As businesses in the Philippines embrace technology, many are moving away from handwritten ledgers and loose-leaf binders. If you're one of the many entrepreneurs or finance managers looking to modernize, it's time to consider using Computerized Books of Account (CBA).
However, while digitizing your accounting system can improve efficiency and accuracy, it also comes with specific compliance requirements under the Bureau of Internal Revenue (BIR).
In this complete guide, we’ll break down what computerized books are, how to apply for BIR approval, how to maintain and back up your records, and how to submit them properly to avoid penalties.
What Are Computerized Books of Account?
Computerized Books of Account refer to accounting records generated and maintained using software, such as:
Enterprise Resource Planning (ERP) systems
Standalone accounting software (e.g., QuickBooks, Xero, Zoho Books)
Custom in-house systems
Excel or spreadsheet-based accounting (only when part of a registered system)
Unlike manual or loose-leaf books, CBA systems automatically record, organize, and summarize financial data. The BIR, however, requires prior approval before a business can start using such systems for official bookkeeping.
Step-by-Step: How to Apply for BIR Approval to Use Computerized Books
Before you can use a computerized system, you must secure a Permit to Use (PTU) from the BIR. Here’s how:
Step 1: Prepare Required Documents
BIR Form 1900 – Application for Authority to Use Computerized Accounting System (CAS)
Sworn Statement – Indicating:
Name and purpose of the system
System features and components
Types of reports generated
Data backup procedures and storage locations
System Documentation – Including:
User manual or functional description
Sample reports (e.g., journals, ledgers, trial balance)
Data flow diagram
Database structure (schemas or tables)
Company Profile and Organizational Chart
BIR Certificate of Registration (Form 2303) – Photocopy
Sample printouts of books and reports from the system
Submit these documents to your Revenue District Office (RDO) or Large Taxpayer Division, if applicable.
After Approval: Your Compliance Responsibilities
Once your PTU is issued, you're authorized to use your computerized system—but the work doesn’t stop there. Here are your key obligations:
1. Maintain Accurate and Up-to-Date Records
Your system must record all financial transactions chronologically and accurately. These should include:
General Journal
General Ledger
Sales and Purchases Book
Cash Receipts and Disbursements Book
Other applicable ledgers and subsidiary books
2. Back Up Data Regularly
The BIR requires that your system has a data backup plan. This includes:
Daily backups (stored onsite and offsite)
Backup copies in standard readable format (PDF, CSV, or XML)
Retention of data for at least 10 years
3. Prepare for Annual Submissions
Depending on your PTU and business classification, the BIR may require:
Submission of Annual Information Report (AIR)
Backup files (in prescribed format)
Sworn declaration on system usage and changes
Hard or soft copies of reports and ledgers, upon request
Acceptable Software and System Requirements
While the BIR does not require specific brands of software, your accounting system must meet these criteria:
Generates audit trail logs
Time- and date-stamps entries
Maintains data integrity and security
Allows non-editable reports for submission
Can produce BIR-required reports (e.g., VAT Relief, SLSP, QAP, SAWT)
If you're using off-the-shelf software, make sure it is capable of customizing output formats to align with BIR standards.
Common Mistakes to Avoid
Many businesses make the mistake of assuming that using software automatically makes their books compliant. Here are some key errors to watch out for:
Using Software Without BIR Approval
Using computerized books without a valid PTU is a violation, even if the records are accurate.
Incomplete or Incorrect Reports
BIR requires reports to match their format. Failure to include required data (like TINs, transaction codes, etc.) can trigger audits.
Poor Backup and Data Retention
Loss of data due to lack of backup can lead to disallowed expenses and potential tax findings.
Modifying Past Entries Without Audit Trail
Manual adjustments or overwriting past records without a proper audit trail can raise red flags during BIR inspections.
When to Reapply or Update Your PTU
You need to inform or reapply to the BIR if:
You change your accounting software or system
You upgrade or replace hardware used in the system
There are significant changes in your business structure or reporting requirements
You switch from CBA to another bookkeeping method (e.g., manual or loose-leaf)
Benefits of Using Computerized Books of Account
When implemented and maintained properly, CBAs can provide:
Faster and more accurate reporting
Real-time financial visibility
Reduced risk of errors
Easier preparation for audits and tax returns
Scalable recordkeeping as your business grows
Final Thoughts
Using a computerized bookkeeping system is no longer optional for growing businesses—it’s a strategic move toward efficiency, transparency, and scalability. But it comes with strict BIR compliance requirements you can’t afford to ignore.
By following this guide, you’ll be well on your way to modernizing your accounting process without compromising on compliance.
Need help applying for a BIR PTU or choosing the right software? Reach out to a BIR-accredited tax advisor or accounting professional—we're here to make digital compliance easier for you.
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