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Why It’s Better to Outsource Company Secretarial Services

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Why It's Better to Outsource Company Secretarial Services

Many multinational companies and investors are becoming interested in the booming Malaysian market.

 

Once the business owners have managed to select a suitable company name and get it registered in Malaysia, they also have to focus on appointing a reliable company secretary as the secretarial services bring several advantages to the company.

 

Moreover, such services are important to comply with legal rules and regulations.

Importance of Company Secretarial Services

Every company has secretarial tasks that should be handled by experienced individuals to ensure maximum efficiency of the business. However, when you are running an entire company by yourself, it can be quite challenging to keep up with such tasks.

For instance, the Companies Act makes it compulsory for companies to submit certain documents on specific deadlines, which is the responsibility of the company secretaries.

Business owners can easily solve this challenge by outsourcing the company secretarial services, which will give them more free time to focus on other essential tasks of the company.

Moreover, they will have peace of mind because the responsibilities of the secretary will be fulfilled by a team of professional people.

There are several reasons why you should consider outsourcing the company secretarial services in Malaysia. These reasons are:

1. Accuracy

Running a company is a challenging task in which the precision and accuracy of the entire process matter a lot. By outsourcing the secretarial services, companies can enjoy accurate and timely handling of the important work of the business.

 

As a result, any potential legal challenges are prevented, as all of the legal formalities will be fulfilled on time. Similarly, you will not have to worry about managing the submission of financial or taxation reports, as it can easily be handled by professional accounting services in Malaysia.

2. Expertise

When you are running a company, especially a new company, you need all the professional help that you can get. It is quite understandable that now every company is able to hire competent individuals who have experience in handling different administration matters.

However, it is completely possible by outsourcing the secretarial services, as you will be getting the services of a qualified, proficient, and experienced company secretary.

When you outsource secretarial services to a reliable and efficient company, you can focus on the other affairs of the business. Hence, it allows you to maximize the efficiency and productivity of the business.

3. Cost-effectiveness

Many business owners believe that outsourcing company secretarial services are an expensive process. However, this is not true at all. In fact, it is a highly cost-effective process and can even help you in saving money, which you can spend in other parts of the business.

Instead of focusing any money on the hiring process or in-house training, you can get a professional and experienced company secretary by outsourcing the secretarial services.

Along with the cost-effectiveness of the process, you should also consider the greater quality secretarial services that you will be getting by outsourcing them.

 

An outsourced team of company secretaries will be familiar with all of the laws and effective policies that have to be implemented for the smooth functioning of your business.

an Asian working adult smiling look at camera

4. Reliability

Once you have outsourced your secretarial services, it will be the responsibility of the outsourced team to make the best decisions for your business.

You will be getting the services of a well-trained company secretary and can fully rely on his or her professional recommendations. Ultimately, it is useful in optimizing your business operations and generating more profits.

5. Minimal Risks

There are a lot of risks involved in training and managing an in-house team. When you rely on outsourced secretarial services and accounting services in Malaysia, you can expect the important matters of the business taken care of within the given timeframe.

 

As a result, the risk of any penalties, financial losses, or legal actions is significantly reduced.

6. Reputation

When you are able to comply with all of the legal requirements with the help of outsourced company secretarial services, you will be able to maintain a good public image and reputation.

Professional accounting services in Malaysia also ensure the prevention of any financial irregularities, which, in turn, helps you in running your business smoothly.
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The Bottom Line

These are some of the main reasons why it is better to outsource company secretarial services.


It allows you to depend on professionals to perform the routine tasks of the company and easily solve the conventional issues associated with the core activities of the company.


In short, if you want competent, cost-effective, and reliable company secretarial services, you should outsource them. For more information, feel free to get in touch with us.

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Understanding The Role Of A Company Secretary In Malaysia

Understanding The Role Of A Company Secretary In Malaysia-01

Understanding The Role Of A Company Secretary In Malaysia

Many people tend to confuse the position of company secretary with other positions like a traditional office secretary, However, a company secretary is an essential position that every company in Malaysia must-have. There are certain duties and roles that every company secretary must fulfil as per Malaysian law.

In this article, you will get to know everything about the role of a company secretary in Malaysia.

What is a Company Secretary?

As per Section 139A of the Companies Act 1965, every organization in Malaysia must appoint a company secretary. Section 236 of the Companies Act 2016 further states that a qualified company secretary must be appointed within 30 days of a company’s establishment.

 

A company secretary is a qualified individual who is an officer of a company. It is the responsibility of the Board of Directors of the company to appoint a company secretary. This decision must be taken very carefully after thorough research and interviewing because a company secretary plays a critical role in a company.

 

Contrary to popular belief, a company secretary is responsible for much more than just compiling records or performing the traditional duties of a regular secretary. Moreover, the roles and responsibilities of a company secretary have also changed a lot in the last decade.

