Loose-Leaf Books of Account
In this article, we dive deep into the reasons why a company should register for Loose-Leaf Books of
Accounts. We also explain how to apply for a Permit To Use, or a PTU, as well as outlining the various
compliance requirements that arise once a company has registered for Loose-Leaf Books.
Types of Books of Accounts in the Philippines
Manual Books of Accounts: The company uses BIR approved/stamped hard-copy ledgers and
journals. This requires accounting transactions to be encoded entirely by hand by the company’s
bookkeeper.
Loose-Leaf Books of Accounts: See below for a detailed description.
Computerized Accounting System (CAS): This is where the books/accounts are generated by a
computer system. Transactions are recorded, reports are generated and receipts/invoices are
issued using a digital or computerized accounting system. However, the actual computerized
accounting system must first be reviewed and approved by the BIR (after in-depth examination)
before it can be used (although, the CAS is undergoing certain changes to make the registration
process more efficient in light of Covid-19 and the greater emphasis on digital solutions).
What Is Loose-Leaf Books of Account?
Loose-Leaf Books of Accounts are one of three BIR-approved systems for maintaining a company’s
accounting books. It is a type of hybrid system for maintaining accounting books which lies between the
Manual Books and the CAS (see above).
What does that mean? It means that Loose-Leaf Books of Accounts must be maintained via a process
that combines digital systems and manual submissions – a mix of both!
Business transactions can be recorded and encoded using a digital or computer based accounting
system during the financial year. Then, at the end of every year, the company must print out the ledgers
and books from the accounting system based on BIR approved format, have them bound together and
submit the bound books physically to the BIR.
According to the BIR, Loose-Leaf Books of Accounts are still technically a “manual” form of maintaining
company books in the Philippines.
Accounting Systems for Loose-Leaf Books of Accounts
So what kind of accounting systems can be leveraged by a company registered for Loose-Leaf Books of
Accounts?
In short, while there is no mandatory requirement to register the specific accounting system with the
BIR, it should be an accounting system that has the functions and facilities to record and track
bookkeeping transactions and importantly, can be set-up and aligned with the local Philippine tax and
compliance framework.
Finally and as mentioned briefly above, in contrast to the CAS Books of Accounts, for Loose-Leaf Books
of Accounts, the specific accounting solution does not have to be examined by or registered with the BIR
(although the format and templates for the printed books do have to be registered). This a big
advantage of Loose-Leaf Books as the BIR approval system for accounting solutions can be quite
extensive.
Permit To Use Loose-Leaf Books – The PTU
In order to be able to use Loose-Leaf Books of Account, a business must first apply to their local BIR
Revenue District Office, or RDO, for permission. The permission, if approved, comes in the form of a
Permit to Use Loose-Leaf Books.
The application for the Permit To Use Loose-Leaf Books of Accounts will require, at a minimum, the
following documents:
1. BIR Form1900 (in duplicate original)
2. Sample format and print-out template which the company intends to use.
3. Sworn Statement of the company specifying the type of books that will be used and submitted.
4. Sworn Statement of the company confirming their intention and commitment to file the
required books with the BIR within 15 days after the end of each taxable year or upon
termination of its use.
5. If the filing is being submitted by an Authorized Representative of the company, a Board
Resolution nominating the representative to file must be submitted. This could also be in the
form of a Secretary’s Certificate. This should also be accompanied by a Government ID of the
Authorized Representative.
6. Payment or confirmation of payment of the company 0605 Annual Registration Fee (PHP500).
Annual BIR Compliance Requirements
Where a company has applied to the BIR to use Loose-Leaf Books of Account and where they have
received their Permit to Use, the company must adhere to specific annual compliance requirements.
Companies are required to print out their books/accounts from the accounting system using the BIR
approved format, bind them and then submit them to the BIR within 15 days of the end of the taxable
year. For most Philippine companies with taxable year ending December 31 and are registered for
Loose-Leaf Books, requirements for submission is no later than 15 January, 2023!
Under the Loose-Leaf Registration, the following are the specific books that are required to be printed
out, bound and filed with the BIR each year:
1. General Journal
2. General Ledger
3. Sales Book
4. Purchase Book
5. Cash Disbursement Book
6. Cash Receipt Book
While the requirements for submission can sometimes change across Municipalities and RDOs, there are
a few additional general requirements that must be submitted at the time of filing including:
1. The Company’s Permit To Use Loose-Leaf
2. A Certificate under Oath from the Company confirming the accuracy of the information included
in the submitted Loose-Leaf Books and confirming the name and type of each of the books being
submitted as well as the number of pages in each book.
3. BIR form 2303 (Certificate of Registration)
4. BIR form 0605 for the current year’s annual registration fee
5. Copies of approved formats of journals and ledgers
