BIR Audited Financial Statements, when mandatory?

---

By this post, let us answer the question of SMEs on whether or not financial statements to be attached to their annual income tax returns (ITR) in Philippines are mandated to be audited by an independent Certified Public Accountant. Section 232 of the Tax Code, as amended provides, and hereunder quoted: “Section 232. Keeping of Books of Accounts. – (A) Corporations, Companies, Partnerships or Persons Required to Keep Books of Accounts. – All Corporations, Companies, Partnerships or persons required by law to pay internal revenue taxes shall keep a journal and a ledger or their equivalents: Provided, however, That those whose quarterly sales, earnings, receipts, or output do not exceed Fifty thousand pesos (P50,000) shall keep and use simplified set of bookkeeping records duly authorized by the Secretary of Finance where in all transactions and results of operations are shown and from which all taxes due the Government may readily

Read More

Bookkeeper and Auditor, Understanding their Works

---

For small & medium entrepreneurs, this has long been a misconception. For most, this works as “two birds for one stone” because for them, having a bookkeeper is likewise having an auditor. This is not how it is and we wish to share the distinctions below for guidance and better appreciation. To start with, bookkeeping is different from auditing. Bookkeeping deals with maintaining the records of the day to day transactions on the books of accounts of the taxpayer. In practice, it includes preparation of monthly and quarterly BIR reports (withholding returns, VAT or OPT returns, and income tax returns). On the other hand, auditing is the periodic examination on the work of the bookkeeper or company prepared financial statements lifted from the books of accounts to express an opinion on whether or not such records were maintained in accordance with existing accounting rules, the generally accepted accounting principles. Auditor

Read More

May 2012 New CPAs, Congratulations!

---

Congratulations to the 1,995 New CPAs out of the 5,315 takers! The Professional Regulations Commission (PRC) has just released today the results (one-day processing) of the May 2012 Certified Public Accountant (CPA) Board Examinations held last May 13-14 and 20-21 at Metro Manila, Baguio, Cagayan De Oro, Cebu, Davao, Iloilo, and Legaspi. Hereunder are the Top Ten (10) successful examinees: Rank 1 – Manuel Pillora Buensuceso Jr of San Beda College – 94.86%; Rank 2 – Kathrine Rose Co Catinding of UST – 94,43%; Rank 3 – Grace Menor Albunian of TIP- Manila – 93% Rank 4 – Gianna Tan Chua of USC – 92.57% – Monique Kris Florante Villaflor – 92.57% Rank 5 – Richard Lei Paciencia Canete of EVSU, Tacloban – 92.43% –  Bonvin Go Nuqui of DLSU Manila – 92.43% Rank 6 – Benson Pabiona Kotah of Ciang Kai Shek College – 92.14% – Rowell Canda Marasigan

Read More

Sample Headaches with Outdated Bookkeepers

---

For entrepreneurs, time is of the essence and while they may agree that they can do the accounting and bookkeeping by themselves after an education on basic business accounting and BIR compliance, paying for a bookkeeper or accountant is sometimes more practical. First, entrepreneur can concentrate more on operational aspect of the business. Second, the books of accounts and related compliance with applicable government rules and regulations could be more efficiently handled because the bookkeeper or the accountant is more knowledgeable on them. It is so saddening to say that based on the experiences of some small & medium entrepreneurs, not all bookkeepers and accountants are competent enough to properly handle the bookkeeping and proper compliance in keeping with the existing rules and regulations of the government agencies.  This is without prejudice to the accounting profession because this may not apply to all, but it appears that some have their

Read More

Tax savings under Optional Standard Deduction (OSD)

---

For taxpayers engaged in trade, business, or practice of profession, optional standard deduction (OSD) is a good are to look at for tax savings.  Under Section 34(L) of the Tax Code, as amended by Republic Act No. 9504 dated June 17, 2008, and hereunder quoted: “Section 34(L) Optional Standard Deduction. – In lieu of the deductions allowed under the preceding Subsections, an individual subject to tax under Section 24, other than nonresident alien, may elect a standard deduction in an amount not exceeding forty percent (40%) of his gross sales or gross receipts, as the case maybe. In the case of a corporation subject to tax under Sections 27(A) and 28(A)(1), it may elect a standard deduction in an amount not exceeding forty percent (40%) of its gross income as defined in Section 32 of this Code. Unless the taxpayer signifies in his return his intention to elect the optional