 

Their duties are versatile because they are supposed to be involved in all of the departments of an organization. Company secretaries should have the required skills and knowledge to regularly monitor and review company procedures and advise the board of the company on important matters. Moreover, they have to work with other companies like accounting firms in Malaysia to which an organization might have outsourced its services.

Roles of a Company Secretary in Malaysia

It is quite clear that having a company secretary in a Malaysian organization is essential because it is mandated by law. The following are the main roles and duties of a company secretary:

Understanding The Role Of A Company Secretary In Malaysia-02

Knowledge

A company secretary must have knowledge of the important processes of a company. This is the primary reason why experienced and professional individuals are appointed to this position because they are familiar with the requirements of this job. Generally, a company secretary should have knowledge about:

  1. The essential provisions of the Articles of Association of the company.
  2. Rules and regulations that apply to the company.
  3. Corrective measures that have to apply in case of an error or problem arising at the company.
  4. Essential information about the organization and business models so he or she can advise the Board for the betterment of the company.

Ensuring Compliance

Under Malaysian law, a company secretary is responsible for ensuring that legal and standard business protocols are being implemented and that the organization is in compliance with legal guidelines and local rules and regulations. Most of these legislations are stated in the Companies Act 1965. 

Liaison

A company secretary acts as the official liaison for a company. It means that he or she is responsible for communicating with official companies, authorities and other partners such as accounting firms in Malaysia. 

 

The company secretary also has to ensure that all of the changes made in a company are as per the law and the company’s rules. Such changes must be noted down and relevant forms should be submitted. Malaysian law also dictates that holding an annual general meeting is essential for a company.

 

Therefore, the company secretary must ensure such requirements are met. For this purpose, they should advise the board of the company about the relevant dates on which annual general meetings can be held.

Preparing Resolutions

The role of a company secretary is not only limited to advising the board about the dates of the annual general meeting. They also have to prepare for meetings by developing resolutions, the agenda of the meeting and ensure that it is conducted smoothly and efficiently.

 

Moreover, the company secretary is an essential link between shareholders and a company. Any significant announcement like changes in the company must be announced to the shareholders via the company secretary.

Notices and resolutions are distributed to the staff and shareholders by the company secretary. Furthermore, other important documents like company registration forms and annual returns are also handled by a company secretary. They must make sure that annual returns are filed with concerned authorities.

Understanding The Role Of A Company Secretary In Malaysia-03

In a Nutshell

The position of a company secretary is a very important one. No organization can expect to run smoothly without a company secretary due to which the law has made it compulsory for companies to hire a company secretary soon after their inception. Both hiring and removing the company secretary is in the hands of the board of the company.


In short, it is an essential position that should be filled as soon as possible so that a qualified company secretary can play its role in the success of the company. 


For more information, feel free to get in touch with us.

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How Does Comparable Company Analysis Work?

Comparable Company Analysis
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How Does Comparable Company Analysis Work?

There are numerous methods of business valuation used in Malaysia such as comparable company analysis and asset-based comparable valuation. These methods vary from organization to organization, depending on the type and scale of the company.

 

In addition, if you have outsourced your accounting services to an accounting firm in Malaysia, then the firm will decide the best suitable valuation method for your business.

 

Asset-based valuation means the type of valuation in which the value of the business is determined depending on the comparable values of the assets and the total market value of the assets after minimizing the liabilities.  Once all of the assets are fully evaluated, fair market value is obtained on the basis of the entire comparison and analysis.

 

A traditional example of asset-based comparable analysis is when property owners work with appraisers to determine the worth of several properties in the same area. When the price of a specific property increases, the cost of other properties around it will also increase.

 

Therefore, the new value will be decided as per the asset-based evaluation because liabilities will happen at a market rate. Typically, when asset-based valuation is used, no other method of valuation is necessary. However, accounting firms in Malaysia might prefer using a combination of valuation methods to produce the most accurate results.

Important Components of Asset-Based Comparisons

Cost is an asset-based comparable valuation that includes considering the cost of each and every important part of a business such as modern machines, equipment, technology, furniture, lost income and every important item and asset that a business has.

This type of thorough analysis is essential to make sure proper comparisons can be made between the assets of different departments of the company so that an accurate price value of the company can be estimated.

It is also important for the accounting firms in Malaysia to consider the financial and functional usability of assets. Some companies can have intangible assets like outdated equipment and technology. Technological equipment plays a huge role in asset evaluation.

 

For instance, if a company is manufacturing vacuum tubes while another one is in the business of providing nanotech, then these types of comparisons must be kept in mind while evaluating the financial conditions of business.

Comparable Company Analysis-1

Advantage

Many organizations in Malaysia will find comparable asset-based analysis to be helpful when they are suffering from financial problems like liquidation.

