Business Finance

Be Finance Ready For Your Business Start-up

9 May 2023

Key takeaways:

  • Separate your personal and business finances
  • Choose your accounting software
  • Hire a money person
  • Go digital for less hassle

Recently decided to make it on your own after years as an employee? Or keen to take advantage of an existing market opportunity? Whatever your reasons, by deciding to go into a business, you've already made the most important decision of all. However, many entrepreneurs and SME owners forget a few key steps that can kickstart good governance practices and make your journey to get financing down the road easier when the time comes to expand your business.

Keep your personal and business banking separate

First, formalise your new business. Depending on your sector, growth aspirations, and nature of business, you can choose to incorporate as a sole proprietor, Sdn Bhd or Limited Liability Partnership (LLP) with the Companies Commission of Malaysia (SSM). Check out our previous articles for a comprehensive list of the types of business entities in Malaysia as well as the process of registering your new business with SSM.

Next, open a business current account (BCA). This will normally involve a minimum deposit into the account, which will be your owner's equity in the new business. This is necessary because it is good practice to separate your business and personal finances so that when tax season and financial reporting season come along, you can clearly delineate your business income and track your cash flows.

If you are a sole proprietor, you file a single tax return and cannot draw wages from your business. For other business entities like Sdn Bhd, LLP, or Bhd, you will need to file two tax returns, one as an individual drawing wages/director's fees from your company, and another on behalf of your company itself. Thus, it is vital to separate your business and personal banking activities off the bat. We've previously put together a primer on how you can quickly open a BCA as well as key considerations when choosing a bank to open a BCA with.

Get scalable accounting software

One key consideration in choosing which bank to open your business account with, is what value-added services and enhancements your bank can offer to your business as you scale. For instance, Alliance Bank business clients get instant access and discounted rates to over150 partner apps and services supported via BizSmart® Solution. These include accounting, taxation, ERP software as well as point of sales, social media marketing, logistics and advisory services.

If you run an e-commerce business, consider integrating all your business social media profiles with your various payment options (the more the merrier) so you never miss an order. Ensure your software can be integrated with the ERP, POS systems or apps you use to take payment. So when it comes time to file tax returns or submit financial statements for bidding on jobs, you have clear view of all your business inflows and outflows, regardless of client or mode of payment.

Meanwhile, if you are a freelancer issuing invoices primarily for B2B transactions, make sure you streamline your bookkeeping with software like Wave or Zoho. These come with in-built reminders for clients to pay up and can immediately generate profit and loss (P&L) statements, balance sheets, and cash flow statements for any given time period. This will make it easier for business loan or credit card applications down the line and can make financial planning ahead for both peak and slow seasons easier.

Hire a money person

After all that, why should you still hire a money person? Don't worry, they don't have to work full-time. But having a tax consultant or accountant check your finances means you don't have to waste your time on non-core business activities.

Your money guy or gal can come in once a month to double-check your accounts and plan your taxes, and update you on any changes to tax deductibles and such based on guidance from the Inland Revenue Board (LHDN).

Moreover, whether your business is a Sdn Bhd or Bhd, you will need to appoint a company secretary/auditor and/or hold an AGM, set your financial year end for reporting purposes to SSM or Bursa Malaysia. These professionals will be able to help you maximise your tax deductions and keep you updated on accounting requirements that may affect financial reporting.

Less hassle with Alliance Digital SME

Your time is money, and you want to spend it growing the business, not bogged down in paperwork. Business owners need to hit the ground running, marketing their new venture and getting the word out. With a minimum deposit of RM500, entrepreneurs can open a BCA with Alliance Digital SME and start tapping into the BizSmart® universe without leaving their business premises. All it takes is three simple steps:

  • Complete the web form and upload your NRIC.
  • The Alliance Digital SME Relationship Manager will contact you for documents required and to schedule an appointment for a quick verification process at your business premises.
  • Once all documents and details are verified, your account number will be generated, and you can start your business journey!