Bookkeeping Requirements for Small Sari-Sari Stores Under Tax Laws

I. Introduction

Sari-sari stores are the archetypal Filipino micro-enterprise: small, often home-based retail outlets selling low-priced goods to the immediate community. From a tax law perspective, however, a sari-sari store is not “informal” at all. The moment a person regularly sells goods “in the course of trade or business,” that person is considered a taxpayer engaged in business and becomes subject to registration, invoicing, and bookkeeping rules under the National Internal Revenue Code (NIRC), as amended. (RESPICIO & CO.)

This article synthesizes the bookkeeping requirements applicable to small sari-sari stores—typically “micro” or “small” taxpayers under the Ease of Paying Taxes Act (RA 11976) and its implementing revenue regulations. It focuses on national tax law and BIR issuances, with occasional reference to related compliance requirements.

II. Legal and Regulatory Framework

Key legal sources governing bookkeeping for sari-sari stores include:

  1. NIRC of 1997, as amended

    • Sec. 232 – Obligation to keep books of accounts. (Business Registration Philippines)
    • Sec. 235 – Preservation of books and accounting records (as amended by RA 11976, now a fixed 5-year retention). (KPMG)
    • Sec. 236 – Registration requirements (including registration of books as part of business registration). (ChanRobles Law Firm)

  2. Republic Act No. 10963 (TRAIN Law) – Retains the ₱3,000,000 VAT threshold and introduced the 8% income tax option for individuals whose gross sales/receipts do not exceed that threshold. (Bir Cdn)

  3. Republic Act No. 11976 (Ease of Paying Taxes Act, “EOPT”)

    • Effective 22 January 2024, it reorganized taxpayer classifications (micro/small/medium/large) and fixed a 5-year preservation period for books of accounts. (LawPhil)

  4. Revenue Regulations and Memorandum Circulars (select)

    • RR No. 8-2024 & RMO No. 37-2024 – Implement the new taxpayer classifications based on gross sales. (National Tax Research Center)
    • RR No. 7-2024 – Implements EOPT provisions on preservation of books (5-year period). (Grant Thornton Philippines)
    • RMC No. 3-2023 – Online registration of books via ORUS and QR stamping. (studylib.net)
    • RMC No. 65-2025 – Clarifies what formats of books new business taxpayers may register (manual, loose-leaf, computerized). (Bir Cdn)

  5. Administrative and practical guidance

    • BIR, tax advisory firms, and legal commentaries provide operational detail on formats, timing, and penalties for failure to maintain registered books. (Business Registration Philippines)

III. Who Is Covered: Sari-Sari Stores as Micro/Small Taxpayers

A. Sari-Sari Store as a Taxpayer

A sari-sari store, even if run from the owner’s residence and even if “small,” is recognized as a business establishment for income tax, percentage/VAT, and documentary requirements. (RESPICIO & CO.)

Thus, the proprietor (individual or entity) is required to:

  1. Register with the BIR (TIN, Certificate of Registration, BIR Form 2303). (RESPICIO & CO.)
  2. Register books of accounts.
  3. Issue BIR-authorized receipts/invoices where required.
  4. File tax returns and pay the correct taxes.

B. Micro vs. Small Taxpayer

Under RR No. 8-2024 implementing RA 11976: (National Tax Research Center)

  • Micro taxpayer – gross sales < ₱3,000,000 per taxable year
  • Small taxpayer – gross sales ≥ ₱3,000,000 but < ₱20,000,000

Most sari-sari stores fall within the micro taxpayer category, though larger neighborhood groceries branded as “sari-sari” may fall into small. The classification does not exempt micro or small taxpayers from bookkeeping; it mainly affects penalty rates, form lengths, and some procedural concessions. (srmo-law.com)

IV. Tax Regimes and Why Bookkeeping Still Matters

For small sari-sari stores, the applicable national taxes typically are:

  1. Income tax

    • Individuals with gross sales/receipts ≤ ₱3M may choose:

      • Graduated income tax rates; or
      • 8% income tax on gross sales/receipts in lieu of graduated rates and percentage tax. (Bir Cdn)

  2. Percentage tax or VAT

    • If non-VAT (gross sales < ₱3M and no voluntary VAT registration): subject to percentage tax unless using the 8% option. (Tax Accounting Center)
    • If VAT-registered (gross sales ≥ ₱3M or voluntarily registered): subject to VAT.

