Frequently Asked Questions for Bookkeeping in the Philippines

Frequently Asked Questions for Bookkeeping in the Philippines

COVID-19 or not, bookkeeping is a taxing but necessary endeavor for any business. Regardless of scale, businesses need to know the current state of their finances. Company owners and management members should at least have a working knowledge of the most commonly-used accounting jargon. This way, they can make decisions and allocate resources with an eye on maintaining and building the company’s financial health.

The following is a short list of frequently asked questions (FAQs) on bookkeeping in the Philippines. It includes answers to general questions like “What is bookkeeping?” to more specific questions like “What is the difference between bookkeeper and accountant?”. We hope that this list can help you answer some of your most common questions when it comes to bookkeeping.

What is bookkeeping?

Q: What is bookkeeping?

Bookkeeping includes recording, storing, and retrieving financial transactions for an entity such as a business, nonprofit organization, individual, etc. It also requires knowledge of basic financial accounting concepts such as debits and credits, balance sheets, and income statements. It is part of the full business accounting process.

On the other hand, accounting refers to recording, organizing, and understanding your company’s financial records. Accounting can tell you which parts of the business actually makes you money and whether your business is making a profit or not.

Q: What’s the difference between bookkeeper and accountant?

What’s the difference between bookkeeper and accountant?

A bookkeeper is the one who keeps, records, and gathers financial data, while an accountant summarizes, interprets and communicates this data for financial decisions. The two roles are very similar, but still very different.

While an accountant can do bookkeeping tasks (but usually don’t), they are better suited to consulting work, such as preparing your financial reports and helping you understand the financial impact of your previous (and upcoming) decisions.

Q: What are some examples of bookkeeping tasks?

Typical bookkeeping tasks include:

  • Processing employee payroll and related governmental reports
  • Billing for goods sold/services provided to clients
  • Recording receipts from customers
  • Monitoring individual accounts receivable
  • Providing financial reports
  • Paying suppliers
  • Verifying and recording invoices received from suppliers
  • Recording depreciation and other adjusting entries

Q: What makes a good bookkeeper?

A good bookkeeper will help improve business cash flow, maximize tax exemptions, and free you up to focus on growing your business.

Q: Can I do the bookkeeping myself?

Yes, but you need to ask yourself if this is really the best use of your time. For many business owners, time is their most valuable asset. Consider if you have other business tasks that need attending to. A good rule of thumb is that if you can outsource or delegate it to someone else, then do so.

We can only do so much in a day, so your limited time is better spent on pursuing high-leverage tasks and ideas. In the long run, you may also find that it costs more money to do the bookkeeping yourself—especially if you don’t have the necessary experience or interest

Should I outsource my bookkeeping?

Q: Should I outsource my bookkeeping?

Yes, but it also depends on how much you’d like to micromanage.

If you like having a tight rein over your company’s finances, being your own bookkeeper might work for you. However, our general recommendation is to outsource as it saves your time, money, and energy. Hiring a professional bookkeeper or accountant is always the better choice, as it can save you from making mistakes that could eventually cost you a lot.

Q: Will I save time and money if I outsource accounting or bookkeeping?

Yes to both! Your time is better off spent on tasks that will grow your business the most, like strategizing and planning for business growth. Some benefits of outsourcing business bookkeeping and accounting include:

Will I save time and money if I outsource accounting or bookkeeping?
  • Reduced operational costs (e.g. payroll, office space, equipment)
  • Lesser risk of paying penalties and fines for non-compliance
  • Improved Cash Flow
  • More time spent on core business competencies
  • Better insights with which to boost your internal systems and processes
  • Allows you to easily scale up as needed

Q: Where can I find a bookkeeping firm in Makati?

DAYANAN Business Consultancy offers bookkeeping services and is located in the heart of the Philippines’ business district. You may contact us at telephone number +632 7576-8476 or visit us at LG1, Cityland III, V.A. Rufino corner Esteban Streets, Legaspi Village, Makati City.

Q: What are some examples of bookkeeping and/or accounting software?

While a spreadsheet program like MS Excel or Google Sheets may be useful for businesses with a tight budget, it’s still limited compared to specialized bookkeeping software such as Quickbooks.

The most popular bookkeeping software is Quickbooks, but Xero and Freshbooks are some well-known names as well. Explore your choices before making your purchase.

Q: What bookkeeping records must be maintained by businesses in the Philippines and what are they for?

