Registration of Simplified Set of Bookkeeping Records for Professionals

January 21, 1972 REVENUE MEMORANDUM CIRCULAR NO. 09-72 SUBJECT : Registration of Simplified Set of Bookkeeping Records for Professionals TO : All Internal Revenue Officers and Others Concerned The use of the Simplified Set of Bookkeeping Records prepared by Mr. Clemente Uson, C.P.A. and Atty. Gerardo F. Santos, has been authorized by the Secretary of Finance, having been found to conform with the requirements of Revenue Regulation No. V-1 as amended by Revenue Regulation No. V-43. The said simplified set of bookkeeping records for professionals may, therefore, be accepted for registration and used for record purposes, under Section 334 of the Internal Revenue Code, as amended. ENFORCEMENT All concerned are enjoined to be guided accordingly. cdt MISAEL P. VERA Commissioner of Internal Revenue ANNEX SIMPLIFIED SET OF BOOKKEEPING RECORDS FOR PROFESSIONALS _________________________ Name of Taxpayer _________________________ Profession or Business _________________________ Business Address _________________________ Citizenship ACR/LC No. ___ Date ___ 19 ___ Res. Cert. Nos. A - ______; B - ______ P.T.R. No. ___ issued at ________ Date of issue ______ 197_; ______197_ __________ on __________ 197_ Place of issue __________; __________ (Prepared and Designed by: CLEMENTE USON, C.P.A.) & GERARDO F. SANTOS LL.B. BUREAU OF INTERNAL REVENUE (Office of the Regional Director) _____________________________________________________ (To be accomplished by the owner as per Sect. 19 of Rev. Reg. No. V-1) Taxpayer Business Name Business Address Citizenship ACR/LC No. ____ Date Iss. _____ Kind of Business Int. Rev. P.T.R. Date Iss. of P.T.R. Kind of Book Vol. No. of this Bk. to be Reg. Vol. No. of preceding Bk. ____ Date ____ This SIMPLIFIED BOOKKEEPING RECORD, Volume ______ with 16 sheets is approved on this _______ day of _______ 197 ____, for purposes of Regulations No. V-1 Volume No. ______ of this SIMPLIFIED BOOKKEEPING RECORDS was approved on the ______ day of ____, 197 ____ ________________________ Internal Revenue Officer (SPACE BELOW IS FOR CERTIFICATE OF EXAMINATION BY REVENUE EXAMINER) NOTES 1. Renewal of the annual privilege tax receipt (P.T.R.) without penalty is due and payable on or before the 20th day of January of each year. 2. Monthly payment of percentage taxes for any month without penalty is due on or before the 20th day of the succeeding month. 3. The deadline for filing income tax return for any year without penalty is April 15 of the following year. 4. Persons who are required to keep bookkeeping records shall comply with all the requirements regarding preparation, issuance, use, keeping, presentation and preparation of invoices, receipts, vouchers, etc. as prescribed by Revenue Regulations No. V-1. INSTRUCTIONS I. GENERAL 1. This simplified set of bookkeeping records is intended for practicing professionals. It may also be used to advantage by individuals who although not engaged in any trading business, have to file income tax returns. The set is designed for recording transactions on the cash basis method of accounting. Transactions that do not involve either cash received or cash paid are not for entry in this record. 2. Revenue regulations require of the taxpayer evidence or proof of his transactions for purposes of assessment of taxes due from him. Hence, it is important that the entries in this record are supported by proper evidence of the transactions. 3. For the transactions to be recorded in this set, two cash forms shall be used, namely, (1) the official receipt for cash received; and (2) the cash voucher for cash paid out. A supply of both forms can be purchased from stationery stores that carry them in open stock, unless the taxpayer desires to have his own forms specially printed for him. 4. If purchased, the official receipt form which is in duplicate and usually in booklets of 50 numbers to a stub should be pre-numbered consecutively from 1 up by the taxpayer himself. It should also be stamped with his name by means of a rubber stamp expressly made for the purpose. All blank booklets of the receipt to be used should be registered with any BIR office, together with this set. As a receipt is issued or used, the duplicate thereof should be retained in the stub, as basis of entry in the Record of Daily Cash Receipts. All stubs of used receipts should be preserved in pursuance of revenue regulations. 5. The cash voucher form, after accomplished, is the evidence of cash disbursement for entry in the Record of Daily Cash Disbursements. Only one copy of the voucher need be prepared for each payment. Cash vouchers should be numbered, as prepared, from 1 up. After the vouchers are entered, they should be filed in numerical order, and preserved like the official receipt, to be readily available to revenue examiners. II. RECORD OF DAILY CASH RECEIPTS (Form 1) 1. This record is for entry of all official receipts issued for cash received. 