For someone like a business owner or a taxpayer, one of the most important requirements that you need to comply with the BIR (Bureau of Internal Revenue) is to maintain a record of day-to-day business transactions called book of accounts, which should be registered once you apply for a certificate of registration, and must be accomplished in an annual basis.
Requirements for Books of Accounts
Here are some of the things that should be included in your books of account. These requirements varies depending on the type of business that you have:
- General Journal (Book of original entry)
- General Ledger (Book of final entry)
- Cash Receipt Journal (Recording of cash sales)
- Cash Disbursement (Recording of cash payments)
- Sales and Purchase journals – a recordation of AP/AR from customers/suppliers.
Formats for Books of Accounts
As per BIR guidelines, a registered taxpayer should choose between three formats namely — (1) Manual Books of Account, (2) Loose-leaf Books of Account and (3) Computerized Books of Account or simply known as CAS.
1. Manual Books of Account
Often referred to as journals or what you call ledgers, transactions in these books of account are being written by hand, and pre-printed formats of these books can be seen in bookstores and other office supply retail centers.
Manual books are considered as the most popular format for books of account due to its cost effective nature. These books can easily be registered with the BIR, thus becoming a big hit for micro and small businesses. Keep note that using this; a.) all entries shall be handwritten, b.) pasting/glueing/inserting onto pages are prohibited and subject to penalty pursuant to existing revenue issuances as stated in BIR’s RMC 29-2019.
2. Computerized Books of Account (with Permit to use)
Transactions in these kinds of books are being recorded with the use of computer applications that are designed for faster and accurate recording of transactions.Also known as CAS (Computerized Accounting Systems), it should be registered with the BIR, for them to review the software’s accuracy and capability in recording transactions.
Much like loose-leaf books of account, taxpayers who uses computerized versions should also file an application for PTU (Permit to Use). Venues for filing PTUs for CAS are currently transferred to the National Accreditation Board (NAB).
3. Loose-leaf Books of Account (with Permit to use)
Much like manual books, Loose-leaf accounts are printed ledgers. The only difference is that recorded transactions in loose-leaf books are being entered in a spreadsheet, and are printed out based on an approved format.
Once you decide to register your books with the BIR, you need to elaborate your purpose of using loose-leaf books instead of utilizing manual or CAS formats. The taxpayer should also file an application for Permit to Use.
Application for PTU loose-leaf books of account is processed within the Revenue District Office (RDO) via regional director’s jurisdiction through its legal division according to RMC No. 13-82, and it follows requirements such as:
1. BIR 1900 Form (Accomplished)
2. Sample format/s to be used
3. A sworn statement specifying the following:
- Books to be used, invoices/purchases and other transactional records along with serial numbers for principal/supplementary transaction documents.
- A commitment to bind loose-leaf forms (permanent) within 15 days after the end of each taxable year.
Although CAS and loose-leaf books both require PTU and are done with the use of computers, loose-leaf books are considered as manual books and its PTU should not be filed within the National Accreditation Board, in accordance with (RMC) No. 68-2017.