Every business owner knows that efficient bookkeeping is a cornerstone of success. But when was the last time you brushed up on bookkeeping and accounting best practices? 

In case you need them, here are a few quick tips you can apply when you’re reviewing your books.

📖In Summary

• Avoid unforeseen complications by separating your business and personal finances
• Adapt to changes in tax regulations by staying informed with recently passed local laws.
• Updated financial records can help you make quicker business decisions.
• Your accounts receivable is a good indicator of cash flow
• Find a bookkeeping software that has the features you need to be efficient

1. Open a separate bank account for your business

You’ll have an easier time identifying business transactions from personal ones if you keep separate accounts. 

What if you’re a sole proprietor? A dedicated business bank account can still be beneficial even if you’re not legally required to create one.

You save time and effort since you won’t need to painstakingly identify each transaction as either business or personal.

Organizing and examining your financial records becomes easier as a result — making occasions like filing of tax returns and routine audits less daunting. 

Additionally, using a business bank account for your payment obligations can help build credibility among your clients and suppliers

 

2. Stay updated with tax deadlines and regulations

Mistakes on your business’s annual tax return are costly but avoidable. Make sure to stay on top of changes in Philippine tax regulations to ensure your business is compliant. Below are just a few examples:

• The Ease of Paying Taxes Act was signed into law in January 2024 to improve tax compliance. One of the major changes introduced by the new law is the shift from gross receipts to gross sales as the basis for calculating value-added tax. Business taxpayers will also be classified into four groups based on their gross sales. Then, those with less than ₱20 million in sales can benefit from a simpler income tax return process.
• Amendments to the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act were mentioned in President Ferdinand “Bongbong” Marcos Jr.’s State of the Nation Address in July 2024. More corporate income tax reductions and a “mix-and-match” of incentives for desirable economic activities are just some of the proposed changes to this pandemic-era law.

💡Take advantage of these new tax incentives with Loft 

Understanding the nuances of the tax code and keeping up with new regulations isn’t easy, which is why it’s a good idea to work with bookkeeping professionals who can provide expert guidance. 

Loft can help you make sense of new tax regimes and how it affects your business. Whether you’re a foreign entrepreneur or a local business owner, we’ll help you navigate the Philippines’ tax compliance landscape.

Our bookkeeping services include the following: 

• Recording transactions via Xero
• Payroll processing 
• Monthly tax returns
• Quarterly tax returns
• Annual computation (e.g. annual income tax, certificate of compensation)

Contact us today by phone at (63) 917 899 1111 or via email to get started.

3. Keep an eye on your accounts receivable 

Your accounts receivable is a key indicator of how much cash is coming into the business. 

Use key performance indicators when tracking your accounts receivable. Take for example days sales outstanding or DSO, the average time it takes to collect payment.  The lower the number, the more effective your collection process is. 

One way to nudge clients into making timely payments is by proactively sending reminders even before the due date. Each communication with the client should have a clear outline of the available payment processes.

Additionally, it’s also important to simplify payment processes and ease any friction in the process. 

If using credit, identify which clients have a good track record of timely payments. Shortlist the ones that regularly fall behind on payments so you can prepare a realistic payment plan to collect what you are owed.

 

4. Review your financials every month

Regular review of your financial records aren’t just for avoiding penalties. It also helps you spot trends in your business — whether it’s rising expenses, a bloated budget, or peak seasons in terms of sales. Here are a few suggestions on how to go about a monthly review:

• Review your assets (liabilities + equity) thoroughly and see if one side of the equation is tilting more to one side or the other. 
• Apply double-entry bookkeeping to make it easier to spot inconsistencies or errors. 
• When considering bookkeeping or accounting software, find one that lets you easily make digital copies of paper documents.
• If you mostly peruse physical copies of documents, make sure to store them in a secure, fire-proof container.

 

5. Use bookkeeping software to automate processes

Software such as Xero, Quickbooks, and Freshworks, can automate many bookkeeping processes. This saves you a lot of time which you can devote to other critical parts of business operations. 

Bookkeeping software ensures there’s a secure and accurate digital record for every transaction. These solutions also improve the accuracy of your reports.

When considering a software solution, list the features you need most. This list will help you figure out if you can allocate enough budget for a suitable solution. Here are some common features you should consider:

• Invoicing
• Bank reconciliation
• Expense tracking
• Payroll processing
• Reporting capabilities
• Integration with other software

6. Consult Loft for bookkeeping and tax compliance

Updating your books can take away time from other equally important aspects of your business — if you’re doing it on your own.

Loft’s bookkeeping services give you peace of mind when it comes to your financials. Whether it’s assisting you with year-end audits or financial statement preparations, our team of experts are invaluable partners in your business journey. 

You may complete the short form below to get in touch with our team.