 

Moreover, companies in the financial industry and real-estate sector are able to compare the value of different companies, business processes, properties and various other assets to determine the price of an organization. In industries where assets are evaluated on the basis of income or market approach one can use asset-based valuation.

Disadvantages

Asset-based valuation has some serious disadvantages as well. Unlike the rest of the business valuation techniques, a comparable asset-based approach ignores the potential earnings of a company. It means that the value is evaluated on the basis of the current assets possessed by the company and profits projections are entirely removed.

 

As a result, it is highly possible that the actual price of the company could be much higher than the estimated one, especially if it is expecting to earn a massive amount of profits in the future.

 

Furthermore, it is important to note that many products that are produced by the company are often not included in a balance sheet due to intangible products and technology. As a result, it is difficult to keep into account the cost of the intangible resources of a company during asset-based comparable valuation.

Comparable Company Analysis-2

In a Nutshell

Business valuation is much more than just determining the price of an organization. It involves a set of strategies, tools, and techniques required to assess the financial condition of a company from different angles before any conclusion can be made about the company’s worth. Accounting firms in Malaysia are capable of conducting efficient and reliable business valuations because they have expert accountants who can perform thorough comparable company analysis and asset valuation.

 

In order to make sure that the comparable asset-based approach is properly executed, you should hire an accounting firm in Malaysia because its experts will have the knowledge, skills and experience to evaluate the value of your business accurately. Such an option is also important when you find accounting to be a challenging task. Reliable results of a business valuation ensure you are able to make the best decisions for your company.

 

Overall, comparable asset-based valuation is an extremely flexible method of determining the value of a company. It has some very general rules. Otherwise, it is up to the accounting firm in Malaysia to design an efficient and reliable method of business valuation to ensure it is capable of producing the correct range for the value of a given business. For more information, feel free to get in touch with us.

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What You Need To Know About Vacancy Tax In Malaysia?

vacancy tax
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Vacancy Tax In Malaysia

Even if you are familiar with the concepts of a vacancy tax in Malaysia, it is highly possible that you might have heard more about it recently because it is being extensively discussed in the news at the moment. It is associated with the oversupply of properties that have a high cost and are not selling due to their unsuitability.

 

Property developers and contractors build buildings to make big profits. Now the Malaysian government is proposing the imposition of a vacancy tax on the unsold buildings of these builders.

What is Vacancy Tax?

A vacancy tax is a tax that is imposed in the shape of a penalty on those properties that are left vacant for a certain period of time. The amount of the vacancy tax is calculated on the basis of the percentage of gross selling of such properties. 

Importance of Vacancy Tax

The vacancy tax is being formulated by the Housing and Local Government Ministry (KPKT). It is expected to be imposed on developers who fail to sell properties in a few months during the next few years. The purpose of this tax is to minimize the existence of empty residential units in the country.

Moreover, the Ministry is also expecting that the vacancy tax will prompt developers to become more careful and responsible with their projects, especially high-rise and large-scale developments. The introduction of the vacancy tax does not need Parliament’s approval as it can be implemented without amending the Act.
vacancy tax-1

Criticism of Vacancy Tax

The announcement of the vacancy tax has resulted in severe criticism. Some economic experts and leaders of the real estate industry have criticized the authorities because such a tax could discourage investors and developers from developing new structures.

 

In this regard, certain developers have turned to accounting and audit firms in Malaysia to assess the possible taxes they might have to pay if the vacancy tax is successfully imposed on their unsold properties.

 

The basic demand of the developers is that the owners of these properties should have complete freedom over various matters associated with properties and construction. There are also some serious concerns that the imposition of a vacancy tax will set a precedent of administrative interference in the internal matters of a particular industry like the property industry.

 

Property and legal experts have also highlighted the fact that the Local Government Act provides tax incentives to vacant properties. On the other hand, a vacancy tax would disturb future projects in Malaysia.  It is seen to be an undesirable time for such a move because the country is still recovering from the impacts of COVID-19 on the economy.

 

Another common criticism of the vacancy tax is that it will negatively impact property markets because they will be forced to reduce the rent in markets where properties are oversupplied. Moreover, it is important to note that monitoring vacant properties all over the country is quite challenging; the implementation of the tax will be difficult.

vacancy tax-2

Government Response

The Malaysian government has promised to consider all factors before imposing any kind of vacancy. Government authorities will thoroughly study the proposal of imposing a vacancy tax. Moreover, the efficiency of this tax is often defended using the fact that similar taxes are applied in Canada and Australia.

The government has also assured the developers that any such action of imposing a vacancy tax will be taken after discussions with the financial institutions like Finance Ministry, Bank Negara Malaysia and other regulatory authorities. Similarly, Kuala Lumpur City Hall is also considering the demands and complaints of the developers and issuing proper planning approvals for sustainable development in the city.

