Record Keeping of LLP Accounts

When we run a business, we need an organised system to track all changes, transactions, and expenses in the business. Accounting and bookkeeping have existed for a long time since humans started activities in trade and business.

With your LLP registered, you have ongoing obligations of the LLP including registration of changes, keeping records of accounts, annual declarations to SSM and other statutory compliance matters.

Keeping Accounting Records

LLPs shall keep accounting records and other similar records that will explain the transactions and financial position of the LLP and enable profit and loss accounts and prepare balance sheets from time¹ to time that give a true and fair view of the state of the LLP’s affairs. LLPs shall maintain accounting records and other records as above for a period of not less than seven years from the end of the financial year in which the transaction or operation to which the record relates is completed.

Accounting Record Keeping Documents

As a legitimate business entity, here are the documents that you need to prepare for the purpose of your LLP’s annual accounting:

Balance Sheet: Also referred to as a statement of financial position or condition, it reports the company’s assets, liabilities, and owner’s equity at a point in time.
Income Statement (Profit and Loss – P&L): Also referred to as a Profit and Loss Statement, it reports revenue, expenses, and profits over an accounting period. This includes sales and various expenses incurred during processing.

Process of Annual Declaration of LLP to SSM

Period of LLP Annual Declaration

As an LLP, you must ensure that reports are made to SSM annually within ninety (90) days from the end of the LLP’s financial year. Here are the important things that you need to do in this process:

The declaration can be made by either of the two partners stating that your LLP is able or unable to pay its debts when it is due in the normal course of business and the declaration needs to be accompanied by other details that the SSM may require.
For the first annual declaration, it must be made no later than eighteen (18) months from the registration of the LLP or ninety (90) days from the end of the financial year, whichever comes first.
If your LLP fails to make an Annual Declaration within the period and an extension period is given by the Registrar, you have committed an offence and if convicted, will be fined not more than RM20,000 and a further fine not exceeding RM500 for each day the offence continues after conviction.

Extension of Submission of Annual Declaration to SSM

If you are unable to prepare your LLP Annual Declaration within the stipulated time, an application for an extension period needs to be made after the end of the financial year and at least thirty (30) days after the date of submission of the annual declaration with a fee payment. Reasons that may be considered by the Registrar for granting an extension are as follows:

Death of a partner/compliance officer (supported by a death certificate).
Natural disasters such as fires, floods, etc. that destroy LLP records and documents (supported by a police report).
Theft (supported by a police report).
The LLP is under investigation where the books of accounts and records have been taken and are in the custody of the SSM and other Authorities (supported by relevant documents/letters from the relevant Authorities).
The LLP is involved in a court case (supported by relevant documents).
Other reasons deemed reasonable by the SSM for the extension period.

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Costs of Accounting and Annual Declaration of LLP

Reading all that has been shared above may have started to make you dizzy. Actually, I was like you originally because I did not take into account the importance of accounting in my business activities before. To do your LLP accounting, agencies or secretarial companies charge up to RM1,500 to RM2,000 to do this process.

Do Your Own Accounting and Annual Declaration to Save More

You have two options, either you can:

get paid services from agencies, agents or company secretaries who provide the service. This way is easier and faster without having to worry. Pay them, and they manage all the “accounting” process of your LLP. This method is suitable if you have several LLPs to manage and have large capital, or
do it yourself or “Do-it-Yourself” step by step using the ebook that I have provided below.

In this ebook, I have documented and listed the important steps that you need to take so that you can do your own accounting and annual declaration of your LLP. Here is what you will get in the DIY ebook “Do-it-Yourself Guide and Steps to Annual Accounting of LLP Without Agent”:

List of documents and actions required
Detailed step-by-step instructions on how to prepare the required documents
Important phone numbers and emails for the process of communication with the Companies Commission of Malaysia
Process of submission and annual declaration of LLP
Examples (downloadable) of Balance Sheet and Income Statement (Profit and Lost – P&L) as references.
Other important tips and advice in this process

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The four (4) advantages of this ebook are as follows:

Easy to understand & facilitate your affairs
There are detailed step-by-step instructions for each process and action to be taken
Save thousands of ringgit of your money
Instead of wasting thousands of ringgit, you can do this process yourself. Be a smart business user and entrepreneur.
Save your time
Believe it or not, I almost took two months to get all the information. Don't make the same mistake as me
Save your energy and commitment
To get all the information, I made dozens of calls, here and there (SSM and LHDN). So, don't waste your energy like I did before

I used to be confused about how to make an LLP account. I was also not sure how to send information to SSM. Alhamdulillah, now I can do it myself and don’t have to spend thousands of ringgit anymore.

Huzaifah bin Jazlan

Kuantan, Pahang

Straight Forward! I just need to follow this step-by-step ebook. Now I am more confident with my business.

Jenice Poh

Georgetown, Pulau Pinang

Just follow the steps provided. I can already do my LLP account on my own. No need to look for an agent anymore.

Vicknesh Kumar

Kajang, Selangor

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