Regardless of whether the sari-sari store uses the 8% option, percentage tax, or VAT, books of accounts must still be kept. The choice of tax regime affects how the books are summarized (e.g., whether VAT components need to be shown), but not the underlying obligation to maintain them. (Business Registration Philippines)

V. Legal Mandate to Keep Books of Accounts

Section 232 of the NIRC provides that every person, natural or juridical, required to pay internal revenue taxes must keep and maintain books of accounts in which all transactions are recorded. (Business Registration Philippines)

Key points:

  1. Universality – The requirement applies to all taxpayers engaged in trade or business—including sari-sari stores—regardless of size.
  2. Sufficiency – Books must be sufficient to clearly reflect income and support the computation of taxes.
  3. Auditability – Books must be kept in such a manner that they are readily available and auditable by the BIR.

VI. Recognized Formats of Books of Accounts

Under the NIRC and BIR issuances, sari-sari stores may choose among three legally recognized formats: (Business Registration Philippines)

  1. Manual Books of Accounts

    • Traditional bound ledgers/columnar notebooks.
    • Pages are stamped or QR-stamped by the BIR upon registration.
    • Suitable for very small sari-sari stores with manageable daily transactions.

  2. Loose-Leaf Books of Accounts (LLBA)

    • Books printed from spreadsheets or accounting software, then permanently bound after the taxable year.
    • Require a Permit to Use (PTU) or acknowledgement from BIR and annual submission of printed/bound or electronic copies within prescribed deadlines.

  3. Computerized Books of Accounts (CBA)

    • For accounting systems generating digital ledgers and journals.
    • Require an Acknowledgement Certificate or PTU from the BIR and annual submissions of electronic data and summary print-outs.

RMC No. 65-2025 clarified that new business registrants may choose any of these formats at the time of registration; those opting for loose-leaf or computerized books are not required to also register manual books. (Bir Cdn)

For a typical sari-sari starting out, manual books remain the simplest and most practical choice.

VII. Types of Books Typically Required for Sari-Sari Stores

The BIR does not prescribe a single “sari-sari store book,” but under Sec. 232 and various guidance, micro and small businesses generally maintain some combination of: (FilipiKnow)

  1. General Journal – Chronological listing of transactions not captured in specialized books.

  2. General Ledger – Summarizes all accounts (Cash, Sales, Purchases, Expenses, Capital, etc.).

  3. Cash Receipts Book – Records daily sales and collections, including cash and other forms of payment.

  4. Cash Disbursements Book – Records purchases and expenses, including payments to suppliers, utilities, and other costs.

  5. Subsidiary Ledgers (optional but recommended)

    • Inventory/Stock Card – For tracking merchandise purchases, quantities, and balances.
    • Receivables – If the store allows utang/credit to regular customers.

BIR guidance and practice recognize simplified books for micro enterprises, so long as they contain the minimum information to reconstruct income and expense figures. (Philippine Business Corner)

VIII. Registration and Updating of Books

A. Initial Registration

For new business registrants, manual books of accounts must be registered before the deadline for filing the initial quarterly or annual income tax return, whichever comes earlier, usually through the Online Registration and Update System (ORUS), which generates a QR stamp pasted on the first page of each book. (studylib.net)

Common practice, reflected in BIR forms and advisory materials, is to register books within 30 days from issuance of the Certificate of Registration or start of operations. (Business Registration Philippines)

B. Subsequent Registration / New Sets

For manual books:

  • The sari-sari owner does not need to register new books every year.
  • New sets must be registered only when all pages of the prior registered books have been fully used, and always before use of the new book. (Bir Cdn)

For loose-leaf and computerized books:

  • Registration or re-registration is generally annual, with specific filing and submission deadlines (e.g., within 15–30 days after the close of the taxable year). (studylib.net)

IX. What Must Be Recorded: Minimum Content for Sari-Sari Store Books

Although the law does not prescribe a sari-sari-specific template, certain minimum data is expected to appear in the books of accounts: (Business Registration Philippines)

  1. Sales / Gross Receipts

    • Daily sales totals, ideally broken down into:

      • Cash sales
      • Credit sales (if any)
      • Returns/refunds

    • For VAT-registered stores: VAT-exclusive sales, VAT amount, and VAT-exempt transactions must be distinguishable.

  2. Purchases and Inventory

    • Purchases of merchandise (date, supplier, reference invoice, amount).
    • Beginning and ending inventory; periodic counts are advisable to approximate cost of goods sold.

  3. Operating Expenses

    • Common expenses such as rent, utilities, wages, licenses, transportation, and small supplies.
    • Each entry should have a supporting document (receipts, bills, contracts).

  4. Capital and Drawings

    • Initial capital contributions and subsequent injections of funds by the owner.
    • Withdrawals of cash or goods for personal use (to avoid distortion of profit).

  5. Assets and Liabilities (if significant)

    • Store fixtures, refrigerators, freezers, etc., and any loans used to finance them.

