In the Philippines, all registered taxpayers in the practice of a profession, doing business, or under self-employment need to comply with the tax law of keeping records of all transactions. According to expert tax services in Manila, this process is summarized into what is called the books of accounts of accounting books, and this is necessary for second registration with the Bureau of Internal Revenue (BIR).
The Books of Accounts consists of the requisite General Ledger and General Ledger. Optionally, it may register Subsidiary Ledger or Special Journals, like Cash Disbursement Journal, Sales Journal, Purchase Journal, etc. However, before learning how to process books of accounts, particularly loose leaf books of accounts, it is important for you to know the different types of BIR registered books. These are:
1. Manual Books
This is a book that is most popular, especially for Micro Small Medium Enterprises (MSMEs) as it is easiest to register with the BIR. It consists of columnar books that may be purchased from office supply stores. Such just needs to be registered or submitted for stamping to the Revenue District Office (RDO) where you, the taxpayer, are registered. After registration, business transactions must be logged into this book regularly.
2. Loose Leaf Books
Loose leaf books of account are a less popular option that is; however, gaining more awareness now. It utilizes Microsoft Excel or any equivalent alternative to log transactions. But to proceed, you must first apply for a Permit to Use at the BIR RDO where you or your business, as the taxpayer,are registered.
Once a Permit to Use Loose Leaf books is issued, regularly log transactions on your books. At the end of every calendar year, you must print these records for hard-bounding, to be submitted to the BIR RDO where the taxpayer is registered, on or before January 15 of the next calendar year.
3. Computerized Books
Computerized books are often used by large taxpayers. But, in recent times, and with the advancement and increased availability of affordable software coupled with the desire for optimization and automation, self-employed persons, professionals, and MSMEs are now using these.
As of Revenue Memorandum Circular (RMC) 5-2021, applying for a Permit to Use is no longer necessary to use computerized books. Instead, a checklist of requirements must be completed and submitted to the BIR RDO where the taxpayer is registered.
At the end of every year, you must submit a hardbound copy of your computerized accounting records to the BIR RDO on or before January 30 of the following calendar year.
Submission of Loose Leaf Books of Accounts
Let us now proceed to the procedure for complying with submission of Loose Leaf Books of Accounts. According to accounting services in the Philippines, a Permit to Use must first be secured before these steps can be undertaken. If you have not been issued a Permit to Use, first secure an application for it before following the steps below;
1. Print all the ledgers and journals for the covered year
Print all ledgers and journals for the year covered. This means including the transactions from January 1, 20yy to December 31, 20yy, for the following books:
– General Ledger
– General Journal
– Cash Disbursement Journal
– Cash Receipt Journal
– Purchase Journal
– Sale Journal
2. Hardbound all the loose leaf ledgers and journals
Have all the printed ledgers and journals printed with a proper paper or hardcover, which shall include the following information:
– Company Name
– Name of Book
– Period Covered
3. Prepare and complete the required documents
– A filled-up BIR Form 1905, of the Application for Registration Information Update/ Correction/ Cancellation, filling out items 1 to 4, items 6 and 10, and then signing item 20.
– Notarized sworn statement with volume and pages
– A copy of the latest filed and paid Annual Registration Fee or BIR Form 0605
– A copy of Certificate of Registration of BIR Form 2303
– A copy of the loose leaf books submitted the year prior with a photocopy of the first page with the BIR stamped received.
– A notarized Special Power of Attorney (if Sole Proprietor) or Secretary Certificate (if Corporation) for authorized representatives if any
– Hard-bound books of account for the current year
4. Submit all completed requirements to the BIR
Once you have collected all documents and requirements, submit them to the BIR RDO where the taxpayer is registered, and ensure submission of or before January 15 of the following calendar year. Note, that if the deadline falls on a weekend or Holiday, it will be moved to the next working day. Failure to meet the deadline may result in penalties. That’s why it’s so important to take advantage of bookkeeping services in the Philippines to ensure your records are updated.
5. Properly store the loose leaf books
Ensure the safekeeping of the registered Loose Leaf Books together with any other attachments received by the BIR RDO.