2. The amount of each receipt is entered under two money columns: first, under column 4 (amount received); then again under any columns 5, 6 and 8, depending on the source of the cash. If entered under column 8, the source of the cash should also be indicated under column 7, by an appropriate word heading like "dividends" or "rents". 3. The total of columns 5, 6 and 8 should always be equal to the total of column 4. 4. If the user of this set is not a practicing professional, the heading of column 5 (professional fees) should be substituted by another heading that denotes a source of income of the user, which occurs with relative frequency, like "rents" for one who owns buildings for rent, or "dividends" for another who has many investments in securities or corporation stock. 5. At the end of each month, all money columns shall each be totalled. All totals, separately for each column, shall be written on the same horizontal line immediately below that where the last receipt number was entered. The totals are then ruled off. Ruling off means that two parallel lines about half a millimeter apart are drawn underneath the figures representing the totals. 6. The summary for each month is then entered in the Monthly Summary of Transactions (Form 3). Before entering in Form 3, the total of column 8 should be broken down by recapitulating the items making up this total. 7. After ruling off the totals for each month, cash receipts transactions for the following month are entered in the same manner as before. Before making the first entry for any month except January, one or two lines immediately below the totals of the next preceding month may be left in blank, to separate the transactions of each month from those of every other month. III. RECORD OF DAILY DISBURSEMENTS (Form 2) 1. This record is for entry of all cash vouchers evidencing cash paid out. 2. The amount paid out is entered under two money columns: first, under column 4 (amount paid); then, again, under any of columns 5, 6 and 8, depending on what the payment is for. If entered under column 8, the item for which payment is made should be indicated under column 7 by an appropriate title, like "taxes" or "equipment". 3. The total of columns 5, 6 and 8 should always be equal to the total of column 4. 4. At the end of each month, each money column shall be totalled. Thereafter, the same procedure shall be followed as in the Record of Daily Cash Receipts (Form 1). 5. The summary for each month is then entered in the Monthly Summary of Transactions (Form 3). Before entering in Form 3, the total of column 8 should be broken down by recapitulating the items making up this total in the same manner as is done with total of column 8 of Form 1. 6. After ruling off the totals of the money columns for each month, disbursements for the next following month are entered in the same manner as before. Before making the first entry for any month except January, one or two lines immediately below the totals of the next preceding month may be left in blank to set apart the disbursements of each month from those of every other month. IV. MONTHLY SUMMARY OF CASH RECEIPTS AND DISBURSEMENTS (Form 3) 1. The monthly summary of each of receipts (Form 1) and disbursements (Form 2) shall be entered in this record in the manner already explained in the preceding paragraphs. 2. At the end of the year, all money columns shall be totalled. The total of columns 2 thru 7 added together should be equal to the total of column 1. Likewise, the totals of columns 9 thru 14 should be equal to the total of column 8. 3. The resulting totals of the various columns are the figures for preparing the Statement of Cash Receipts and Disbursements (Form 4). Form 4 in turn furnishes the data for the preparation of the annual financial statements the Statement of Net Worth (Form 5-A), and the Statement of Income and Expense (Form 5-B). These are the statement needed for accomplishing the income tax return of the taxpayer. Form 1 RECORD OF DAILY CASH RECEIPTS Form 2 RECORD OF DAILY DISBURSEMENTS Form 3 MONTHLY SUMMARY OF CREDITS AND DISBURSEMENTS FOR YEAR 197___ Form 4 STATEMENT OF CASH CREDITS AND DISBURSEMENTS For Year 197 ___ (Data to be taken from Form 3) 1. Cash on hand at beginning of year* P ____ Add: Receipts during the year: 2. Professional fees P ____ 3. Income from rents ____ 4. Cash dividends received ____ 5. Interest earned ____ 6. Income from farming ____ 7. Other incomes ____ 8. Cash proceeds from borrowings (loans) ____ 9. Cash from other sources ____ 10. ____ 11. Total cash received during year ____ 12. Total of cash at beginning and receipts for year P ____ Deduct: Cash paid out during the year: 13. Office expenses P ____ 14. Taxes ____ 15. Interest paid ____ 16. Repairs ____ 17. Miscellaneous expenses ____ 18. Purchase of