Clarification on Keeping of Books of Accounts by Individual Taxpayers in the Exercise of Their Profession

June 18, 1991 BIR RULING NO. 109-91 232 109-91 S i r : This refers to your March 15, 1991 letter requesting for clarification as regards the keeping of books of accounts by individual taxpayers in the exercise of their profession, and who have availed of the 10% optional standard deduction under Section 29 (k) of the Tax Code, as amended. In reply, please be informed that pursuant to Section 232 (A) of the Tax Code, as amended, all persons required by law to pay internal revenue taxes shall, as a rule, keep a journal and a ledger, or their equivalents. Those whose quarterly earnings or receipts do not, however, exceed P5,000.00 shall keep and use a simplified set of bookkeeping records duly authorized by the Secretary of Finance wherein all transactions and results of operations are shown and from which all taxes due the government may readily and accurately be ascertained and determined any time of the year. Furthermore, those whose gross quarterly earnings/receipts exceed P25,000.00 shall have their books of accounts audited and examined yearly by independent certified public accountants and their income tax returns accompanied with certified balance sheets, profit and loss statements, schedules listing income-producing properties and the corresponding income therefrom and other relevant statements. Your attention is also invited to the fact that the regulations relative to the keeping of books of accounts are set forth in the Revenue Regulations on Bookkeeping. It follows, therefore, that you should comply with the said regulations. aisadc Very truly yours, (SGD.) JOSE U. ONG Commissioner