Most SMEs use Manual Books of Account for filing purposes, because among the three BIR-approved formats for books of account, it is the easiest to register.
On the other hand, large corporations usually use the Computerized Books of Account because they deal with a much larger staff, along with more complicated tax requirements. They also have the luxury of having an entire department handle all tax-related paperwork, so they typically rely on pre-configured and duly BIR registered computer programs such as Quickbooks or SAP for an easy, accurate, and fast processing.
Now that many small businesses are aware that another bookkeeping method, which is the Loose Leaf Books of Account can be used, is actually a method that’s very similar to the Manual Books of Account.
Here’s what you need to know about using the Loose Leaf Account Booking method.
- The Loose Leaf method is basically a computerized version of the Manual Book of Accounts.
The only difference between a manual booking and a loose leaf booking is the method of entering figures. With loose leaf, instead of submitting handwritten ledgers or manually written records and entries, the data is typed into a computer and printed out—typically with the use of simple systems like Microsoft Excel.
- You need to use BIR Form 1900 for Loose Leaf Booking.
BIR Form 1900 is the called the “Application for Authority to Use Computerized Accounting System or Components thereof/ Loose-Leaf Books of Accounts.”
This form must be filled out and submitted together with the print outs of the typed-in records (usually in Excel format) when using the Loose Leaf method of Booking.
- Loose Leaf method must be book bound and submitted for stamping.
Sample printouts are required to be book bound and submitted to the BIR for stamping.
In most cases, you’ll need to justify why you utilized the loose leaf method instead of the manual or computerized booking during registration.
- Computerized Books of Account is not the same as Loose-leaf Books of Account.
Most people get confused with these two methods.
In some cases, even the BIR staff you’ll deal with might give you additional requirements such as hiring an examiner to validate your computer system, even if you’re only using a simple Excel format.
As stated earlier, Loose-leaf books are manual books of accounts where entries are typed in a computer and printed out for filing. Computerized Booking, however, would require you to have the supplier of the system to be BIR accredited along with a DBS examiner to validate the computer system.
As such, the loose-leaf method should not require additional validation to be accepted. BIR form 1900 should accompany your printouts and other documents during registration.
- You can use the Loose Leaf method along with the manual method.
If you use the manual method with loose leaf booking, there’s no need to manually write down any updates of records on your book of accounts.
With an Excel template, you can submit the file as a transmittal for the hard copy and have the manual books stamped when you register.
Having to deal with all the requirements during the tax season can get confusing and eat up a lot of your time and energy.
If you don’t have in-house resources nor the inclination to do your own BIR tax paperwork, consider hiring experts to do it for you. There are bookkeeping services that can be outsourced, which you can hire at reasonable rates as well. Doing such can enable you to devote more of your expertise on what you do best.