What bookkeeping records must be maintained by businesses in the Philippines and what are they for?

According to the Philippines’ Bureau of Internal Revenue (BIR), there are six books that every business should keep and maintain regularly:

  • Journal
  • General Ledger
  • Cash Receipts Book
  • Cash Disbursements Book
  • Subsidiaries Sales Journal
  • Subsidiaries Purchases Journal

1. Journal – Accounting entries are recorded here in chronological order before the transactions are posted to the General Ledger.

2. General Ledger – It holds account information needed to prepare the company’s financial statements. Data in the general ledger is segregated by type into accounts for revenues, expenses, assets, liabilities, and equity.

3. Cash receipts book – It is a detailed record of all cash inflows to a business, such as cash sales and collections of accounts receivable.

4. Cash disbursements book – This is a record of all financial expenditures made by a company before they are posted to the general ledger. It includes disbursements for cash purchases and payments of payables.

5. Subsidiary Sales Journal – It is a record of the details of all sales transactions. The information stored in this journal is a summary of customer-issued invoices. This journal only stores receivables; this means that sales made in cash are not recorded in the sales journal.

6. Subsidiary Purchases Journal – This contains all cash and credit purchases of goods and services. A Subsidiary Purchases Journal contains information about purchasing transactions. All types of purchases made on credit are recorded here.

The BIR also mandates businesses to keep other accounting records such as registers, invoices, receipts, vouchers, returns, and other source documents that support entries in the books of accounts.

Q: For how long does a company have to store its accounting books and records?

For how long does a company have to store its accounting books and records?

10 years per RR 17-2013 and RR 05-2014 issued by BIR. This is because Section 203 of the National Revenue Code provides that in pending cases relating to tax evasion or failure to file returns, the BIR has the authority to examine tax documents for up to 10 years after the discovery of fraud or omission.

Q: What are the common mistakes or misconceptions about bookkeeping that people should be aware of?

There are two common misconceptions when it comes to bookkeeping and accounting. The first is regarding the start of operations and the second is about when to file tax returns.

  • Businesses should only start operating AFTER it obtains necessary permits and licenses from the relevant government offices, either the Securities and Exchange Commission (SEC) for corporations and partnerships or the Department of Trade and Industry (DTI) for sole proprietors. Aside from these, permits and licenses from local government units and the Bureau of Internal Revenue (BIR) must also be obtained.
  • Once the BIR has issued the Certificate of Registration, tax returns MUST be filed, EVEN IF there are no transactions to report. Not doing so will incur you some penalties.

Q: What are the BIR tax reports/requirements that we need to maintain? How often do we submit them to BIR?

The taxpayer needs to regularly file tax returns. What these returns are will depend on the tax types indicated in the BIR Certificate of Registration (COR). Generally speaking though, tax returns need to be filed monthly, quarterly, and yearly, as follows:

  • Withholding Taxes – filed monthly and annually
  • Value Added Tax – filed monthly and quarterly
  • Income Tax – filed quarterly and annually

Aside from tax returns, licenses and permits should be renewed annually, while annual reports should be filed and paid.

Q: Do I need to comply with BIR reports if I already have a registered entity in the Philippines but it’s not yet operational?

Once the BIR issues the Certificate of Registration, you must file, even if no transactions have taken place. Otherwise, you will be charged penalties for non-compliance.

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

There are NO additional tax compliance requirements for foreign businesses, but there may be additional tax filings that are unique to foreign entities. An example is the branch profit remittance tax on 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 and BIR can impose penalties for failure to submit financial statements and tax returns on time. While the exact fines and penalties vary on a case to case basis, complying with basic accounting/bookkeeping requirements is always a good idea.

Thanks for reading this article on frequently asked questions for bookkeeping in the Philippines. If you want to grow your business, outsourcing is generally the way to go. If you need bookkeeping services in Makati or are searching for a bookkeeping firm in Makati, we at DAYANAN can help you! You may contact us here for any inquiries and our team of experts will gladly assist you.

Amnesty Declared for Unsettled Estate Taxes and Tax Delinquencies

Philippines Tax Amnesty 2019

Philippines 2019 Tax Amnesty 

President Rodrigo Duterte signed into law Republic Act (RA) Number 11213 or the Tax Amnesty Act of 2019, which provides amnesty for those with undeclared estate taxes and tax delinquencies, last February 14.

Under the law, the government will now collect only six percent of the net undeclared estate tax for properties owned by those who died before January 1, 2018.

