Starting a business in the Philippines means getting familiar with the Bureau of Internal Revenue (BIR) requirements — one of the most important being the proper recording of your sales and income in the BIR book of accounts. If you’re new to bookkeeping or unsure how to get started, this beginner’s guide will help you record your sales and income the right way.
What Is the BIR Book of Accounts?
The BIR book of accounts is an official record where businesses log all their financial transactions, including sales and income. This book serves as the legal basis for your tax filings and is required for BIR compliance.
Step 1: Register Your Books of Accounts
Before you start recording, you need to register your books of accounts with the BIR. This involves submitting your chosen books (manual or computerized) for approval at your Revenue District Office (RDO). Common books for recording income include:
Cash Receipts Journal (for cash sales)
Sales Journal (for credit sales)
General Journal
General Ledger
Step 2: Issue BIR-Authorized Official Receipts
For every sale or income transaction, you must issue a BIR-authorized official receipt (OR). These receipts prove your income and serve as your source documents for recording.
Use only BIR-accredited receipts or electronic receipts
Make sure to fill out all required details on the OR
Step 3: Record Sales and Income Daily
To avoid missing transactions, enter your sales and income on the day they occur. Record all types of income, including:
Cash sales
Credit sales
Service income
Other miscellaneous income
Each entry should include:
Date of transaction
Customer name
OR number
Amount received
Step 4: Post Entries to the Appropriate Books
Start by recording transactions in your journals (e.g., Cash Receipts Journal or Sales Journal). Then, regularly post summarized amounts to your General Ledger, which consolidates your accounts and helps prepare financial reports.
Step 5: Keep Supporting Documents Organized
Retain all related documents such as invoices, receipts, and contracts. These documents back up your recorded income and are essential during audits.
Step 6: Reconcile Your Records Regularly
Check your book entries against bank deposits and cash on hand regularly. Reconciliation helps identify and fix errors before they become bigger issues.
Step 7: Maintain Your Books for 10 Years
The BIR requires businesses to keep books of accounts for at least 10 years. Store your records safely and in an organized manner to facilitate audits or inquiries.
Final Tips for Beginners
Always issue and keep BIR-authorized official receipts
Don’t mix personal and business finances
Consider using accounting software designed for BIR compliance
Seek help from a professional accountant if needed
Starting your bookkeeping correctly sets a strong foundation for your business’s financial health and compliance. Follow these steps, and you’ll be well on your way to managing your sales and income with confidence.
Would you like me to help you with sample formats or a checklist for recording your sales and income?
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