E-Invoicing in Malaysia: Do SMEs Need to Subscribe to an Accounting Software?

With the implementation of e-invoicing in Malaysia, many small and medium enterprises (SMEs) are wondering whether they need to subscribe to an accounting software to comply with the new requirements. The transition to digital invoicing may seem overwhelming, but understanding the essentials can help businesses make informed decisions.

Understanding E-Invoicing in Malaysia

E-invoicing is a digital process where invoices are generated, sent, and received electronically in a structured format. The Malaysian Inland Revenue Board (LHDN) is implementing e-invoicing to improve tax compliance, reduce fraud, and enhance business efficiency. Starting from August 1, 2024, large taxpayers will be required to adopt e-invoicing, with a gradual rollout to SMEs by Jan 1, 2026.

Does Your SME Need an Accounting Software for E-Invoicing?

While it is not mandatory to subscribe to an accounting software, having one can greatly simplify the e-invoicing process. Here’s what SMEs should consider:

1. LHDN’s MyInvois Portal (Free Option)

LHDN provides a free MyInvois Portal where businesses can manually generate and submit e-invoices. This option is suitable for SMEs with low transaction volumes who prefer not to invest in additional software.

Pros:

• No subscription costs
• Direct submission to LHDN
• Compliance with government requirements

Cons:

• Manual data entry can be time-consuming
• Limited automation and integration with business operations

2. Accounting Software with E-Invoicing Integration

For SMEs handling a higher volume of transactions, investing in e-invoicing-compliant accounting software can be beneficial. These systems automate invoicing, reducing manual work and errors while ensuring seamless submission to LHDN.

Pros:

• Time-saving automation
• Integration with bookkeeping and tax filing
• Reduced risk of human errors

Cons:

• Additional subscription costs
• Requires staff training

Steps for SMEs to Prepare for E-Invoicing

1. Determine Your Business Needs – Assess whether manual invoicing via MyInvois Portal is sufficient or if automation is necessary.
2. Check Compliance Requirements – Ensure your invoicing method aligns with LHDN’s regulations.
3. Evaluate Accounting Software Options – If opting for software, choose a provider offering e-invoicing integration.
4. Train Your Team – Educate employees on the e-invoicing process and system usage.
5. Implement & Test – Before full adoption, test the system to ensure smooth operations.

SMEs in Malaysia have the flexibility to comply with e-invoicing either through LHDN’s free MyInvois Portal or by subscribing to accounting software with e-invoicing capabilities. The best choice depends on business size, transaction volume, and operational needs. By preparing early, SMEs can ensure a smooth transition and avoid last-minute disruptions.

Would you like a consultation on selecting the best e-invoicing solution for your business? Contact us through WhatsApp at 016-518 0469 or email lmaco.taiping@gmail.com.