Books of Accounts: What Is The Best Fit For Your Business? (2026 Update)

Last updated on May 5, 2026

What are books of accounts, and why are they important? What types should your business maintain, and why do they matter?

All businesses in the Philippines and globally must maintain accurate books of accounts. These are essential for financial tracking and business compliance.

Below are the main types of accounting books used in the Philippines and how to choose the right one for your business.

Regardless of size or industry, businesses must keep books of accounts to record all financial transactions. These records show money coming in and going out and are used for financial reporting and cash flow management.

Books of accounts are also required by the Bureau of Internal Revenue (BIR) for all corporations, partnerships, and taxable individuals in the Philippines. They help ensure proper tax compliance and accurate reporting.

Types of Accounts

There are three main types of books of accounts approved by the BIR for use—manual, loose-leaf, and computerized books. Companies may choose which of the three systems best suits their operations.

In each case, the books must generally include, at a minimum, the following information:

• General ledger
• Sales ledger
• Purchases ledger
• Accounts receivable and payable ledger
• Inventory ledger
• Payroll ledger

Companies must register their books of accounts with the BIR upon incorporation. For manual books, new sets only need to be registered once the current books are fully consumed or “paged out,” not necessarily every year.

Registration is now primarily done through the Online Registration and Update System (ORUS), where businesses can generate a QR Code Stamp for their books instead of undergoing manual ink-stamping at the RDO.

Manual Books of Accounts

This is where a business maintains physical books, journals and ledgers. There are no computer or automated processes used for these books. Daily transactions are recorded entirely by hand. This is the most popular system for accounting books across the Philippines. It is most commonly used by freelancers, sole traders and smaller companies as they will usually have a lower volume of transactions and less complex processes.

It is cost efficient as it only requires the purchase of hard copy journals and ledgers but it can be time consuming, more prone to manual errors and fairly inefficient. While companies don’t have to apply for a BIR permit to use the manual books system (as required for other types of accounting books – see below), manual books of accounts do have to be registered with the BIR.

Loose Leaf Books of Accounts

Loose-leaf books of accounts are a somewhat hybrid system between manual books and computerised books. Transactions are recorded into a computer or cloud-based system. When it is time to register or submit the loose-leaf books to the BIR, the company must printout the computer files, bind them together and then submit them to the BIR in hard-copy. If a company wants to use loose-leaf books of account, it must first apply to the BIR for a permit enabling the company to do so.

Cloud based accounting is commonly used in conjunction with the loose-leaf books as they achieve more efficient processes and generates real value-added information for the company without the effort and expenditure required for the registration of the computerized books of account. QuickBooks and Xero are just some of the accounting software that CloudCfo uses.

Computerized Books of Accounts

These books of accounts are “systems generated”. This means recording transactions and generating reports and documents through a computerized accounting system. Computerised books are generally used by bigger organisations that deal with a large volume of transactions and have more complex accounting processes. Capital investment is required as companies must invest in computer hardware, accounting software programmes and data storage.

The company must submit the books of account to the BIR in soft copy (i.e. CD-ROM). The BIR must first approve the company’s use of the computerized books of accounts, including the particular computerised system that the company is operating. Sometimes, the BIR will notify larger companies in the Philippines that they must use computerized books.

Choosing the Right Type of Books for Your Business

Maintaining books of account is mandatory for all BIR-registered businesses in the Philippines, but you have the flexibility to choose which type best suits your business size and operations. Each type has its own registration requirements, so you must secure BIR approval before using your chosen format.

See the guide below to determine which type may be best for your business:

Why Audit Season Makes Your Books of Accounts Matter

Each year, many companies in the Philippines are required to have their books of accounts audited and submit an Audited Financial Statement (AFS) to the BIR.

Businesses should ensure compliance ahead of this deadline to avoid penalties. Check out our blog about audit season to learn more about audit requirements and processes, and why maintaining accurate books of accounts is essential.

Manage Your Books of Accounts with Expert Help

Choosing the right type of books of accounts depends on your business size, operations, and level of complexity. Maintaining the right systems help businesses stay organized, compliant, and financially informed.

At CloudCFO, we help startups and SMEs in the Philippines manage their books of accounts and stay compliant with BIR regulations through efficient and reliable accounting and bookkeeping services.

Whether you are setting up your accounting system or improving your current processes, our team is ready to support you. Get in touch with us today and let our accounting experts handle your compliance needs, so you can focus on growing your business.