Chart of Accounts for Small Business in Malaysia: Sample and Setup Guide

What is a chart of accounts?

A chart of accounts is the numbered list of accounts that every transaction in your books is sorted into: bank, sales, rental, salaries, loans and so on. Think of it as the labelled drawers of a filing cabinet. Each sale, bill or payment goes into exactly one drawer, and your reports are simply the drawers added up.

Every account has a code, a name and a group. The group decides where the account appears: assets, liabilities and equity make up the balance sheet, while income and expenses make up the profit and loss statement. If the chart is muddled, every report built on it is muddled too.

No law hands you a ready-made chart. You design one that fits your business, and accounting software usually comes with a template you can trim. Most private SMEs in Malaysia prepare their financial statements under MPERS (the Malaysian Private Entities Reporting Standard), so a well-built chart lets your accountant produce year-end statements without reshuffling every account. If you are new to the basics, start with our guide to bookkeeping for small businesses in Malaysia.

What are the five groups of accounts?

Every account belongs to one of five groups, and each group gets its own block of numbers, so you can tell an account's type from its code.

Group	What it records	Typical SME accounts	Report	Codes
Assets	What the business owns or is owed	Bank accounts, petty cash, trade receivables, deposits, inventory, equipment, vehicles	Balance sheet	1000s
Liabilities	What the business owes	Trade payables, accruals, SST payable, EPF, SOCSO, EIS and PCB payable, loans, hire purchase, amount due to director	Balance sheet	2000s
Equity	The owners' stake	Share capital, retained earnings (sole proprietors: capital and drawings)	Balance sheet	3000s
Income	What the business earns	Sales, service income, other income	Profit and loss	4000s
Expenses	What it costs to earn that income	Cost of sales, salaries, rental, utilities, depreciation, interest	Profit and loss	5000s–8000s

Many charts split expenses into two blocks: cost of sales (5000s) for costs that rise and fall directly with sales, such as stock purchases, freight on purchases and subcontractors, and operating expenses (6000s–7000s) for running costs such as rental and salaries. That split is what reveals your gross profit, so get it right from day one.

What does a sample chart of accounts look like?

Below is an example chart for a small trading Sdn Bhd in the Klang Valley. Treat it as a starting point: remove what you will never use, and add an account only when a report genuinely needs it.

Balance sheet accounts

Code	Account	Note
1000	Bank – current account (ending 1234)	One account per real bank account; add 1010, 1020 for others
1030	Card and e-wallet settlements	Sales collected but not yet paid into the bank
1050	Petty cash	Topped up to a fixed float
1100	Trade receivables	Unpaid customer invoices
1150	Deposits and prepayments	Rental and utility deposits, insurance paid ahead
1200	Inventory	Unsold stock at cost
1500	Office equipment – cost	Keep cost and depreciation apart for each asset class
1510	Office equipment – accumulated depreciation
1520	Motor vehicles – cost
1530	Motor vehicles – accumulated depreciation
2000	Trade payables	Unpaid supplier bills
2100	Accruals	Costs incurred but not yet billed
2200	SST payable	Only if registered with JKDM
2300	EPF payable	Employee and employer shares, held until paid
2310	SOCSO and EIS payable
2320	PCB payable	Tax deducted from salaries
2400	Amount due to director	The director's current account
2500	Hire purchase payable
2600	Bank loan
2700	Income tax payable
3000	Share capital	Sole proprietors use a capital account
3100	Retained earnings	Profits kept from earlier years

Profit and loss accounts

Code	Account	Note
4000	Sales	Split by product line only if you will review it
4100	Service income
4900	Other income	Interest received, one-off gains
5000	Purchases of stock	Adjusted for opening and closing stock
5100	Freight and duties on purchases	Part of the cost of goods
5200	Subcontractors and direct labour
6000	Salaries and wages
6010	Employer EPF, SOCSO and EIS
6100	Rental of premises
6200	Utilities and internet
6300	Advertising and marketing
6400	Professional fees	Audit, tax agent, company secretary
6500	Entertainment – customers and suppliers	Kept apart for tax
6510	Staff welfare and functions	Kept apart from customer entertainment
6600	Repairs and maintenance
6700	Bank charges and merchant fees
6800	Depreciation
6900	Fines and penalties	Not tax-deductible
7000	Interest on loans and hire purchase	Interest only, not the principal
8000	Income tax expense

How do you set up a chart of accounts step by step?

