Form B season: clearing the year-end backlog for sole proprietor clients

Who files Form B, and when

Form B is the income tax return for individuals with business income. That includes sole proprietors, and partners in a partnership reporting their share of its income. Individuals without business income file Form BE instead.

Form B for a year's income is due by 30 June of the following year. LHDN publishes the exact e-Filing dates in its return form filing programme each year, so check the current year's programme rather than relying on last year's dates.

Unlike a Sdn Bhd, a sole proprietorship isn't required to have its accounts audited. Its income and expenses still have to be worked out properly, though, and LHDN expects the records supporting them to be kept for seven years.

Why sole proprietor files pile up

• The client keeps no books during the year, so everything arrives at once, often close to the deadline.
• The bank account is the only complete record. Receipts are patchy, and business and personal spending often run through the same account.
• Statements arrive in every format: online-banking PDFs, scanned paper statements, photos of individual pages.
• Firms take on many of these clients, and they all share the same 30 June deadline.

A workflow that starts from the bank statement

1. Collect 12 months of statements first. The bank statement is the backbone of the year. Ask for every month for every business account up front, rather than discovering a missing month in June.
2. Extract every line and check the balance. Turn each statement into a transaction table and check that each month's closing balance matches the next month's opening balance. A gap usually means a missing page or month.
3. Categorise income and expenses. Sort each line into sales, purchases, expense categories and drawings. Personal spending through the business account is drawings, not a business expense.
4. Match documents to the larger lines. Prioritise receipts and invoices for the larger expenses and anything unusual, and send the client one list of what's missing instead of a stream of separate requests.
5. Prepare the income statement and tax computation. Once income and expenses are settled, the rest is the familiar part of the job.

Where the hours go

Steps 2 and 3 are where most of the time goes. A busy sole proprietor can run hundreds of transactions a month through one account, and typing them in from a scanned statement is slow and easy to get wrong. Statements that wrap one transfer's description across two or three lines, with the payer's name and reference on separate lines, make it worse.

Spreading the work out

• Ask clients to send statements and receipts monthly or quarterly, even if you only prepare the accounts once a year.
• Give clients an easy way to send documents, such as a shared WhatsApp group, so receipts arrive when they happen rather than in a bag at year-end.
• Set an internal cut-off well before 30 June for clients to send everything, so the last weeks go on reviewing rather than keying in.

Where Krani fits

Krani takes over the extraction step. Upload a year of statements, whether downloaded PDFs or scanned paper copies, and Krani turns every page into a transaction table, joins descriptions that wrap over several lines, and checks the running balance. Receipts sent by WhatsApp are matched against those bank lines, and each transaction is coded to the client's chart of accounts. See the bank statement converter and bank reconciliation pages for how that works.

Krani doesn't prepare the tax computation or file Form B. It gets the year's data into shape so you can do that part faster.