Books of Accounts With the BIR

July 16, 2024

Maintaining accurate and detailed books of accounts is a critical aspect of business compliance in the Philippines. These records ensure transparency, accuracy in financial reporting, and compliance with tax regulations as mandated by the Bureau of Internal Revenue (BIR). This article provides an in-depth look at the books of accounts, their types, filing and submission procedures, timelines, and important considerations for businesses operating in the Philippines.

Understanding Books of Accounts

Books of accounts are systematic records of all financial transactions and business activities. They are the primary data source for preparing financial statements and tax returns. Maintaining these records is crucial for operational efficiency and regulatory compliance.

Types of Books of Accounts

The BIR recognizes several books of accounts that businesses must maintain, depending on their nature, size, and specific regulatory requirements. The six basic types include:

General Journal: A chronological record of all business transactions. Each entry includes the date, accounts affected, amounts, and a brief transaction description.
General Ledger: Contains detailed accounts for all items in the financial statements. It serves as a centralized record of all financial transactions after they have been summarized in the General Journal.
Cash Receipt Journal: Records all cash inflows, including cash sales, collections from receivables, and other cash transactions.
Cash Disbursement Journal: Tracks all cash outflows, such as payments to suppliers, operating expenses, and other cash payments.
Sales Journal: Specifically records all credit sales, including details such as the date of sale, customer name, invoice number, and amount.
Purchase Journal: Logs all credit purchases made by the business, detailing the date, supplier name, invoice number, and amount.

Formats of Books of Accounts

Businesses can maintain their books of accounts in three primary formats:

Manual Books of Accounts: Physical ledgers where transactions are handwritten. This traditional method requires careful attention to detail and accuracy.
Loose-leaf Books of Accounts: Printed forms where transactions are entered manually but kept in loose-leaf binders. This format provides flexibility in record-keeping and can be more convenient than bound ledgers.
Computerized Books of Accounts: Digital records maintained using accounting software. This modern approach allows for easier data management, faster processing, and better accuracy. Businesses using computerized books must comply with BIR requirements for authorization and registration of their accounting software.

Registration and Stamping of Books of Accounts

Before using any books of accounts, businesses must register them with the BIR. The registration process involves:

Application for Registration: Submit the following documents to the Revenue District Office (RDO) where the business is registered:
- BIR Form 1905 (Application for Registration Information Update/Correction/Cancellation)
- Photocopy of the Certificate of Registration (BIR Form 2303)
- Unused pages of previously registered books (for renewal)
- New sets of books for initial registration
Stamping of Books: The BIR will stamp each page of the manual or loose-leaf books to validate their use. The BIR will issue a Permit to Use a Computerized Accounting System (CAS) for computerized books.

Filing and Submission Procedures

Proper filing and submission of books of accounts are crucial for compliance with BIR regulations. The steps include:

Recording Transactions: Ensure that all business transactions are recorded promptly and accurately in the respective books of accounts.
Updating Books: Regularly update the books of accounts to reflect the latest financial activities. This practice ensures that the records are always current and accurate.
Submitting Books: Submit the books of accounts to the BIR upon request, especially during audits or examinations. Businesses are required to present the actual books or certified true copies if necessary.
Annual Submission: While there is no specific requirement for the annual submission of manual or loose-leaf books, computerized books must be submitted annually to the BIR. The submission includes printed copies of the computerized books and the corresponding electronic data files.

Important Timelines and Deadlines

Compliance with the BIR’s timelines and deadlines is essential to avoid penalties and ensure smooth operations. Key timelines include:

Initial Registration: Register new books of accounts within 30 days from business registration or the start of operations.
Renewal of Books: Renew books of accounts within 10 (ten) days after the last entry for the year or before using a new set of books.
Annual Submission for Computerized Books: Submit the printed and electronic copies of computerized books within 15 days after the end of the fiscal year.

BIR ORUS System

The BIR has implemented the Online Registration and Update System (ORUS) to streamline the registration and updating of books of accounts. ORUS allows businesses to:

Online Registration: Register their books of accounts online without the need to visit the RDO physically.
Update Information: Update business information, including changes in the type of books of accounts or accounting method.
Monitor Compliance: Track their registration status and compliance with BIR requirements through the online portal.

Is Assistance Available?

Maintaining and managing books of accounts is a fundamental responsibility for businesses in the Philippines. Understanding the types of books, proper filing and submission procedures, and adhering to the BIR’s timelines are critical for compliance and efficient financial management. Leveraging systems like ORUS can further enhance compliance and streamline processes. Businesses can avoid penalties and foster a transparent and accountable financial environment by ensuring meticulous record-keeping and timely submissions.

Contact Us through any of the following channels to schedule an initial consultation with one of our Books of Accounts experts to assist you: