Whether you run a law firm, an engineering consultancy, a marketing agency, or a construction business, the accounting challenge is the same shape: income is earned against a matter, project, or contract — not a simple invoice — and Service Tax, long payment terms, and (for contractors) retention sums add real complexity on top. ZeroPilot AI's accountants set up and run this in Xero specifically for project-and-time-based businesses, so profitability by matter or project is something you can see, not something your bookkeeper reconstructs at year-end.
Service Tax at 8% for Professional & Project Services
Most professional services in Malaysia are taxable under the Service Tax framework — legal, accounting and auditing, engineering consultancy, architectural, and management consulting services all attract Service Tax at 8% once you cross the RM500,000 annual registration threshold. Construction services carry their own SST treatment depending on the contract type. We configure the correct rate against every invoice, generate your SST-02 return bi-monthly, and keep the documentation RMCD expects on hand for audit.
Matter- and Project-Based Billing, Run For You
Professional services and project-based businesses don't sell products — they sell expertise or delivery against a matter, project, or contract. As part of your monthly service, we:
- Track time, expenses, and disbursements against each matter or project in Xero
- Bill clients based on actual time recorded at your agreed rates, or against milestone/contract value
- Monitor work-in-progress — unbilled time and expenses — across all active matters
- Report profitability by matter, project, client, or practice area in your Syft Analytics dashboard
Time Tracking Rolled Into Your Monthly Billing
Your team logs billable and non-billable hours as they work. At billing time, our team pulls the logged time for the relevant matter into a draft invoice, applies Service Tax, and submits the LHDN e-invoice via MyInvois — as part of the monthly billing run we manage on your behalf. A month of active matters is typically fully billed within a day of our team receiving your time entries.
Progress Claims & Retention for Contractors and Construction Companies
Malaysian contractors bill differently again — on a progress claim basis against milestones or percentage completion, with a retention sum (typically 5% or 10%) withheld until the defects liability period expires. This is genuinely different accounting from a standard project invoice, and we handle it as its own workflow:
- We set up and track the full contract value and billing schedule for each project
- Progress claims are issued with the correct retention deduction applied automatically, and submitted as an LHDN e-invoice
- Retention is tracked in a dedicated receivable account — not written off — until release at practical completion or DLP expiry, at which point we issue the release invoice and clear the balance
- Variation orders are tracked as separate line items against the base contract, and subcontractor claims and retention withheld from subcontractors are tracked in parallel to your own receivables
- Where you engage foreign subcontractors, we track any applicable withholding tax deductions and the associated return documentation
We also track actual project cost — materials, subcontractor payments, direct labour, site overhead — against your contract budget, so a project running over budget shows up in your monthly report while there's still time to act, not after final account.
Retainer Management
For firms billing clients on monthly retainers, we set up the retainer amount, billing date, and Service Tax treatment once, and generate and send the invoice automatically each month. Where clients pay in advance, the retainer balance is tracked as deferred income and recognised as work is delivered — so your P&L reflects revenue earned, not cash received.
LHDN e-Invoice and Client Trust Accounts
Every client invoice we issue on your behalf is simultaneously submitted to LHDN via the MyInvois API — increasingly important as corporate clients require a validated e-invoice for their own input SST claims. For law firms, we maintain client trust money in segregated ledger accounts, record disbursements against the correct matter, and produce client account statements consistent with the Solicitors' Accounts Rules.
See Profitability By Matter or Project
Book a free 30-minute demo and we'll show you what matter- or project-level profitability reporting looks like for a business like yours — whether you bill by the hour, the milestone, or the progress claim.