The proponents of the vacancy tax consider it to be essential because a lot of housing units are taking much more than just a year to fill. As a result, an excess of vacant residential properties is being created.

In a Nutshell

Overall, one could say that the debate about the vacancy tax is far from over. The matter is expected to continually evolve in the next few months as the government has taken up the proposal to study it extensively and assess its feasibility.

 

Depending on the results of such a study, a final decision will be made about whether the vacancy tax is to be imposed on property developers or not.

 

For more information, feel free to get in touch with us.

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What is the difference between Human Resources and Payroll?

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Business meeting. High angle view.

Difference between Human Resources and Payroll

Some people and even organizations make the mistake of considering human resources and payroll to be similar things. However, they are two different areas of a business. Payroll deals with compensating employees while human resources means taking care of employee relations.

 

Both payroll and HR services have distinct roles in a company but they also share some functions that allow smooth and efficient functioning of an organization.

 

The integration of payroll and HR services, with the help of audit firms in Malaysia, allows companies to enhance the efficiency of the business, increase productivity and minimize the issues associated with producing consolidated reports.

 

These two departments of a company overlap in certain situations; for example when an employee is fired or recruited, when increasing the compensation package of an employee or when the company is going to grant leave to an employee.

The Role of Payroll in a Company

Payroll is the process through which the employees of a company receive their salary. Payroll services and functions include balancing and maintenance thorough payroll data, depositing salaries and reporting taxes. Payroll services also include dealing with wage deduction, creating and maintaining records and authenticating financial data.

 

Every organization should hire a reliable payroll management company or an accounting firm in Malaysia that can manage such services and ensure the proper distribution of payroll checks, making sure that the company is in compliance with tax laws and maintaining records of old and new employees.

 

Such accounting and audit firms in Malaysia are not only responsible for calculating the salary and wages of employees, but also for adding overtime, holiday and bonuses when required.

difference between Human Resources and Payroll-1

The Role of Human Resources in a Company

It is the responsibility of the HR department to manage the staff of a company. This type of management can happen in different ways. For instance, hiring the right kind of person for a company and making sure that all of the employees are working for the benefit of a business. Once new employees have joined the company, the HR professional has to ensure that they are delivering as per expectations.

The HR department also has to increase the motivation of employees and reward them by providing different bonuses like paid holiday or incremental increases in salary after a certain period of time.

Common Things Between HR and Payroll Departments

Both HR and payroll services are important to make sure your business is running smoothly. For instance, if an HR department has decided to fire an employee, it must inform the payroll management team to ensure proper paperwork can be produced for his or her release from the contract.

Similarly, in the case of bonuses or an increase in salary packages, the HR department will forward suitable documents to payroll for the calculation of the payment that has to be paid to employees. Other balances like a vacation, sick days and paid or unpaid leaves are tracked by both HR and payroll.

If your company is getting HR and payroll services from an accounting firm in Malaysia, it is important for you to include them in any strategic planning about your business. All departments must work together for the benefit of the business and make sure that they are able to achieve set goals.
difference between Human Resources and Payroll-2

One way of understanding the significance of HR and payroll services in planning is that the HR department is familiar with the professional strategies for hiring the best talent for your business and they know how to implement the suitable rules and regulations that promote an efficient and productive workplace.

 

Similarly, payroll is important for finding the best solutions to maximize the security and efficiency of payroll systems. Audit and accounting firms in Malaysia are well-equipped to provide payroll services, along with efficient auditing systems that minimize the risk of fraud and malpractices in paying employees.

 

Such modern practices and payroll systems also allow your company to pay employees on time so you will not have to face any legal issues due to late payments.

In a Nutshell

It is evident that both the human resources department and payroll services are essential for any type and scale of business. HR professionals make sure that suitable people are joining the company while payroll services are associated with paying your staff correctly and on time.


Most businesses, especially small-scale companies, can enjoy massive benefits by outsourcing their payroll and HR services to a third-party accounting and audit firm in Malaysia. Such firms have the required skills and knowledge needed to provide the best payroll and HR services for your business.


For more information, feel free to get in touch with us.

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Service Tax Measures for COVID-19 in Malaysia

Service Tax Measures
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Service Tax Measures for COVID-19 in Malaysia

To help and support businesses through this difficult and uncertain economic period, the government of Malaysia, as well as many other countries around the world, has introduced a massive number of tax incentives. However, the recently introduced tax schemes can make it quite challenging and confusing; thus, in this article, you will learn about every major tax incentive in Malaysia. 

 

The purpose of this article is to help Malaysian companies get up-to-date information about taxation policies and develop an effective COVID-19 response strategy. Companies that are relying on different accounting services in Malaysia should also be familiar with these incentives to ensure they are getting suitable services and avoiding as much taxation as possible.