stock and/or bonds ____ 19. Purchase of equipment # ____ 20. Loans repaid (borrowings) ____ 21. Other disbursements ____ 22. ____ 23. Total cash paid out during the year P ____ 24. Cash balance: On hand at end of year* P ____ ======= * For cash at beginning, take balance of cash at end of preceding year. (Note: Cash on hand at beginning and at end of year includes cash on deposit in banks.) # For professionals, equipment includes library books, if any. Form 5-A STATEMENT OF NET WORTH As at Dec. 31, 197 ____ 1. Cash on hand* P ____ 2. Investments (stocks and bonds) ____ 3. Equipment less depreciation# ____ 4. Buildings less depreciation ____ 5. Land ____ 6. Other assets ____ 7. Total assets P ______ Deduct: Outstanding Obligations: 8. Loans unpaid P ____ 9. Other debts outstanding ____ 10. Total Obligations ______ 11. NET WORTH P ______ ======= * For amount of cash on hand, take Item 24 in Form 4 # For professionals, equipment includes library books. Form 5-B STATEMENT OF INCOME AND EXPENSE For Year Ended Dec. 31, 197 ___ (Data to be taken from Form 4) INCOME: 1. Professional fees P _____ 2. Income from rents _____ 3. Cash dividends received _____ 4. Interest earned _____ 5. Income from farming _____ 6. Other incomes _____ 7. Total gross income for year P ______ Deduct: Expense and Loss: 8. Office expenses P _____ 9. Taxes _____ 10. Interest paid _____ 11. Repairs _____ 12. Miscellaneous expenses _____ 13. Other expenses and losses _____ 14. Estimated depreciation _____ 15. Total deductions ______ 16. Net Income for the year P ______ ======= ANNEX A 1st Indorsement November 24, 1971 Respectfully forwarded to the Commissioner of Internal Revenue, thru the Revenue Operations Head (Assessment), Bureau of Internal Revenue, Manila, the attached report of investigation of the request of Atty. Gerardo F. Santos for permission to print SIMPLIFIED SET OF BOOKKEEPING RECORDS FOR PROFESSIONALS. Considering that the proposed simplified set conforms to the requirements of Revenue Regulations No. V-43 and V-45, it is recommended that the request be given favorable consideration. MAURO G. CALAGUIO Acting Revenue Regional Director ANNEX B 2nd Indorsement December 20, 1971 Respectfully forwarded to the Honorable, the Secretary of Finance, the papers bearing on the application of Atty. Gerardo F. Santos to print Simplified Set of Bookkeeping Records for Professionals, inviting attention to the preceding indorsement and memorandum dated November 4, 1971 of Revenue Examiner Jose Macaraeg. MISAEL P. VERA Commissioner of Internal Revenue ANNEX C 3rd Indorsement January 3, 1972 Respectfully returned to the Commissioner of Internal Revenue, Manila. It appearing from the sample submitted that the Simplified Set of Bookkeeping Records For Professionals, prepared by Mr. Clemente Uson, CPA, and Atty. Gerardo F. Santos is in accordance with the requirements of the Bookkeeping Regulation No. V-1, as amended by Regulation No. V-43, its use for bookkeeping record purposes, under Section 334 of the National Internal Revenue Code, as amended, is hereby approved. CESAR VIRATA Secretary Copy furnished: Atty. Gerardo F. Santos 1667 Claro M. Recto Ave., Manila ANNEX D November 4, 1971 MEMORANDUM FOR: The Revenue District Officer Revenue District No. 34 R-7, North Manila This refers to the investigation of the request of Atty. Gerardo F. Santos for permission to print Simplified Set of Bookkeeping Records for professionals. Investigation disclosed that the attached pro-forma draft of the simplified bookkeeping records has the following features: 1. The proposed simplified bookkeeping record is for the exclusive use of professionals and others who use the case basis of tax accounting. It has been observed that professionals whose gross receipts do not exceed the amount realized by those who are required to use the simplified set of bookkeeping records do not employ the accrual method of accounting. Since most of these taxpayers (professionals and others engaged in taxable occupations) do not employ bookkeepers, they rarely use the accrual method, which requires the application of the double-entry system of accounting; the cash method is the most convenient accounting method available to them for clearly reflecting their taxable income as required under Section 38 of the Tax Code. 2. The columns under "Record of Daily Cash Receipts" and "Record of Daily Disbursements" are self-explanatory which is easily understood by a taxpayer who is not well-versed in bookkeeping or accounting. The absence of a column for earned income which is not actually received (accounts receivable) and for expenses not actually paid (accounts payable and accrual expenses) avoid confusion in recording income and expenses derived from occupation or professional services. A substantial number of professionals and others whose gross receipts are not derived from sales, purchases or manufacturing, but from sales of professional and other services, maintain their accounting records on the cash basis. It has been observed that most taxpayers deriving income from small non-merchandising businesses cannot afford the employment of bookkeepers. Some are compelled to employ bookkeepers because they don't even know how to use the simplified sets now available in the market because these sets incorporate the accrual feature of accounting. 