Small Business Accounting Practices in the Philippines
Accounting practice is the process and act of recording the daily operations of the business. It is important to create records and produce the necessary financial reports. And to create these standard-based reports, accountants must follow the rules that govern accounting practices in the Philippines.
Accountants follow the Philippine Reporting Standards (PFRSs) when measuring and recording business transactions. The PFRSs are the guidelines on how to properly report transactions. Accountants must always follow these rules to ensure transparency, accuracy, and fairness in reporting.
To ensure that these rules are followed, companies, most especially small businesses should obey the following accounting practices in the Philippines.
Consistency in the Calculation of Payroll
The company must be consistent in applying salary rates. This is related to companies employing workers at a variable rate. Payment at a variable rate means workers are paid depending on the number of hours worked or using other measures. Accountants should make sure that the same rate is applied in every payroll computation.
Furthermore, over time and other fees should also be consistent. Your staff would want to know that you are fair in the payout of salaries. If they think there are biases and favoritism using pay rates, it will cause issues in your company.
Immediate Billing of Customers
It is always advisable to bill your customers after the delivery of goods or services. This way, there won’t be any chances of you forgetting it. This is especially important for companies allowing credit payments.
Sending invoices to your customers ensures that you create a record of a revenue transaction. This also allows your customers to know the details of the transaction, such as the product or service details, and the amount due. Sending your invoices early will result in early payment by customers.
Paying Supplier Invoices On Time
It is always advantageous to pay early or on time. Business owners might think that pushing payments until the last minute allows them to extra available cash just in case. This might be true in some cases, but it’s not worth the risk in the long run.
Actually, suppliers offer discounts if companies pay early. It’s a usual practice that encourages business owners to deliver payments on time. Further, avoiding late payments gives you a good credit relationship with the supplier. Lastly, paying early on will save you from paying penalties and interest for late payments.
Using Consistent Depreciation Methods
Companies should follow good accounting practices in the Philippines. One way to do this is by using the same depreciation methods for the same classes of fixed properties.
The standards provide guidance on which depreciation methods should be used. This depends on the type of business you run, and on the types of properties you use. Following the rules ensures that the property values are correct in the books. Moreover, it also ensures proper expense recognition. If depreciation is made properly, accounting records are accurate.
File and Pay Taxes Early
It is a good accounting practice to prepare your taxes early. This way, you are more confident that your documents are prepared without a hurry. Thus it is complete and accurate. Filing taxes before the deadline is also helpful to avoid payment of penalties.
It is common to be caught on delays in processing taxes on the deadline. Primarily, because everyone is trying to catch the deadline, and thus the queues are busy and long. Further, if issues arise on that day, it is difficult to adjust to still be able to pay on time.
Hire a Respectable Accounting Firm
Are you having issues maintaining proper accounting practices in your company? We know how difficult it can be, especially for small businesses with limited staff. We recognize that accounting is not for everyone. As a small business owner, you would rather have professionals handle the books so you can focus more on operations.
Our teams in 3E Accounting can smooth it out for you. Employing only accounting experts in the Philippines, our firm can provide solutions to any of your accounting issues. We can assure competent accounting services that are efficient and supportive of your company goals.
Let us help you reach your goals. Contact 3E Accounting team today!