 

A timeline of the service tax measures for COVID-19 in Malaysia is as follows:

  • On 30th March, the government announced several service tax incentives in Malaysia to help businesses during the coronavirus outbreak. As a result of such measures, taxes on hotel services were cut from 6% to zero. A similar incentive was provided to selling tobacco and alcohol in hotels until 31st August 2020.
  • On 16th April, the deadline for the sale and service tax was extended from March to 12th May.
  • On 1st May, due to the pandemic and worsening economic conditions, the deadline for the service tax for the months of February and March was extended. Moreover, tax incentives were announced for the tourism industry.
  • On 2nd June, the government again postponed the date of sales tax submission until 30th June. Moreover, the penalties or interest on late submission was completely removed.
  • On 2nd July, the Malaysian government announced multiple service tax incentives for the tourism industry. Moreover, the tax payment instalments were delayed to 31st December. It was also announced that the tourism tax will be zero from 1st July 2020 to 30th June 2021. The 30th March decision of reducing tax on hotels and accommodation services was also extended till 30th June 2021.
Service Tax Measures-2
Generally, value-added tax and services measures have the following attributes:
  • Variations in time to submit taxes for different industries.
  • Specific helplines to get quick answers to inquiries.
  • An efficient system of automatically delayed remittances to give companies a much-needed cash flow boost. Remittances have taken a hit during the pandemic, and such efforts are made to support them.
  • An exemption on the Tourism Tax — the previous rate was 6%, and it was reduced to 0% to support the economy amid the pandemic.
  • Waving the interest on late payments.
  • Reducing interest rates.
  • Providing tax incentives for firms that provide essential services, like accounting services in Malaysia. 
  • Quick and automatic waivers on the fee for late submission of various taxes such as the Sales and Service Tax (SST) as announced by the Malaysian government.
The government also announced several measures for customs duty such as:
  • Hiring more custom officers to maintain a smooth supply chain and prevent massive disruptions caused by the global pandemic.
  • Reviewing policies, like allowing the export of surgical masks, ventilators and raw materials for PPE.
  • Wavering late fees for paying bills.
  • Establishing specific help desks to make the import-export process smooth and easy.

PENJANA

The Malaysian government also announced several economic relief packages to support different industries of the country. Announced in June, the National Economic Recovery Plan (PENJANA) – a comprehensive package viewed by the experts as a leading plan to recover the economy and uplift the economy – promises massive benefits, financial assistance and tax incentives in Malaysia. The service industry got unprecedented benefits under this plan.

Service Tax Measures-3

In a Nutshell

Overall, the response of the Malaysian government to the COVID-19 pandemic has been quite positive and much appreciated. Financial institutions are still trying their best to come up with the best strategies and financial measures that will help businesses in the post-pandemic world.


Furthermore, many industries will be enjoying the tax incentives until 2021, which gives organizations plenty of time to recover their business without worrying about heavy taxes. Companies that rely on professional accounting services in Malaysia have a great chance of getting through this crisis as soon as possible because efficient accounting and record keeping ensure availability of all essential decision-making data.


Moreover, having a complete picture of financial condition will help you in applying for suitable tax incentives in Malaysia and get some sort of tax exemption or relief to focus on rebuilding your business.


For more information, feel free to get in touch with us.

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Adapting Your Business to a New, Post COVID-19 World

Adapting Your Business Post COVID-19
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Adapting Your Business to a New, Post COVID-19 World

A lot has been said and written about the COVID-19 pandemic and the severe effects the lockdown has had on business in Malaysia. This is the perfect time for companies to adapt their business models to the new normal in the post-COVID-19 period to ensure maximum business recovery and survive this economic crisis. Relying on accounting firms in Malaysia will also provide a much-needed, objective outlook on your business and financial condition.

 

While short-term strategies for business recovery are significant, business owners also have to realize that they must redevelop their working procedures and business model to adapt to the new conditions in the post-pandemic world. Long-term planning and strategies will make your business thrive in these unprecedented times.

 

Here are the top five strategies that you should implement to adapt your business to the new normal:

1. Implement Cloud Solutions

Cloud computing has been an important part of organizations for many years now. However, the pandemic has highlighted the importance of modern cloud solutions. Virtual and remote working are essential parts of the new business models, so you must consider implementing modern cloud solutions in your business to start enjoying the massive benefits provided by cloud technology. It will provide scalability, reliability and efficiency in your new business procedures.

2. Establish New Sales Channels

The COVID-19 pandemic has greatly disrupted the traditional sales channels of almost all types of businesses, especially small companies. Now, organizations should start researching various sales channels. Many companies have already moved to online platforms, like e-commerce stores and social media platforms, to keep their business afloat during the pandemic.