3. A monthly summary of receipts and disbursements shown on page 30 is likewise simplified and can be accomplished without the aid of a bookkeeper. The simplified set was designed by Mr. Clemente Uson, C.P.A., who was the former president of the Far Eastern University and is the author of pioneer accounting textbooks in the Philippines. The proposed set may be considered as having been designed with expertise in record keeping and accounting. It is, therefore, recommended that the proposed simplified set of bookkeeping records for professionals, which was found to meet the requirements of Revenue Regulations Nos. V-43 and V-45, be approved for printing. Respectfully submitted: JOSE MACARAEG Revenue Examiner - Code No . ___ ANNEX E September 22, 1971 MEMORANDUM FOR: The Revenue District Officer Revenue District No. 34 R-7, North Manila There is referred to you herewith a letter dated September 17, 1971 of Atty. Gerardo F. Santos, together with a draft of SIMPLIFIED SET OF BOOKKEEPING RECORDS FOR PROFESSIONALS prepared and designed by Clemente Uson, CPA, and Atty. Santos, for immediate verification as to whether or not the proposed simplified set complies with the requirements of Revenue Regulations No. V-43. Prompt report hereon is desired. FOR THE REGIONAL DIRECTOR: VICTOR A. DEOFERIO, JR. Assistant Chief, Assessment Branch ANNEX F September 17, 1971 The Honorable Commissioner Misael P. Vera Bureau of Internal Revenue Sir: Sometime in September 26, 1968, I filed a written request for the approval of a Simplified Bookkeeping Records for PROFESSIONALS, which I prepared for use of brother professionals, and the issuance of a Circular to all BIR agents and Regional officers to register and accept said pamphlet as official bookkeeping record. However, when I followed up my request with the office of Deputy Commissioner Conrado Diaz where it was first submitted, a lady secretary in said office informed me that my letter together with the sample copy were missing and could not be located. I got disappointed and discouraged so I forgot all about it. Recently, Mr. Clemente Uson, a CPA and former President of the Far Eastern University, revised and improved my original copy of the said Simplified Set of Bookkeeping Records for PROFESSIONALS, hence, I am again reiterating my request for its approval and acceptance as official Bookkeeping Record. I am attaching herewith a sample copy of the Improved Simplified Set of Bookkeeping Records to substitute the original submitted and a xerox copy of my request filed in September 26, 1968. Trusting that this request will merit your kind and early consideration, I remain. Very truly yours, ATTY. GERARDO F. SANTOS ANNEX G September 23, 1968 The Commissioner Bureau of Internal Revenue Manila Sir: In my desire to fill the needs of brother-professionals for a simplified bookkeeping record, I devised and prepared a pamphlet complete with instructions specially for their purpose, a sample of which is enclosed herewith. This record book, I believe, will not only encourage members of the different professions to record their daily transactions but will also facilitate the examination of the income of said individual professional by the Bureau of Internal Revenue. Realizing that many professionals are but willing to comply with the requirement for the recording of their income and expenses, it is possible that because of lack of the necessary know-how with the bookkeeping methods or system, they still have to employ a trained bookkeeper to prepare it for them but which will incur an additional expense, so they just ignore and forget the requirement. However, with this Simplified Bookkeeping Record for Professionals, they personally enter every transaction by merely following the instructions therein, so that a complete and systematic record of their daily income and disbursement is thereby accomplished. Since a prior registration with the BIR is necessary, all entries therein will be official and a complete record of the professional is supplied the BIR for the exact determination of his income tax. I respectfully request therefore that an endorsement of this Simplified Bookkeeping Record for Professionals be made by your office and a circular or memorandum be issued to all Internal Revenue Officers and others concerned to accept his bookkeeping records for registration. Very truly yours, LAWYER'S SUPPLY & SERVICE, INC. By: ATTY. GERARDO F. SANTOS Vice President & General Manager