1. List the questions you want answered each month: sales by main line, gross margin, the big cost items, what customers owe you and what you owe.
2. Start from a short template, such as the sample above or your accounting software's default, and delete what you will never use.
3. Number in blocks with gaps (1000, 1010, 1020…) so new accounts slot in without renumbering.
4. Add one account for every bank account, e-wallet and card settlement, so each can be reconciled against its own statement.
5. Add the statutory accounts you need: SST payable if registered, EPF, SOCSO and EIS payable, PCB payable, and the director's account.
6. Name and describe each account consistently. Say what it is, such as "Bank – current account (ending 1234)" rather than a nickname, and add a one-line description so everyone who posts uses it the same way.
7. Review it once a year and merge accounts that rarely move. Make changes at the start of a financial year, and deactivate old accounts rather than deleting them.

Two things do not belong in the chart. Individual customers and suppliers are tracked in the receivables and payables lists, not as separate accounts. And if you run several branches or projects, use branch or project tags (if your software offers them) instead of copying every expense account per branch.

A quick health check: an account showing the opposite of its normal balance, such as negative trade receivables, usually means a payment was not matched to its invoice. A monthly bank reconciliation brings these problems to the surface quickly.

Which accounts should always be kept separate?

Some balances are not really yours, and others change your tax, so they need their own accounts rather than being buried in a general one.

• SST payable. If you are registered, the sales or service tax you charge is held for JKDM, not earned. Post it to its own liability account; the balance should agree with the SST-02 return you file every two months. See our guide to SST registration for the thresholds.
• EPF, SOCSO, EIS and PCB payable. Amounts deducted from wages, plus the employer's share, sit here until paid by the 15th of the following month. After payment the balances should return to zero; a balance that keeps growing points to a missed or mismatched payment. Our payroll guide covers the rates.
• Director's account. Use one account for money moving between the company and its director: personal costs paid by the company, business costs the director paid personally, and cash the director lent. It keeps private spending out of expenses; see separating business and personal money.
• Loans and hire purchase. Only the interest is an expense. The principal part of each instalment reduces the loan balance.
• Fixed assets. A RM15,000 espresso machine or a delivery van is an asset, not a repair or a stock purchase. Depreciation spreads its cost over its useful life.

How does the chart become your profit and loss and balance sheet?

Income and expense accounts add up to your profit and loss statement for the period; at year end they are closed into retained earnings and start again from zero. Asset, liability and equity accounts carry their balances forward and form the balance sheet.

Example: a Klang Valley café's September, straight from its accounts.

Code	Account	RM
4000	Sales	60,000
5000	Food and beverage purchases (cost of sales)	(21,000)
	Gross profit (65%)	39,000
6000–6010	Salaries and employer contributions	(18,100)
6100	Rental	(8,000)
6200	Utilities	(2,600)
6700	Bank charges and merchant fees	(900)
6800	Depreciation	(1,200)
	Net profit	8,200

Had the café posted its food purchases into a general expenses account, net profit would still read RM8,200, but the 65% gross margin would vanish from view. That margin is the first number to fall when portion sizes creep up or a supplier raises prices, which is why cost of sales deserves its own block. To read these reports with confidence, see how to read a profit and loss statement and balance sheet, and for the monthly pack built on them, management accounts for SMEs.

How does a good chart make the tax computation easier?

Your tax agent starts from the accounting profit and adjusts it for items the tax rules treat differently. When those items already sit in their own accounts, the adjustments are quick and nobody has to search receipt by receipt. The general principles under the Income Tax Act 1967 are:

Keep in its own account	General tax principle
Depreciation	Added back; capital allowances are claimed on qualifying assets instead
Entertainment of customers and suppliers	Most business entertainment is only 50% deductible
Staff welfare and functions	Staff functions, such as an annual dinner, are among the listed exceptions to that 50% restriction
Fines and penalties	Not deductible
Owners' private spending	Not deductible; belongs in the director's account or drawings

Example: a Penang hardware company's ledger shows depreciation of RM12,000, customer entertainment of RM6,000, a RM2,500 staff annual dinner and RM300 of traffic summonses on the company van. Because each sits in its own account, the tax agent sees at a glance what to do: add back the RM12,000 depreciation (and claim capital allowances separately), add back half the entertainment (RM3,000) and add back the RM300 of fines, while the staff dinner is not restricted. That is RM15,300 of add-backs, identified without opening a single receipt. Your tax agent confirms the final treatment; for the wider rules, see tax-deductible business expenses.

How WeCount helps

WeCount runs monthly bookkeeping for Malaysian SMEs on a clear chart of accounts, with cost of sales, SST, statutory payroll balances and the director's account kept separate. Each month the team records sales and purchases, reconciles every bank account, tracks receivables and payables, and prepares management reports built on that structure. At year end, your accountant and tax agent receive clean, well-labelled ledgers instead of one large pile of general expenses. Regulated audit, tax-agent and professional accountancy services are delivered through appropriately authorised partners where required. See our monthly bookkeeping service for details.