Recording business income in your Bureau of Internal Revenue (BIR) book of accounts is not just good bookkeeping practice — it’s a legal obligation for every registered business in the Philippines. Understanding the legal basics ensures that your business stays compliant, avoids penalties, and builds a trustworthy financial record.
Here’s what you need to know about the legal requirements for recording business income in your BIR books:
1. Mandatory Keeping of Books of Accounts
Under Philippine tax law, all businesses registered with the BIR are required to maintain books of accounts that clearly reflect their financial transactions, including all income earned.
This is governed by the National Internal Revenue Code (NIRC) and BIR regulations.
Books must be properly maintained, updated, and readily available for inspection.
2. Use of BIR-Authorized Official Receipts (ORs)
Every income-generating transaction must be supported by BIR-authorized official receipts or sales invoices.
These official receipts serve as the primary evidence of income.
Using non-accredited receipts or failing to issue receipts is a violation and can result in penalties.
3. Registration of Books of Accounts
Your books of accounts must be registered with the BIR’s Revenue District Office (RDO).
Only registered books are considered valid in case of audits.
Registration involves submitting sample books (manual or computerized) for BIR approval.
4. Proper and Timely Recording of Income
Income should be recorded immediately or within the day of the transaction.
Delays in recording can be viewed as non-compliance or can lead to discrepancies during audits.
5. Accuracy and Completeness Are Required by Law
Entries in your books must be accurate, complete, and reflect the true nature of your business transactions.
Intentional misreporting or omission of income is considered tax evasion, which carries heavy legal consequences.
6. Retention Period of Books of Accounts
The law requires that books of accounts and supporting documents be kept for 10 years.
This is to facilitate BIR audits and investigations if necessary.
7. Use of Electronic or Manual Books
Both manual and computerized books of accounts are allowed, but computerized books must be BIR-registered and compliant with prescribed standards.
Consequences of Non-Compliance
Failing to properly record business income or maintain the required books of accounts can result in:
Monetary penalties and fines
Additional taxes and surcharges
Legal action and possible suspension of business operations
Damage to your business reputation
Final Thoughts
Knowing the legal basics of recording business income in your BIR books helps you avoid unnecessary risks and ensures smooth business operations. Compliance is not just about meeting government requirements — it’s about building a transparent and trustworthy business.
Would you like help preparing your books for BIR registration or tips on how to keep your records legally compliant? Feel free to ask!
Ready to get started on making your books fully compliant?
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