In the post-COVID-19 world, you should not abandon such channels. Instead, allocate an appropriate portion of your budget to digital marketing and developing other sales channels. It will ensure that your business is able to smoothly function – even if it is closed physically.
Adapting Your Business Post COVID-19-1

3. Reduce Physical Assets

Many accounting firms in Malaysia provide professional accounting services. You should consider availing them to revaluate your entire business model. Technology has been an essential part of business for many years now, but the pandemic has accelerated this process.

 

You should expect rapid digitalization in various industries; thus, try to minimize the physical assets in your value chain – as much as you can. Moreover, you will realize that using modern tools and technology will improve the entire company and enhance the capabilities of your business.

 

For instance, you will be able to get reliable accounting services in Malaysia through digital channels, such as using suitable software for better finance management and budgeting. Ultimately, it will be useful in adapting to the new normal of business that is highly dictated by the digital age.

4. Reset Your Supply Chain

It is easier said than done, but if the COVID-19 pandemic has disrupted the supply chain of your business, then you must re-configure it. You should remember that even if the lockdown is over, the pandemic is still affecting a lot of countries and people all over the world. The only way to move forward is by adapting to evolving situations.

The coronavirus pandemic has exposed the vulnerabilities of the global supply chain. For this reason, it is imperative that your business devise suitable strategies that will help optimize the business procedures for your company. One common approach that you can use to avoid further disturbance in the supply chain is to use a flexible and networked ecosystem instead of a linear supply-chain model.

The flexibility and resilience of supply chains are significant to help a business recover as well as prevent further losses in the future. Using technology in the global supply chain has also become more important than ever. Automation, machine learning, AI and using tools to predict future trends are becoming essential in the post-COVID world to help organizations adapt to new settings.
Adapting Your Business Post COVID-19-2

In a Nutshell

All of the above strategies are highly useful in adapting your business to the new working procedures and demands after the pandemic. There are many other measures that you can take to help your business survive in the post-pandemic period. These methods will only be useful when you are fully ready to embrace the change in your business and accept the fact that you might have to completely transform your business to adapt to the new world.

 

When making such important decisions, you should definitely consider using the accounting services of experienced and reliable accounting firms in Malaysia. Such firms are fully equipped with the right skills and technology needed to be able to evaluate business conditions and suggest changes. This will depend upon the analysis and data collected by these companies about the industry and specific businesses.

 

For more information, feel free to get in touch with us. 

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Seven Business Valuation Methods You Should Know

Business Valuation Methods
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Seven Business Valuation Methods You Should Know

Business valuation is the process through which you can determine the economic value of your business or an organization. There are various circumstances when business valuation becomes essential. For instance, you might be interested in selling your company for taxation purposes. Being familiar with the value of your business is important so you can make a smart decision about your company.

 

Owners and managers of companies in Malaysia usually make use of professional business valuation services to get an objective estimate of the worth of their business. This information is also important in negotiations with shareholders and potential investors.

 

There are numerous ways of evaluating the value of a business. Generally, all of these methods produce a comprehensive and objective report of your company’s value. The following are the top seven business valuation methods used in Malaysia:

1. Market Value Valuation

The market value business valuation method is a subjective method of measuring a company’s value. The primary step involved in such a method is comparing the value of your company with similar businesses that have been sold.

This type of business valuation method is only feasible for those businesses that are able to access comprehensive records of their competitors. However, it is not suitable for sole proprietors because it is very challenging to obtain data about such competitive businesses. Furthermore, there is a very high chance of incorrect or imprecise calculations using the market value valuation method.

Therefore businesses can only rely on this method if they are confident that they will be able to negotiate the final value if they are looking for investors or buyers. Otherwise, another business valuation method should be used.

2. Asset-Based Valuation

Asset-based valuation is an efficient business valuation method used in Malaysia. It involves finding out the company’s total net asset value and subtracting the value of its liabilities. Businesses that are going to continue operating should use the going-concern method to evaluate the company’s value.

 

On the other hand, companies that are going to shut down or are operating with the assumption that the business will be finished in the near future should implement the liquidation value asset-based valuation. In such a scenario, the value is determined based on the net cash that the owners will have in cases of business termination.

 

You should remember that using the liquation-based valuation approach means the value of the company’s assets is likely to be lowered due to differences in market value.

Business Valuation Methods-1

3. ROI-Based Valuation

As the name suggests, an ROI-based valuation method determines the value of a business depending on the profits and the type of return on investment an investor is going to receive by purchasing or investing in your company.

It is a very useful business valuation method being used in Malaysia, especially from the investors’ perspective. They get all the essential information about potential ROI before investing in a company. However, ROI tends to fluctuate a lot due to evolving market conditions which make the ROI-based valuation method extremely subjective.

4. Discounted Cash Flow Valuation

The three business valuation methods discussed above are the most common ones in Malaysia. However, other methods like DCF valuation are also used. It is also called the income approach valuation because it involves evaluating a company’s value based on its projected cash flow. It is a very useful valuation method, especially when you are not expecting a huge rise in your profits anytime soon.

