Books of Accounts and Accounting Records

Keeping and Using of Books of Accounts

All corporations, companies, partnerships or persons, required by law to pay internal revenue taxes shall keep and use relevant and appropriate set of bookkeeping records duly authorized by the Secretary of Finance wherein all transactions and results of operations are shown and from which all taxes due the Government may readily accurately be ascertained and determined any time of the year.¹ 

Types of Books of Accounts

Business Entities/Professionals² may opt to use any of the following 3 types of Books of Accounts.

1. Manual Books of Accounts - These are bound books that are commonly and readily available in the market. For new registrants, the registration is before the deadline of initial filing of Quarterly Income Tax Return (QITR) or the Annual Income Tax Return (AITR), whichever come earlier.³ Subsequent registration is done before its use.⁴
2. Loose-leaf Books of Accounts - These Books require Permit-To-Use (PTU) before they can be used. These are used in recording of details/descriptions in the computer and in generating/printing of copy using approved looseleaf format to be permanently bound as the bookkeeping record of the taxpayer. This is considered as computer aided bookkeeping under manual recording. ⁵
3. Computerized Books of Accounts (CBAs) or Computerized Accounting System (CAS) [with PTU or Acknowledgement Certificate, whichever is applicable] - This is recording of transactions and maintenance of accounting software which should be compliant with the BIR policies and regulations.

Audit and Examination of Books of Accounts

Corporations, companies, partnerships or persons whose gross annual sales, earnings, receipts or output exceed P3,000,000.00 shall have their books of accounts audited and examined yearly by independent CPA.⁶

Preservation of Books of Accounts

All taxpayers are required to preserve their Books of Accounts and other accounting records for the period of 10 years in which the first 5 years in hardcopies while softcopies in the second 5 years.⁷

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¹ Sec.232, NIRC, as amended. Keeping of Books of Accounts

² A Professional is a Self-Employed Individual who is engaged in the practice of profession or calling, with or without license under a regulatory board or body.  

³ RMC 29-2019

⁴ Ibid.

⁵ RMC 29-2019 / RMC 68-2017

^{6 Sec.232, NIRC, as amended. Keeping of Books of Accounts}

⁷ Sec.235, NIRC, as amended/RR 5-2014