Whether you're launching a startup, running a small shop, or managing a growing corporation in the Philippines, your Books of Account are at the heart of your tax compliance. But maintaining them isn’t just about writing things down—it’s a full lifecycle governed by the Bureau of Internal Revenue (BIR), from registration to audits.
In this guide, we walk you through each phase of that lifecycle—so you’ll know what to do, when to do it, and how to stay BIR-compliant every step of the way.
Phase 1: Registering Your Books of Account
Once your business is officially registered with the BIR, the next step is to register your books. This is your starting point for lawful recordkeeping.
What You Need to Register
BIR Certificate of Registration (Form 2303)
BIR Form 1905 – For registration of books
Actual Books:
For manual books: columnar notebooks labeled by type (e.g., General Journal, General Ledger)
For loose-leaf or computerized: application for approval (BIR Form 1900)
Choose the Right Method:
| Method | Approval Needed? | Submission Required? |
|---|---|---|
| Manual | No (just stamping) | No, unless audited |
| Loose-leaf | Yes | Yes, annually |
| Computerized | Yes (Permit to Use) | Yes, with backup files |
When to register: Before issuing receipts or conducting any business transactions.
Phase 2: Daily and Monthly Record-Keeping
Once your books are registered, your job is to keep them accurate, consistent, and up to date. This phase is ongoing and critical to avoid compliance issues.
Basic Books to Maintain (Depending on Taxpayer Type)
General Journal
General Ledger
Cash Receipts and Disbursements Journal
Sales and Purchases Books (for VAT taxpayers)
Subsidiary Ledgers (for receivables, payables, inventory)
Key Record-Keeping Rules:
Record transactions chronologically
Don’t skip pages or alter entries
Use official receipt or invoice numbers as references
Include detailed descriptions of each transaction
Reconcile regularly with cash and bank accounts
Tip: Review your entries at least monthly to catch errors before they become audit issues.
Phase 3: Year-End Procedures and Submission (If Applicable)
At the end of your taxable year, specific requirements kick in—especially for those using loose-leaf or computerized books.
Year-End Requirements:
| Bookkeeping Method | What to Submit | Deadline |
|---|---|---|
| Manual | None (retain for 10 years) | N/A |
| Loose-Leaf | Printed copies + sworn declaration | Within 15 days after the close of the year |
| Computerized | Backup files + printouts + reports | Within 15 days after year-end or per PTU terms |
Include all registered books
Number pages sequentially
Attach sworn statements as required
Ensure formats match approved templates
Failure to submit on time may invalidate your authority to use those books and trigger penalties.
Phase 4: Preparing for a BIR Audit
A tax audit may come without warning—but your books are the first thing the examiner will ask for.
What the BIR Checks:
Consistency across books and tax returns
Supporting documents (ORs, invoices, contracts, bank statements)
Proper registration and format of books
Audit trail and explanations for unusual entries
Audit-Ready Checklist:
Are all books BIR-registered and updated?
Do ledgers match journal entries?
Are receipts, disbursements, and returns supported by source documents?
Have you reconciled your books with filed tax returns?
Are soft copies of loose-leaf/computerized books backed up?
The cleaner your books, the smoother your audit.
Common Mistakes to Avoid at Every Stage
Registering books late or not at all
Failing to update entries consistently
Skipping page numbers or using unregistered books
Missing annual submissions (for loose-leaf/computerized)
Not storing records securely (must be retained for 10 years)
Final Thoughts
Your Books of Account aren’t just a formality—they’re a living record of your business. From the moment you register to the day you're audited (and beyond), how you handle them determines your compliance status and your credibility as a taxpayer.
Understanding the full lifecycle—registration, daily maintenance, annual reporting, and audit preparation—will help you stay compliant, avoid penalties, and build a financially sound business.
Need help registering, formatting, or preparing your books for audit? Get in touch with a BIR-accredited accountant or tax consultant. Compliance doesn’t have to be complicated—we’ll walk with you at every phase.
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