5. Capitalization of Earnings Valuation

The capitalization of earnings valuation method is like an extension of the DCF valuation method. It involves calculating the business’s value based on its cash flow, annual ROI, projected profits and value. It is suitable for stable companies that are not expecting many fluctuations in their overall finances.

6. Multiples of Earnings Valuation

A business’s potential to generate revenue in the future is the basis of the multiple of earnings valuation method. In this method, a multiplier is assigned to the current revenue to calculate the overall worth of the company. The multiplier is decided on the basis of the company’s projected profits, industry situations and other such factors. It is not commonly used because the reliability of the value evaluated through this method can greatly decrease due to a number of factors.

Business Valuation Methods-2

7. Book Value Valuation

Book value is another business valuation method used by some organizations in Malaysia. It involves calculating the value of a company by looking at the balance sheet of a company. A balance sheet contains all of the essential information about the value of the equity, total assets and liabilities that are critical to evaluating the right value of a business.

The book value valuation method is beneficial for businesses that have low profits, but a large number of valuable assets.

In a Nutshell

These are the most popular business valuation methods around the world, including Malaysia. You should remember the fact that business valuation is a complicated process and every organization must determine the most suitable valuation method, depending on the scale of the business and the industry in which it is operating.

 

It is not necessary to use just one option. Instead, using multiple valuation techniques and combining the results allows companies to get reliable and accurate results.

 

For more information, feel free to get in touch with us.

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How Does Comparable Valuation Work?

Comparable Valuation
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How Does Comparable Valuation Work?

Comparable valuation is a type of business valuation. It allows companies to evaluate the worth of a company by comparing its valuation multiples to those of its competitors. Valuation multiples are affected by several different factors – generally, the multiples are ratios of numerous valuation metrics, such as equity market or capitalization, or financial metrics, like earnings per share or sales.

 

The basic concept of comparable valuation revolves around comparing the company with its competitors because it is only logical that organizations with identical attributes should trade at similar values. However, this type of business valuation technique is only used by those companies in Malaysia that are capable of gathering enough data about their competitors.

The Importance of Using Comparable Valuation

If you have the required data from your competitors, then the comparable valuation is quite an easy method of business valuation used by many accounting firms in Malaysia. Furthermore, if the markets are steady and providing good securities of other companies, you can rely on comparable valuation to get an accurate valuation range.

 

On the other hand, other business valuation techniques, like discounted cash flow, are affected by many other factors that make comparable valuation much more reliable.

 

Comparable valuation has applications in various industries. Accounting firms in Malaysia prefer this type of business valuation in many situations because it is a highly respected technique among market analysts, investment bankers and other equity investors.

How to Perform Comparable Valuation

There are three main steps involved in performing comparable valuation for reliable and efficient results:

1. Validate the Peer Data

Selecting an appropriate dataset is of utmost importance in comparable valuation. The entire process depends on choosing a suitable company(s) with which you will be making comparisons. Some organizations might choose to compare their business with companies from two different industries. It all depends on the nature and scale of your business.

Whatever your requirements or type of business, you must properly research your peers before selecting suitable companies and move on to the second step to validate the basic metrics chosen for the comparisons.
Comparable Valuation-1

2. Confirm Basic Metrics

There are different types of comparable valuation that have emerged due to the technicalities of different types of businesses. As a result, it is the responsibility of the accounting firm that you are using in Malaysia to select and confirm appropriate metrics for comparable valuation.

Analysts can choose trailing performance metrics or future performance metrics that are derived on the basis of projections. Depending on what kind of data you have about your own company (as well as your peers), both of these metrics are useful for an efficient comparable valuation process.

Generally, future metrics are preferred by a significant number of analysts and accounting firms in Malaysia. However, such metrics must be dealt with very carefully and confirmed at every step of the process to ensure there are no serious errors.

 

Uncertain market situations can disrupt the entire process because the future projections will prove to be inaccurate; hence, the end result will be wrong as well. However, it can be avoided by keeping the metrics up-to-date.

3. Choose Suitable Multiples

Several adjustments have to be made during the comparable valuation of an organization. Such changes might be in the form of one-time changes or modifying the cost of non-recurring assets, like legal expenses, restructuring fees and selling assets. Every company must use up-to-date facts and figures to ensure their metrics and multiples are not off. All of these factors will be highly beneficial in producing an accurate range value of your company.

If the business valuation is being carried out by comparing the company with different organizations in Malaysia, then choosing the right multiples can become quite challenging. In fact, in such situations, many experts suggest shifting towards any other type of business valuation. The goal of business valuation is to determine the worth of a company.

 

In cases where the comparable valuation is not able to produce appropriate results, accounting firms in Malaysia can choose to use other valuation techniques, along with comparable valuation, to get a precise value of the company.

