01/10/2025
Books of Accounts Guide for Non-VAT, VAT, 8% Income Tax, and BMBE
Proper bookkeeping isnβt just about complianceβitβs about keeping your business financially sound and audit-ready. Hereβs a tailored guide to help you stay on top of your BIR requirements:
π 1. Non-VAT (3% Percentage Tax with OSD or Itemized Deduction)
Required Books:
β General Journal β Records all financial transactions.
β General Ledger β Summarizes all accounts.
β Sales Journal β Tracks all sales.
β Cash Disbursement Book (CDB) β Logs cash payments.
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Why? Businesses under the 3% Percentage Tax must record sales and expenses unless using OSD (Optional Standard Deduction), where expense tracking isnβt requiredβbut books must still be maintained for transparency
π 2. Non-VAT (8% Income Tax Rate)
Required Books:
β General Journal
β General Ledger
β Sales Journal
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Why? With the 8% income tax rate, percentage tax and deductible expenses are removed, simplifying bookkeeping. However, sales records remain essential for tax reporting.
π 3. VAT-Registered Businesses
Required Books:
β General Journal
β General Ledger
β Sales Journal
β Purchases Journal β Tracks purchases with input VAT.
β Cash Disbursement Book β Logs cash payments.
β Cash Receipts Book β Records all sales collections.
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Why? VAT-registered businesses must track input and output VAT to ensure accurate tax computation. The Purchases Journal is crucial for claiming input VAT credits.
π 4. BMBE (Barangay Micro Business Enterprise)
Required Books:
β General Journal
β General Ledger
β Sales Journal
β Cash Disbursement Book (Optional, if applicable)
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Why? While BMBEs are exempt from income tax, bookkeeping remains mandatory for compliance and financial tracking. Proper records also help in securing loans or grants.
π Key Reminders for Compliance:
π Manual Books β Must be registered and stamped by the BIR.
π Loose-Leaf Books β Requires BIR approval; must be printed and bound yearly.
π Computerized Accounting System (CAS) β Needs BIR approval for high-volume transactions.
π Keep your books updated β Avoid penalties by maintaining accurate and timely records.
Need assistance with bookkeeping or tax filing? Letβs simplify your compliance! Send a message today. π©