Learn more about Accounting in Philippines

Accounting for companies in the Philippines refers to the process of recording, classifying, and summarizing financial transactions of a business entity in compliance with local regulations and standards. It includes the preparation of financial statements, tax compliance, and other financial reports required by the government and other stakeholders. Accounting is essential for businesses in the Philippines as it enables them to track their financial performance, make informed decisions, and comply with legal requirements. Themis Partner can simplify the management of your company’s accounting by offering the services of expert partner accountants who are knowledgeable about current legislation. In addition, essential legal documents are available for your convenience. By entrusting your accounting tasks to professionals, including financial statements, tax filing, and management reports, you can focus on running your business with peace of mind.

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What is an Accountant?

An accountant in the Philippines is a professional who provides accounting and financial services to individuals, businesses, and organizations. Accountants in the Philippines are trained to manage financial records, prepare financial statements, provide tax advice, and assist in compliance with legal requirements. They may work in various industries, including government, private companies, accounting firms, and non-profit organizations. Accountants in the Philippines are also required to be licensed by the Board of Accountancy and must pass the Certified Public Accountant (CPA) examination to practice their profession.

What are the mandatory documents to use for your activities?

In the Philippines, the accounting documents that companies are required to use for their activities may include:

1. Journal – a record of all financial transactions in chronological order.

2. Ledger – a summary of all transactions by account.

3. Cash disbursement journal – a record of all cash payments made by the company.

4. Cash receipts journal – a record of all cash receipts received by the company.

5. General journal – a record of adjusting entries and other non-routine transactions.

6. Sales journal – a record of all credit sales made by the company.

7. Purchase journal – a record of all credit purchases made by the company.

8. Inventory ledger – a record of all inventory transactions, including purchases, sales, and adjustments.

9. Fixed assets ledger – a record of all fixed assets owned by the company.

10. Payroll register – a record of all employee salaries and wages.

These accounting documents are essential for companies to accurately record their financial transactions, monitor their financial performance, and comply with legal requirements.

What are the accounting regulations in the Philippines?

In the Philippines, the accounting regulations that companies are required to follow include:


1. Philippine Financial Reporting Standards (PFRS) :

The local version of International Financial Reporting Standards (IFRS) that prescribes the accounting standards to be followed in preparing financial statements.

2. Generally Accepted Accounting Principles (GAAP) :

The set of accounting principles, standards, and procedures that companies should follow in preparing their financial statements.

3. Philippine Accounting Standards (PAS) :

A set of standards that provides guidance on specific accounting topics such as revenue recognition, leases, and financial instruments.

4. Tax laws and regulations :

Companies in the Philippines are required to comply with tax laws and regulations, including the submission of regular tax returns and payment of taxes.

5. Securities and Exchange Commission (SEC) rules and regulations :

Companies listed on the Philippine Stock Exchange are required to comply with SEC rules and regulations, including the submission of periodic financial reports.

These accounting regulations are designed to ensure that companies in the Philippines maintain accurate financial records, provide reliable financial information to stakeholders, and comply with legal and regulatory requirements.

What is the difference between bookkeeping and accounting?

Bookkeeping and accounting are two closely related functions that are essential for managing a company’s finances.

Bookkeeping involves the recording of financial transactions, such as purchases, sales, and payments, in a systematic and accurate manner. The bookkeeper is responsible for maintaining the company’s financial records, including ledgers and journals, and ensuring that they are up-to-date and accurate.

Accounting, on the other hand, involves the interpretation and analysis of financial data, with the aim of providing insights into the company’s financial performance and making informed decisions.

The accountant is responsible for preparing financial statements, analyzing financial data, and providing advice on financial matters. While bookkeeping focuses on the accurate recording of financial transactions, accounting goes beyond this to provide insights into the company’s financial performance and inform decision-making.

What is the role of PFRS in the Philippines?

The role of Philippine Financial Reporting Standards (PFRS) in the Philippines is to provide a set of accounting standards that companies must follow when preparing their financial statements.

PFRS is the local version of International Financial Reporting Standards (IFRS), which are globally recognized accounting standards. The adoption of PFRS ensures that financial statements are prepared in a standardized manner, making them more comparable and transparent. PFRS also ensures that financial statements accurately reflect the company’s financial position, performance, and cash flows, providing stakeholders with reliable information to make informed decisions.

PFRS is updated regularly to keep up with changes in the accounting and financial reporting landscape, ensuring that companies in the Philippines are using the latest accounting standards in their financial reporting.

What are the taxation rules for companies in the Philippines?

➤ Corporate Income Tax - companies are required to pay a corporate income tax on their taxable income, which is currently set at a flat rate of 30%.
➤ Value-Added Tax (VAT) - companies engaged in the sale of goods or services are required to register for VAT and collect and remit VAT on their sales. The VAT rate is currently set at 12%.
➤ Withholding Tax - companies are required to withhold taxes from payments made to employees, suppliers, and other entities. The withholding tax rates vary depending on the type of payment.
➤ Documentary Stamp Tax - certain documents, such as contracts and agreements, are subject to documentary stamp tax, which is calculated based on the value of the transaction.
➤ Local Business Tax - companies operating in certain cities and municipalities are required to pay a local business tax, which is calculated based on the company's gross receipts or assets.
➤ Other taxes - companies may also be subject to other taxes, such as excise tax, property tax, and customs duties, depending on their business activities.

It is important for companies in the Philippines to comply with these taxation rules, as failure to do so can result in penalties, fines, and legal consequences. Companies may also need to file regular tax returns and maintain accurate financial records to ensure compliance with taxation rules.

How much does it cost to hire an accoutant in the Philipppines?

The cost of hiring an accountant in the Philippines can vary depending on several factors, such as the size of the company, the complexity of the accounting needs, and the experience and qualifications of the accountant.

In general, the hourly rate for a junior accountant in the Philippines can range from around PHP 250 to PHP 500 (approximately USD 5 to USD 10). For a more experienced accountant, the hourly rate can range from around PHP 800 to PHP 1,500 (approximately USD 16 to USD 30).

Alternatively, some accounting firms offer fixed-price packages for specific accounting services, such as preparing financial statements or filing tax returns. These packages can range from a few thousand pesos to tens of thousands of pesos, depending on the scope of the service.

It is important to note that while hiring an accountant can incur additional costs for a company, it can also provide valuable benefits, such as ensuring compliance with accounting regulations, providing accurate financial reporting, and making informed financial decisions.

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