These records must be chronological, complete, and supported by source documents (invoices, receipts, vouchers) which themselves form part of the “other accounting records” that must be preserved under Sec. 235, as amended. (KPMG)

X. Preservation, Place of Keeping, and Inspection

Under Sec. 235 of the NIRC, as amended by RA 11976 and RR 7-2024: (KPMG)

  1. Preservation Period

    • Books of accounts and other accounting records (including invoices, receipts, vouchers) must be preserved for five (5) years,
    • reckoned from the day following the deadline for filing the return, or from the actual filing date if late,
    • covering the taxable year when the last entry was made in the books.

  2. Form of Preservation

    • Manual / loose-leaf – must be kept in hard copy.
    • Computerized – electronic copies must be preserved.

  3. Extended Retention

    • If there is a pending protest, tax credit/refund claim, or tax case, books and records must be preserved until the dispute is finally resolved, even beyond five years. (KPMG)

  4. Place of Keeping and Inspection

    • Books and records must be kept at the place of business and produced upon demand by internal revenue officers. (E-Library)
    • Examination is generally limited to once per taxable year, subject to exceptions (fraud, reinvestigation, withholding verification, etc.). (KPMG)

XI. Audited Financial Statements and Thresholds

For sari-sari stores operating as individual enterprises:

  • If gross annual sales exceed ₱3,000,000, the books of accounts and financial statements must be audited by an independent CPA and an Audited Financial Statement (AFS) must be filed with the BIR together with the annual income tax return. (help.taxumo.com)

Below that threshold, a sari-sari store (typically micro taxpayer) is generally not required to submit audited financial statements, but must still maintain proper books sufficient to justify the figures declared in returns.

XII. Penalties for Non-Compliance

Failure to register or properly maintain books of accounts exposes sari-sari store owners to:

  1. Administrative Penalties

    • Compromise penalties for:

    • RA 11976 grants reduced civil penalties and interest for micro and small taxpayers (e.g., 10% instead of 25% penalty rate in many cases), but does not excuse non-compliance. (srmo-law.com)

  2. Closure / Suspension of Business

  3. Criminal Liability

    • Willful refusal to keep books, falsification, or destruction of records may, in extreme cases, lead to criminal prosecution under the NIRC. (E-Library)

XIII. Practical Compliance Roadmap for a Small Sari-Sari Store

While the legal rules can appear dense, the actual steps for a sari-sari owner are manageable if approached systematically: (RESPICIO & CO.)

  1. Register the Business and Books with BIR

    • Secure TIN and Certificate of Registration (BIR Form 2303).
    • Decide on the tax regime (percentage tax vs. 8% vs. VAT, as eligible).
    • Choose manual books (for most sari-sari stores) and register them via ORUS or at the RDO; obtain QR stamp.

  2. Set Up a Simple Bookkeeping System

    • Use a Cash Receipts and Disbursements Book plus a Ledger as a minimum.
    • Design a daily routine: record total sales at day-end, and post purchases/expenses as they occur.

  3. Keep All Source Documents

    • Retain purchase invoices, utility bills, local permits, BIR receipts, and any loan documents.
    • File them by month to match entries in the books.

  4. Do Periodic Inventory Counts

    • At least once a year (ideally monthly or quarterly), count stock to estimate inventory and cost of goods sold.

  5. Monitor the ₱3M Threshold

    • Track cumulative annual sales to know if/when the store approaches the ₱3M VAT / micro-small boundary, which will affect VAT registration and the requirement for audited financial statements. (National Tax Research Center)

  6. Preserve Books and Documents for Five Years

    • Store them safely, preferably in a secure container at the store or home office.
    • Keep electronic backups if using any digital system.

  7. Seek Professional Help When Needed

    • For borderline cases (near or above ₱3M gross sales) or when shifting to loose-leaf or computerized systems, consulting an accountant or tax counsel is prudent, particularly to obtain the necessary BIR permits. (Business Registration Philippines)

XIV. Concluding Observations

Bookkeeping for small sari-sari stores is not merely a bureaucratic formality—it is a legal obligation and a practical tool. The NIRC, as amended by TRAIN and the EOPT Act, together with BIR regulations, requires even the smallest sari-sari store to maintain registered books of accounts, preserve them for at least five years, and ensure that they accurately reflect the store’s income and expenses. (KPMG)

The recent classification of taxpayers into micro and small categories, along with penalty reductions and simplified forms, signals a policy choice to make compliance easier—but not optional. For the sari-sari store owner who follows these bookkeeping rules, the benefits go beyond avoiding penalties: clear records help manage stock, control cash, support loan applications, and demonstrate the store’s viability as a legitimate business.

Disclaimer: This content is not legal advice and may involve AI assistance. Information may be inaccurate.

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