Comparable Valuation-2

In a Nutshell

Despite some of its disadvantages, comparable valuation has managed to remain a popular type of business valuation in Malaysia because it is easy to calculate a company’s value through comparisons when a large amount of data is available.


All you have to do is select suitable peer data, calculate the market capitalization and value and find out the projected finances of the company. Finally, you can obtain the company’s value by applying suitable metrics and making smart comparisons.


For more information, feel free to get in touch with us.

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What Businesses Need To Know About The PENJANA Tax Incentives

Penjana tax incentives-2
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What Businesses Need To Know About The PENJANA Tax Incentives?

Malaysia has introduced its fourth economic relief package to mitigate the impact of the COVID-19 pandemic on the economy, and to provide various tax incentives in Malaysia. The package is named Pelan Jana Semula Ekonomi Negara (PENJANA). Its value is around RM 35 billion.

 

The package includes a number of tax incentives for businesses affected by both the pandemic and the lockdown. It also provides both financial assistance for SMEs and measures to protect the job. Through PENJANA, most of the Malaysians will be able to enjoy tax reliefs as they will not have to pay taxes on some specific expenses.

This article discusses the tax incentives and reliefs given to various individuals and organizations under PENJANA. Here are the top five exemptions given under PENJANA:

1. Incentives for Property Owners

PENJANA provides massive tax deductions to property owners that reduce the rental amount to at least 30%. Such a measure supports not only longstanding property owners, but also the people who are looking to buy property for the first time.

 

The PENJANA plan will also reintroduce and promote the Home Ownership Campaign. It will be useful in kick-starting the property market after COVID-19, which is highly important considering the fact that real estate has suffered a lot in the last few months.

Moreover, stamp duty exemptions are offered to homeowners. Stamp duty is a fee that is typically required for legal documents like instruments of transfer, loan agreements, and other such documentation. The properties that value above RM 1 million will get stamp duty exemptions. 

 

Ultimately, the businesses involved in the real estate industry will also enjoy these benefits, because they will kick-start the property market. Hence, real estate businesses will be able to sell more properties.

Penjana tax incentives

2. Tax Exemption for Automotive Industry

The automotive industry has received a 100% tax exemption for both local and imported cars. It simply means that vehicle manufacturers will not have to pay a single-stage tax on local or international manufacturing. Moreover, the buyers in Malaysia will also benefit from these tax incentives because their costs will come down, due to fewer taxes.

3. Small and Medium-Sized Enterprises (SMEs)

Tax specialists and accounting firms in Malaysia have lauded PENJANA because it covers almost all industries and aspects of the Malaysian economy. Micro businesses and SMEs are considered to be the backbone of the Malaysian economy, as they represent around 98% of Malaysia’s business population.

 

PENJANA pays special attention to SMEs to uplift and heal the economy. Incentives like establishing new companies, income tax rebate of RM 20,000 per annum for the first three years, and stamp duty exemptions are introduced to support this important sector.

 

To facilitate the SMEs’ cash flow issues, the banking sector will be providing about RM 2 billion at a low-interest rate of 3.5%. A criterion is set, and the eligible SMEs can apply for a maximum amount of RM 500,000.

4. Tax Incentives For Enterprises in Malaysia

Large organizations and enterprises were also heavily affected by prolonged lockdown and a smaller number of customers. Hence, PENJANA is promising up to RM 400 million for enterprises with an interest rate of 3.5%.

 

The companies that are eligible for this incentive can apply for up to RM 50,000. Accounting firms in Malaysia will have to keep these incentives and new regulations in mind before managing various companies’ payroll.

Penjana tax incentives-1

5. Tourism Industry

The tourism industry has taken a huge hit due to COVID-19 pandemic and global travel restrictions. PENJANA includes several proposals to help the tourism industry and boost the economy. Some of these measures are:
  1. Extending the tax deadlines until December 31st for the tourism and travel agencies, hotels, and airlines.
  2. Domestic travellers are given concessions as well, because they will not have to pay an income tax of up to RM 1,000 if they are travelling locally between 1st March to 31st December 2021.
  3. Moreover, 100% tourism tax exemption will be given from 1st July 2020 to 30th June 2021. It includes many different exemptions, such as exemption from paying tax for accommodation.

In a Nutshell

Other than the industries discussed above, many other businesses are also given tax exemptions and relief under the PENJANA plan. Newly established businesses and COVID-19 related products like PPEs, thermal scanners, masks, and others are given maximum tax relief.


Overall, PENJANA is a very comprehensive economic package that includes a lot of provisions to support various industries and therefore the Malaysian economy. Every business and accounting firm in Malaysia should familiarize itself with these provisions to ensure that they are able to take benefits from these tax incentives.


For more information, feel free to get in touch with us.

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