President Duterte Veto

Duterte vetoed provisions allowing a one-time settlement of estates for those properties under multiple unsettled estates and presuming the truthfulness of self-declared property values. It would thus seem that the six percent rate will apply at every transfer of property based on fair market values, and that the government will have to verify all estate tax amnesty returns.

The President rejected more items in the original bill which would have granted a general tax amnesty for those who failed to pay correct taxes in 2017 and previous years. Citing potential abuse by tax evaders, Duterte called on Congress to pass another bill that would lift bank secrecy in cases of fraud, include mechanisms for the automatic exchange of information, and ensure truthful declaration of assets and liabilities.

In conjunction with the Tax Reform for Acceleration and Inclusion (TRAIN) law, R.A. 11213 was envisioned by the Duterte administration to help raise revenues and expand the tax base in support of its priority development programs.

Amnesty Coverage

The law also grants amnesty on tax delinquencies, covering all national internal revenue taxes such as income tax, withholding tax, capital gains tax, donor’s tax, value-added tax, excise tax, and documentary stamp tax. The amnesty tax rate is 40 percent of the delinquent tax. Those whose cases have been subject to final judgment by the courts will have to pay 50 percent. Pending criminal and tax evasion cases merit 60 percent of the tax assessed, while those who did not remit withheld taxes have to pay 100 percent.

Finance Secretary Carlos Dominguez III noted that the amnesty on estate taxes would help those who avail to “free up property that long been estate-locked and allow heirs to make good economic use of the properties they have inherited.”

“We hope that in availing [themselves] of this amnesty—a very, very generous reprieve from the state, taxpayers would feel more encouraged to pay the right taxes, and be more empowered to be good taxpayers in the future,” Dominguez said.

DAYANAN Business Consultancy is Newest Moores Rowland Philippines Partner Firm

DAYANAN Business Consultancy is Newest Moores Rowland Philippines Partner Firm

DAYANAN president Jake Gacus (2nd from left) and director David Elefant (3rd from left) during the signing of the partnership agreement with Moores-Rowland Philippines & Co. (MRP & Co.) last December 28, 2018. With them are MRP & Co. managing partner Neil Sison and program head Beverly Buenconsenjo.

DAYANAN Business Consultancy is Newest Moores Rowland Philippines Partner Firm

DAYANAN president Jake Gacus (2nd from left) and director David Elefant (3rd from left) during the signing of the
partnership agreement with Moores-Rowland Philippines & Co. (MRP & Co.) last December 28, 2018. With them
are MRP & Co. managing partner Neil Sison and program head Beverly Buenconsenjo.

DAYANAN International Business Consultancy Services—one of the country’s leading firms providing
business registration, visa applications, and disaster preparedness services—is now an independent
member firm of Moores-Rowland Philippines & Co. (MRP & Co.).

The collaboration was officially formalized through the signing of a partnership agreement last
December 28, 2018 in Makati City. Representing DAYANAN were its president Jake Gacus and
director David Elefant. Neil Sison (managing partner) and Beverly Buenconsejo (program head)
represented MRP & Co.
A leading alliance of professional firms in the Philippines, MRP & Co. has members providing top-notch
services in areas such as merger and acquisitions, business valuations and appraisal, sustainability
and environmental audit, sales and marketing, and software development. MRP & Co. also provides its
members with access to networking, business consultation, marketing, and training opportunities.
“We are very happy to be part of the Moores Rowland family,” said Gacus. “The DAYANAN brand has
always been about innovation, and this partnership gives us an opportunity to bring that to the next
level. We are also excited to leverage our expertise to improve the capacity of Filipino professionals,”
he added.
Since its founding in 2011, DAYANAN has assisted hundreds of small- and medium-sized companies
set up their operations in the Philippines, facilitating foreign investments and increasing local
employment. To know more about DAYANAN’s services and products, visit
www.DayananConsulting.com and www.DisasterKit.asia.

Bookkeeping Accounting Services

Bookkeeping Services

All businesses registered in the Philippines must comply with the Philippines Bureau of Internal Revenue bookkeeping regulations. These regulations apply to corporations, branch offices, representative offices, ROHQ, RHQ and partnerships.

Bookkeeping is the recording of financial transactions, and is part of the process of accounting in business. Information extracted from the bookkeeping will be used to evaluate a company’s financial position.

