Why SMEs struggle with business compliance and what can be done?
Many small business owners in Malaysia often struggle with compliance issues like audits, taxes, and SSM (Companies Commission of Malaysia) due to several factors:
1. Lack of Awareness
Many small business owners may not fully understand their compliance obligations or the consequences of non-compliance. By the time they realised, it is usually too late with hefty fines and penalties .
2. Limited Resources
Small businesses often have limited financial and human resources, making it challenging to allocate time and money for compliance activities. It is often one-leg kick with multiple priorities running concurrently and business survival often takes the lead.
3. Complexity of Regulations
Malaysia’s regulatory environment can be complex and frequently updated, making it difficult for small business owners to keep up with changes and requirements. Business Owners also don’t get updated or invest sufficient time and resources to plan for the changes resulting in haphazard and reactive implementation.
4. Time Constraints
Small business owners are often heavily involved in day-to-day operations, leaving little time to dedicate to compliance tasks.
5. Fear of Costs
Small business owners may be hesitant to invest in compliance measures due to perceived costs, such as hiring professionals or implementing software solutions. As a result, they put up with partial measures which they will handle as they go along.
One of the solutions is for Business Owners to consider outsourcing. As we progress, outsourcing is now slowly becoming part of the norm with higher acceptance. Grab or Buddy Drive is a form of outsourcing instead of engaging a full time driver. Grab delivery or Lalamove instead of engaging a full time office boy.
With outsourcing, there are considerations that may deter small business owners from considering it include:
1. Control Concerns
Some business owners may feel uncomfortable relinquishing control over certain aspects of their operations to third-party providers. They may feel that they can’t see them and worry about not getting results.
2. Cost Perceptions
While outsourcing can be cost-effective in the long run, some business owners may perceive it as an additional expense rather than an investment.
3. Security and Confidentiality
There may be concerns about the security and confidentiality of sensitive business information when outsourcing tasks to external parties.
4. Quality Concerns
Business owners may worry about the quality of work provided by outsourcing partners compared to in-house staff.
5. Communication Challenges
Effective communication with external providers can sometimes be challenging, leading to misunderstandings or delays in deliverables.
Let’s debunked some of these myths above to see how outsourcing can support small business owners by:
– Accessing Specialized Expertise:
Outsourcing allows businesses to access specialized skills and knowledge that may not be available in-house. You usually get a team of experts who handle the functions on a daily basis. This takes the pressure off business owners having to get all updates to ensure ongoing compliance.
– Cost Savings:
Outsourcing certain tasks can be more cost-effective than hiring full-time employees, especially for non-core functions like payroll, HR, Accounting or IT support. There is no need to worry about staff turnover, maternity, annual or medical leave. You are paying for what you want and the provider will handle both the workload and delivery. Provider also will not ask for bonus, company trip and staff benefits, so it is easier to manage based on a Fixed costs.
– Focus on Core Activities:
By outsourcing routine tasks, business owners can focus their time and energy on core business activities, such as growing their customer base or developing new products. Without the need of managing the non core and paying based on agreed deliver, this allows business owners to dedicate time on the areas of business that really matters.
– Scalability:
Outsourcing provides flexibility and scalability, allowing businesses to easily adjust their resource allocation based on fluctuating demand or growth opportunities.
There is confidentiality and engagement agreement in place the set boundaries just like like with internal staffs to govern the conduct, work and deliverables.
According to business data, a survey by the Malaysian Institute of Accountants found that 67% of small and medium enterprises (SMEs) in Malaysia cited compliance as one of their top challenges, with 48% indicating that they lacked adequate resources for compliance activities. Additionally, a study by the SME Association of Malaysia revealed that 62% of SMEs considered cost reduction as the primary reason for outsourcing, while 28% cited access to specialized skills.
Talk to us and get to know how outsourcing could be for you and your business today!
Disclaimer: The information provided in this article serves as a general guide. However, it is essential to recognize that each case is unique and can be influenced by various factors. Laws and regulations may change over time, and individual circumstances may require tailored approaches. The author of this article make no representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability, suitability, or availability of the information provided herein. The article’s content is for informational purposes only and should not be considered as legal advice or a substitute for professional consultation. Readers should always consult with qualified professionals for advice on specific matters and the interpretation of applicable laws and regulations.
How InTune Outsourcing Can Support SME Business Owners?
InTune Outsourcing is one of the Malaysia’s Most Advanced and Top Outsourced Accounting, Finance, HR and Payroll services providers.
We have served more than 400 clients todate and InTune offer full-range services from start up to small to medium-sized companies.
InTune takes away the stress and pains from managing Accounting, Finance, Payroll and HR, including Bookkeeping, Payment Services, Accounts Payable, Accounts Receivable, Payroll and more, by providing an expert team of CPAs and other accounting professionals who understand the special accounting needs of growing businesses.
We can also help in preparing Budgets too as part of our Consultancy Package.