2.1

what constitute sufficient records that an individual needs to keep when carrying on a business as a sole proprietorship or a partnership; and

3.1

An individual carrying on a business as a sole proprietorship or a partnership is required under the Income Tax Act 1967 [hereinafter referred to as the Act ] to keep and retain in safe custody sufficient records to enable the income or loss from the business for the basis period for any year of assessment to be readily ascertained.

• • 3.3.1

For a small business [ see paragraph 4.2 ] , a cash book may be kept, recording all bank account entries,
cash receipts and cash payments. For a business other than a small business, it may be necessary
to keep other books of accounts including a sales ledger, a purchases ledger and a general ledger.
The type of books that should be kept will depend on the nature and the size of the business.
The following requirements should be complied with:
A. The books of account should be written up at regular intervals.Appropriate
entries for each transaction should be recorded as soon as possible (in any
case not later than 60 days after the transaction).
B. Supporting documents such as invoices, bank statements, pay-in slips,
cheque butts, receipts for payments, payroll records and copies of receipts
issued should be retained.
C. Receipts issued should be serially numbered. Where the gross takings
for a year exceeds RM150,000 from the sale of goods or RM100,000 from the
performance of services, receipts issued must be serially numbered.
D. A valuation of the stock in trade or work in progress should be made at the
end of each accounting period and the appropriate records main taine d

3.4

Examples of recordsSome examples of the records to be kept are described below:

• • 3.4.1

Bank accountsAll bank statements or savings books, into which account money for the business has been credited or withdrawn, should be retained. It is good practice to maintain separate bank accounts for business and for personal use. If, for any reason, a separate account is not maintained for the business, a record should be kept to identify the transactions which are for business purposes.

3.5

Treatment of Certain Transactions

• • 3.5.1

SalesSales would include goods taken from stock for personal use or family’s consumption. Goods or services supplied to others, in exchange for their goods or services, should also be included in sales.

• • • • • A.

Motor vehicleIf a motor vehicle is used for both business and private purposes, a record of business and private mileage should be kept. This should be used to allocate the expenses incurred on the vehicle between the two purposes

3.6

The Consequences if Sufficient Records Are Not Kept

• • 3.6.1

The individual carrying on business as a sole proprietorship or a partnership may be required by the DG, at the expense of that individual, to have his accounts audited by a professional accountant.

• 4.1

“Records” includes:
4.1.1 books of account recording receipts and payments or income and expenditure;
4.1.2 invoices, vouchers, receipts and such other documents as are necessary to
verify the entries in any books of account; and
4.1.3 any other records as specified by the DG.