Dayanan can assure your business financial reports are accurate, reliable and clear by providing the following bookkeeping/accounting services done by our registered certified public accountants. We offer the following services:

We carry out a complete and accurate record keeping of your business transactions.  We use accounting software for efficient bookkeeping processing to maintain correct and up-to-date financial records. We ensure that our recording process is in compliance with the latest financial accounting standards.

Our services include the following:

  • Chart of Account Set-up and Management
  • Set-up of Accounting System and General Bookkeeping Set-up
  • Accounts Payable Processing (Voucher System)
  • Accounts Receivable Management
  • Fixed Assets Management
  • Expense Report Processing
  • Bank Reconciliation
  • Payroll Services

Our management accounting services give your Company a deeper understanding of your internal business operations, these reports allow your Company’s board of directors to make profitable financial decisions.

Our CPAs can prepare the following reports:

  • Profit and Loss vs. Budget Comparison
  • Cash Forecast and budgeting
  • Revenue Projections
  • Preparation of other Management Reports as required

Outsource your financial controlling to Dayanan Business Consultants, a more cost – effective solution than hiring an internal finance and Accounting Team.  Services include:

 

  • Internal Control Set-up
  • Accounting and Financial Policy Set-up
  • Set-up of Receivable and Payable Procedures and Policies
  • Analysis of Financial Reports

An important tool in your management’s decision making is the evaluation by our CPAs of your company Financial Information.

Some of the financial analysis services, your company can outsource are:

  • Profitability Analysis
  • Review of Sales Contracts and other contracts for impact on accounting policies
  • Product Cost Calculations

Dayanan will ensure that your Company complies with Philippine Accounting and Reporting Standards, Bureau of Internal Revenue Regulation and filings with all government agencies.

  • SEC Reporting
  • Period – End Reporting (Quarterly, Annually etc.)
  • BIR Mandatory Reports (Monthly, Quarterly and Annual Reports)

Submission of the following reports

  • Expanded Withholding Taxes (BIR Form 1601-E)
  • Final Withholding tax Returns (1601 – F)
  • Value Added Tax Returns (2550M and 2550Q)
  • Income Tax Returns (1702Q)
  • Compensation Withholding Taxes (1691-C)
  • Certificate of Creditable Withholding Taxes (2307)
  • PEZA Reporting compliance

The Bureau of Internal Revenue (BIR) is now enforcing compliance with Transfer Pricing Regulations. All foreign owned companies in the Philippines must present to the BIR upon request, a Transfer Pricing Analysis Study to justify their income from their parent company, subsidiaries and affiliates.

Dayanan can prepare a complete Transfer Pricing Analysis encompassing:

  • Transfer Pricing System Design
  • Year End Adjustment
  • Risk Management
  • Transfer Pricing Control Framework
  • Benchmarking
  • PRO Industry Solution
  • Outsourcing of Auditors that meets your Company’s requirements
  • Assist in your audit preparation of your financial reports
  • Special Audit Services (fraud audit, internal control compliance etc.)

We are your hands-on partner and advisor, it’s our duty to provide services with the highest standards of professionalism and integrity. Contact us for an evaluation of your bookkeeping and accounting requirements.

Philippines Payroll System, Processing & Services

Philippines payroll processing

Philippines employee payroll is complicated; to compute payroll you need to have a good knowledge of taxation and labor laws.

Try Payroll Outsourcing in the Philippines

Dayanan’s efficient, accurate and secure payroll processing services will give you and your employees peace of mind.

Free up your time and resources, concentrate on your core business and let us process your payroll. We keep you updated on the latest changes in Department of Labor and Employment (DOLE) and Bureau of Internal Revenue regulations, filings and reports.

Basic employee information needed to prepare payroll:

  • Name
  • Tax Status
  • Civil Status
  • Basic Salary
  • Taxable and Non-taxable Benefits
  • Incentives
  • Bonuses
  • Number of Hours Worked, Tardiness, Absences with and without Pay, Overtime
  • SSS and HDMF Loan Vouchers
  • BIR Form 2316 from Previous Employer

Our Payroll Accounting Service Provides Companies with:

(i) Payroll Computation

(ii) Preparation of Bank Data Documents

(iii) Pay slip preparations

(iv) Preparation of Payroll Accounting Entries for your Accounting and Bookkeeping requirements

This involves computation of bi-monthly payroll including determination of applicable deductions of SSS, PHILHEALTH, HDMF contributions and computation of Withholding Tax; Preparation of Pay Slips and Payroll Summary and Special Processing of 13th month pay, final pay, incentives, etc…

