Frequently Asked Questions for Accounting/Bookkeeping and Financial Services in the Philippines

Q: Why outsource the bookkeeping tasks?

Starting a business is challenging and success may be easier achieved if the management focuses on the core business and outsource bookkeeping to a firm with Certified Public Accountants (CPA) who are knowledgeable of the latest accounting practices in the Philippines.


Q: Why can’t I do the bookkeeping myself?

It may be more efficient, in terms of time and money, to outsource bookkeeping to a firm rendering professional services.


Q: How much time and money can I save if I outsource accounting/bookkeeping?

Simple bookkeeping would take at least 3-5 hours a day if performed by a CPA. This time may be better spent managing the operations of the business.

Hiring an in-house CPA to perform accounting, tax compliance, and payroll tasks may cost more than the professional fee of a firm that can perform the same tasks. The firm would also have the contractual obligation to ensure continuity of services regardless of any changes in its manpower.


Q: What records must be maintained by businesses in the Philippines?

The Bureau of Internal Revenue (BIR) requires every taxpayer to keep a set of six books of account, to be kept and maintained in its principal place of business.

  1. Journal – Accounting entries are recorded in the Journal before the transactions are posted in the general ledger. It contains the following information:
  • Posting date
  • Description of the transaction
  • Accounts to debit and credit and the corresponding amounts.
  • Reference number which may be check numbers, Sales Invoice No., Purchase Order No., etc.
  1. General Ledger – It lists the movement (Debit and Credit) of each account in its Chart of Accounts in a given period based on the journal entries in the Journal.
  1. Cash receipts book – It is a record of the details of all cash receipts, including receipts for cash sales and collections of accounts receivable and other transactions involving inflow of money. Each entry may include the following details:
  • Accounts to debit or credit and the corresponding amounts
  • Date of record
  • Date of receipt
  • Cheque number (for cheque collections)
  • Sales Invoice/Official Receipt number
  • Short description
  1. Cash disbursements book – It is a record of the details of all cash disbursements, including disbursements for cash purchases and payments of payables. Each entry may include the following details:
  • Accounts to debit or credit and the corresponding amounts
  • Date of record
  • Date of payment
  • Cheque number (for cheque payments)
  • Sales Invoice/Official Receipt Number
  • Short description
  1. Subsidiary Sales Journal – It contains all cash and credit sales. Each entry may include the following details:
  • Accounts to debit or credit and the corresponding amounts
  • Date of record
  • Sales Invoice/Official Receipt Number
  • Sales terms
  • Customer name
  • Short description
  1. Subsidiary Purchases Journal – It contains all cash and credit purchases of goods and services. Each entry may include the following details:
  • Accounts to debit or credit and the corresponding amounts
  • Date of record
  • Sales Invoice/Official Receipt Number
  • Purchase terms
  • Vendor name
  • Short description

Q: What should small business owners look-out for?

The business should only commence operations after it obtains the necessary permits and licenses from the Securities and Exchange Commission (SEC) for corporations and partnerships or Department of Trade and Industry (DTI) for sole proprietorships, local government unit, and the Bureau of Internal Revenue (BIR).

As soon as the BIR issues the Certificate of Registration, the taxpayer is required to start filing tax returns even if it has no transactions to report.


Q: What are BIR/tax reports/requirements that we need to maintain/submit?

The taxpayer needs to regularly file tax returns relevant to the tax types indicated in its BIR Certificate of Registration.


Q: How often do we need to submit these reports/requirements to the BIR?

In general, taxpayers are required to pay three main taxes, as follows:

  1. Withholding Taxes – filed monthly and annually
  2. Value Added Tax – filed monthly and quarterly
  3. Income Tax – filed quarterly and annually

The taxpayer may be required to file additional tax returns, as provided in its BIR Certificate of Registration.


Q: What happens if I already have a registered entity in the Philippines but I’m not yet operational, do I need to comply with BIR reports?

The taxpayer needs to start filing tax returns as soon as the BIR Certificate of Registration is issued. It may reflect in its returns that it has no transactions for the period.


Q: Are there any additional requirements for foreign businesses registered in the Philippines?

In general, there are no additional tax compliance requirements for foreign businesses. However, additional tax filings may be required for taxes that are unique to foreign entities such as branch profit remittance tax for profits remitted by a Philippine Branch to its Head Office.


Q: What happens if we don’t comply with the mandated accounting/bookkeeping requirements?

The SEC mandates registered business to prepare Financial Statements in accordance with the Philippine Financial Reporting Standards (PFRS). In addition, corporate entities with authorized capital stock or paid-up capital, whichever is lower, of at least P 50,000 or quarterly gross sales of more than Php150,000 are required to submit Financial Statements duly audited and certified by an independent public accountant (external auditor) and stamped ‘received’ by the BIR within 120 days from the end of its fiscal or calendar year.  No external auditor would issue an unqualified opinion unless the entity complied with PFRS in recording its transactions. The BIR also requires annual income tax returns to be accompanied by audited financial statements.

The SEC and BIR may impose penalties for failure to submit financial statements and tax returns on time.