Philippine Business Glossary

Systematic numbering of accounts in the chart of accounts, typically: 1000s (Assets), 2000s (Liabilities), 3000s (Equity), 4000s (Revenue), 5000s-6000s (Expenses).

Money owed by a business to suppliers or vendors for goods or services received but not yet paid for. Classified as a current liability on the balance sheet.

Money owed to a business by customers for goods or services delivered but not yet paid for. Classified as a current asset on the balance sheet.

Alphabetical listing of employees and payees submitted to the BIR with the annual withholding tax returns, detailing income payments and taxes withheld.

Alphanumeric Tax Code assigned by the BIR to specific types of income payments and withholding rates. Used on BIR forms to identify the nature of the withholding.

A sequential record of all changes made to financial data, showing who made the change, when, and what was changed. Required for BIR-compliant computerized accounting systems.

BIR authorization required before a taxpayer can have official receipts, sales invoices, or other principal documents printed by an accredited printer.

The process of matching the balances in a business's accounting records against the corresponding bank statement to explain any differences.

The fixed, regular pay of an employee before any allowances, overtime, bonuses, or deductions. Used as the basis for computing SSS, PhilHealth, Pag-IBIG, and 13th month pay.

Annual Information Return of Income Taxes Withheld on Compensation and Final Withholding Taxes — filed by employers by January 31 for the preceding calendar year.

Annual Income Tax Return for individuals engaged in business or practice of profession.

Quarterly Income Tax Return for self-employed individuals and mixed income earners.

Certificate of Creditable Tax Withheld at Source — issued by withholding agents to payees, used to claim creditable withholding tax in the income tax return.

Monthly Value-Added Tax Declaration — filed by VAT-registered businesses every 20th of the following month to report output and input VAT.

BIR-required accounting records that every registered business must maintain — including journals, ledgers, and subsidiary books — available for BIR examination.

BIR document issued to a taxpayer after business registration, specifying the tax types the business is registered for and the official receipts it is authorized to issue.

Structured list of all account codes used by a business to record financial transactions, organized by account type (assets, liabilities, equity, revenue, expenses).

Accounting software hosted on the internet rather than installed locally, allowing access from any device and enabling real-time collaboration between business owners and their accountants.

Document issued upon receipt of payment for goods sold on credit, where a Sales Invoice was previously issued.

Autonomous association of persons voluntarily united to meet common economic and social needs, registered with the Cooperative Development Authority (CDA). Enjoys certain tax exemptions.

Legal entity with a separate juridical personality from its owners (stockholders), providing limited liability. Registered with the SEC, requiring at least two incorporators (or one for OPC).

An accounting entry that increases liability, equity, and revenue accounts, and decreases asset and expense accounts. Always recorded on the right side of a T-account.

Tax withheld at source by the payor from income payments, which the payee can use as a credit against their income tax liability. Evidenced by BIR Form 2307.

An accounting entry that increases asset and expense accounts, and decreases liability, equity, and revenue accounts. Always recorded on the left side of a T-account.

Accounting system where every transaction is recorded with equal debits and credits across at least two accounts, ensuring the accounting equation (Assets = Liabilities + Equity) always balances.

System where the payor withholds a portion of income payments (at rates from 1% to 15% depending on ATC code) and remits it to the BIR on behalf of the payee.

Tax withheld at source that constitutes full and final payment of the tax due. The payee does not include these payments in their gross income for income tax purposes.

The book of original entry where all financial transactions are first recorded as journal entries before being posted to the general ledger.

The master accounting record containing all transactions organized by account, from which financial statements are derived.

Progressive income tax system in the Philippines where tax rates increase with higher income levels, ranging from 0% (up to ₱250,000 annual income) to 35% (over ₱8,000,000).

VAT paid to suppliers on purchases of goods or services. Can be credited against output VAT to determine net VAT payable.

A record of a financial transaction in the accounting system, always containing at least one debit and one credit of equal amounts following double-entry bookkeeping.

BIR document authorizing a Revenue Officer to examine a taxpayer's books and records for a specific taxable period.

BIR-required document issued by a seller for every payment received for services rendered or sale of goods. Numbered sequentially under an Authority to Print.

A corporation with a single stockholder, introduced under the Revised Corporation Code of 2019 (RA 11232). Provides limited liability unlike sole proprietorship.

VAT collected from customers on sales of goods or services. A VAT-registered business adds 12% to the selling price as output VAT.

Monthly contribution to the Home Development Mutual Fund — 2% by employee and 2% by employer on the first ₱5,000 of monthly compensation.

Business entity formed by two or more persons who contribute money, property, or industry to a common fund with the intention of dividing profits. Registered with SEC.

3% tax on gross receipts of non-VAT registered businesses with annual gross receipts not exceeding ₱3,000,000. Filed quarterly using BIR Form 2551Q.

Monthly health insurance premium contributed by employee (2.5%) and employer (2.5%), totaling 5% of monthly basic salary, with a maximum combined monthly contribution of ₱5,000.

BIR office with jurisdiction over taxpayers within a specific geographic area. Every registered taxpayer has a designated RDO.

BIR-required document evidencing the sale of goods. Required for every sale of goods regardless of whether payment has been received.

Simplest business structure in the Philippines — owned and operated by one individual with unlimited personal liability. Registered with DTI and BIR.

Monthly contribution to the Social Security System by both employee (4.5%) and employer (9.5% plus EC), based on the employee's salary bracket per the SSS contribution schedule.

Unique number assigned to every taxpayer by the BIR for tax administration purposes. Required for all business registrations, employment, and financial transactions.

A list of all account balances in the general ledger at a specific date, used to verify that total debits equal total credits before preparing financial statements.

12% consumption tax imposed on the sale of goods, services, and importation in the Philippines, applicable to businesses with annual gross receipts exceeding ₱3,000,000.

Income tax withheld by employers from employees' monthly salaries based on the graduated withholding tax table, remitted monthly to the BIR.