BIR

  • Monthly Withholding Tax on Compensation Return (BIR 1601-C, BIR 1603)
  • Annual Reports (BIR 1604CF and 2316)

SSS

  • Monthly Payment Return of Contributions (SSS R3)
  • Monthly Payment of Loan Return (ML1)
  • Salary Loan Application (ISL-101)

PHILHEALTH

  • Monthly Payment of Contributions (RF-1)

HDMF

  • Monthly Membership Contributions Remittance (HDMF M1-1)
  • Monthly Remittance Schedule of Loan (HDMF P2-4)

Contact Dayanan now to discuss how we can facilitate your Philippines Payroll System Processing and Services

 

Philippines Bookkeeping Services

All businesses registered in the Philippines must comply with the Philippines Bureau of Internal Revenue bookkeeping regulations. These regulations apply to corporations, branch offices, representative offices, ROHQ, RHQ and partnerships.

Bookkeeping is the recording of financial transactions, and is part of the process of accounting in business. Information extracted from the bookkeeping will be used to evaluate a company’s financial position.

Dayanan can assure your business financial reports are accurate, reliable and clear by providing the following bookkeeping/accounting services done by our registered certified public accountants. We offer the following services:

Dayanan Bookkeeping Services

Accounting and Bookkeeping

We carry out a complete and accurate record keeping of your business transactions.  We use accounting software for efficient bookkeeping processing to maintain correct and up-to-date financial records. We ensure that our recording process is in compliance with the latest financial accounting standards.

Our services include the following:

  • Chart of Account Set-up and Management
  • Set-up of Accounting System and General Bookkeeping Set-up
  • Accounts Payable Processing (Voucher System)
  • Accounts Receivable Management
  • Fixed Assets Management
  • Expense Report Processing
  • Bank Reconciliation
  • Payroll Services

Management Accounting

Our management accounting services give your Company a deeper understanding of your internal business operations, these reports allow your Company’s board of directors to make profitable financial decisions.

Our CPAs can prepare the following reports:

  • Profit and Loss vs. Budget Comparison
  • Cash Forecast and budgeting
  • Revenue Projections
  • Preparation of other Management Reports as required

Financial Controlling

Outsource your financial controlling to Dayanan Business Consultants, a more cost – effective solution than hiring an internal finance and Accounting Team.  Services include:

  • Internal Control Set-up
  • Accounting and Financial Policy Set-up
  • Set-up of Receivable and Payable Procedures and Policies
  • Analysis of Financial Reports

Financial Analysis

An important tool in your management’s decision making is the evaluation by our CPAs of your company Financial Information.

Some of the financial analysis services, your company can outsource are:

  • Profitability Analysis
  • Review of Sales Contracts and other contracts for impact on accounting policies
  • Product Cost Calculations

Statutory Reporting and Compliance

Dayanan will ensure that your Company complies with Philippine Accounting and Reporting Standards, Bureau of Internal Revenue Regulation and filings with all government agencies.

  • SEC Reporting
  • Period – End Reporting (Quarterly, Annually etc.)
  • BIR Mandatory Reports (Monthly, Quarterly and Annual Reports)

Submission of the following reports

  • Expanded Withholding Taxes (BIR Form 1601-E)
  • Final Withholding tax Returns (1601 – F)
  • Value Added Tax Returns (2550M and 2550Q)
  • Income Tax Returns (1702Q)
  • Compensation Withholding Taxes (1691-C)
  • Certificate of Creditable Withholding Taxes (2307)
  • PEZA Reporting compliance

Transfer Pricing

The Bureau of Internal Revenue (BIR) is now enforcing compliance with Transfer Pricing Regulations. All foreign owned companies in the Philippines must present to the BIR upon request, a Transfer Pricing Analysis Study to justify their income from their parent company, subsidiaries and affiliates.

Dayanan can prepare a complete Transfer Pricing Analysis encompassing:

  • Transfer Pricing System Design
  • Year End Adjustment
  • Risk Management
  • Transfer Pricing Control Framework
  • Benchmarking
  • PRO Industry Solution

Audit Support Solutions

  • Outsourcing of Auditors that meets your Company’s requirements
  • Assist in your audit preparation of your financial reports
  • Special Audit Services (fraud audit, internal control compliance etc.)

We are your hands-on partner and advisor, it’s our duty to provide services with the highest standards of professionalism and integrity. Contact us for an evaluation of your bookkeeping and accounting requirements.