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BIR Loose Leaf Books of Accounts: Annual Submission

Updated: Aug 2

All registered taxpayers doing business, self-employment or practice of profession need to comply with the tax law of keeping records of transactions, known as books of accounts or accounting books, as part of their secondary registration with the Bureau of Internal Revenue (BIR).

Books of Accounts consists of the required General Journal and General Ledger, but as an option, may also register Special Journals or Subsidiary Ledger such as Cash Receipt Journal, Cash Disbursement Journal, Sales Journal, Purchase Journal, and the like.

Types of BIR Registered Books

There are three types of books of accounts to choose from:

Manual Books

Manual Books are a traditional type of book that is the most popular as of this writing. The majority of Micro, Small Medium Enterprises (MSMEs) use manual books because it is the easiest to register with the BIR.

Manual Books consist of columnar books you can buy from the office supplies store and then register or submit for stamping in BIR RDO, where the taxpayer has registered. Once registered, business transactions are hand-written on a regular basis.

Loose Leaf Books

Loose leaf has been the least popular in the past years. But there is an increasing awareness that this option is available.

Loose leaf is a book that uses Microsoft Excel or any equivalent. But before you can do so, you must apply for a Permit to Use (PTU) in the BIR Regional District Office (RDO) where the taxpayer has registered.

Once there’s Permit to Use (PTU) Loose leaf, at the end of the year, print the journals/ledgers and handbound it. After which, submit it to the BIR RDO on or before January 15 of the next calendar year.

Computerized Books

Large Taxpayers often use Computerized Books. But due to the rising popularity of automation and affordable software like Xero Account Software, even MSMEs, self-employed, or professionals are now using and registering computerized books.

Per Revenue Memorandum Circular (RMC) 5-2021, it is no longer necessary to apply for Permit to Use (PTU) computerized books. Instead, you only need to complete and submit the checklist of requirements to the BIR RDO where the taxpayer has registered. To signify acceptance, the BIR will issue you an Acknowledgement Receipt.

But just like Loose leaf Books, at the end of the year, you must submit soft copies of your computerized accounting records to the BIR RDO on or before January 30 of the next calendar year.

How to Comply with Annual Submission of Loose Leaf Books of Accounts?

This article is for those who already have a Permit to Use (PTU) Loose leaf or for anyone who wants to learn about this annual requirement.

It is important to note that if you do not have a Permit to Use (PTU) Loose leaf, but you intend to maintain a Loose-leaf Books, then you must first submit your application to your BIR RDO before doing the steps below.

So, without further delay, here are the steps to comply with the requirement of Annual Submission of Loose leaf Books of Accounts:

1. Print all the journals and ledgers for the covered year

Print all the journals and ledgers for the covered year. For example, from January 1 20xx to December 31, 20xx, for the applicable books such as:

  • General Journal

  • General Ledger

  • Cash Receipt Journal

  • Cash Disbursement Journal

  • Sales Journal

  • Purchase Journal

See the sample image below of a Cash Receipt Journal:

2. Hardbound all the loose-leaf journals and ledgers

Have all the printed journals and ledgers hard bounded with proper covers such as:

  • Company Name

  • Name of the Book

  • Period Covered

3. Prepare the complete requirements for successful submission

The requirements are as follows:

a. Filled-Up BIR Form 1905

Fill out items 1 to 4, item 6 and item 10. Then sign item 12.

See sample image below:

b. Notarized Sworn statement with volume and pages

See the sample image below:

c. Copy of Latest filed and paid BIR Form 0605 Annual Registration Fee

For sample BIR Form 0605 visit this article, click here.

d. Copy of BIR Form 2303 Certificate of Registration

See the sample image below:

e. Copy of the previous year's submitted loose-leaf books

Photocopy of the first page with BIR stamped received.

See the sample image below:

f. Notarized Special Power of Attorney or Secretary Certificate for authorized representatives

If someone else will submit your loose leaf books to the BIR, prepare a notarized Special Power of Attorney (if Sole Proprietor) or Secretary Certificate (if Corporation) for the authorized representative.

See sample image below:

g. Hard-Bounded Books of Accounts of the Current Year

Refer to step 2, for example.

4. Submit complete requirements to the BIR RDO

Submit the hard-bound loose-leaf books and all other requirements to the BIR RDO where the business has registered. The deadline of submission is on or before January 15 of the next calendar year.

For example, Loose-leaf Books for Calendar Year January 1, 2021 to December 31, 2021 are due for submission on or before January 15, 2022. If the deadline falls on a weekend or holiday, the deadline will be moved to the next working day. In this example, since January 15, 2022 is Saturday, the deadline is moved to the next working day which is January 17, 2022.

5. Properly Safe Keep the Loose Leaf Books

Keep and store the registered Loose Leaf Books, including all other attachments received by the BIR RDO, at the registered address of the taxpayer.

Benefits and Disadvantages of Loose Leaf Books

Loose leaf books of accounts have its benefit. First, you do not need to handwrite your transaction in a manual book. Second, you can do record-keeping electronically using Microsoft Excel or in software. Lastly, you just print and book-bind the loose-leaf book at the end of the year.

However, on the other hand, there are also disadvantages to using Loose leaf books. First, there is an additional cost to print and book-bind the loose-leaf books. Second, you need to submit the loose-leaf books annually to the BIR RDO on or before January 15 of the following calendar year. Lastly, there is a stiff timeline to finalize your records and do all the other requirements before the BIR deadline for submission.

I hope this article has been helpful for you in complying with the BIR requirement of annual submission of loose leaf books of accounts, or at least understand how to comply with this requirement should you choose to do loose leaf books in the future.

Feel free to leave your thoughts, suggestions, or questions in the comment box below. If you liked this article, please share it with someone you know who can benefit from it. Thank you!

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Written by: Jac Cantos, 2023, Upcloud Accounting

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