Read More

Tax-exempt COLA increased by P30

---

Good news for NCR workers! Under the Department of Labor & Employment (DOLE)- NCR’s Wage Order No. 17, minimum wage is increase by P30 cost of living allowance (COLA) as follows: First tranche – P20 per day upon the effectivity of Wage Order No. 17; and Second tranche – P10 per day effective on November 1, 2012. The new minimum wage rate under the Wage order No. 16 that took effect last 26 May 2011 of P426 for National Capital Region integrating the previous COLA of P22 will remain in force. Integrating the new COLA under the new Wage Order, the new minimum wage for non-agriculture sectors will now become P446.00 (P426+20) upon effectivity of the new Wage Order No. 17, and P456.00 (P446+P10) on November 1, 2012 or equivalent to P13,680.00 a month (P456.00 x 30 days). In effect, the minimum wage earners will now earn P600 more (P20

Read More

Views on Real Estate Mortgage for Microlending

---

A friend in the micro-lending industry once asked – “Is Real Estate Mortgage worth to look into for microlending?“ Let me share with you our view on the circumstances and benefits of Real Estate Mortgage (REM). REM is an accessory contract in the form of a collateral security for the  availment of the credit facility. As compared to a no collateral loan, REM may prove to be better as the lender would have some property to pursue upon default as compared to an empty hope in a non collateral situation. To be effective, a REM has to be in a legal document to be executed by the parties. Based on such document, it shall be annotated in the title of the real property (TCT or CCT) with the Registry of Deeds. The purpose of this is for the binding effect of the REM to third parties. Upon default, foreclosure proceedings

Read More

Tax-exempt uniform allowance increased

---

The Bureau of Internal Revenue (BIR) has issued Revenue Regulations No. 8-2012 – “Further amends Revenue Regulations 2-98 and 3-98, as last amended by Revenue Regulations 5-2008 and 5-2011, with Respect to de minimis benefits” or “RR No. 8-12“. Under RR 8-12, uniform allowance of P4,000 a year had been increased to P5,000 a year effective January 1, 2012. Being a deminis benefits, or provisions to employees of relatively small value for their general welfare, the same is exempted from withholding tax on compensation. To qualify for tax-exemptions, it is not required that the employer-taxpayer prescribes a particular company-wide uniform. What is required is that the employer-taxpayer actually provides such uniform allowance as a matter of policy. It could be given one-time of P5,000.00 anytime during the taxable year or at a uniform monthly rate  of P416.67 (P5,000 divided by 12 months). In effecting such de minimis benefits in BIR

Read More

BMBE Law eyed for amendments

---

The Barangay Micro Business Enterprise (BMBE) Law or Republic Act No. 9178 was enacted sometime in 2002 to encourage the growth and formation of barangay based micro-enterprises. This has long been effective, but based on our observations, only few enterprises registered and availed of the same. Under the Department Order No. 17-04 of the Department of Finance (DOF) providing guidelines, hereunder are the basic qualifications of the BMBE to qualify for income tax exemptions, exemption for minimum wage application, and other benefits: a. Barangay based which means (a) majority of its employees are residents of the municipality of principal office location, (b) principal activity consist in the application of a skill peculiar to the locality, or business operations confined to the LGU of principal office location. b. Micro-enterprise in nature and scope which requires that (a) its principal activity be primarily for livelihood, or determined by SMED or DTI as

Read More

PHILSME EXPO 2012 – May 11-13, 2012

---

Tax and Accounting Center, Inc. (TACI) in coordination with GPP & Co, CPAs (GPPCOCPAs)participated in the duly concluded PHILSME Expo 2012 organized by Tradecon along with its various exhibitors. The 3-day event from May 11-13, 2012 at PICC Forum, CCP Complex, Pasay City had been said to gather some 8,000 participants and visitors from around the Metro Manila.During the event, various exhibitors had participated ranging from franchising business, direct selling, networking, retailing, and financial services. TACI Resource Speaker, Mr. Garry S. Pagaspas, CPA, LLB was called up to share insights about BIR Compliance for SMEs on the first day of the event, while the Managing Partner of GPP & Co., CPAs, Mr. Floyd Paguio, CPA, is scheduled to share insights about SEC Compliance for SMEs on the third day. With the advent of strict implementation of the government authorities, our guest speakers shared their insights about the basic requirements of

Read More