Among the required information in receipts is the business style. Is this the same as the nature of business (i.e. construction, wholesale and retail, manufacturing, etc)?
No, the business style as required to be indicated in receipts refers to the "trade name" of a sole proprietorship or a corporation. For a long time, this remained unexplained and has only been clarified recently by the Bureau of Internal Revenue (BIR) under Revenue Memorandum Circular No. 55-2019.
For corporations, trade names are not the corporate names. The trade name is signified by "doing business as" or "doing business under the name and style of" or any other similar indicators.
For sole proprietorships, this is more straightforward as the trade name is indicated in the Department of Trade and Industry certificate of registration.
Not issuing receipts is a big no-no when it comes to running a business, but what happens if I don't issue receipts?
There are two cases where receipts are not issued – failure to issue receipts or refusal to issue receipts. Failure to issue receipts could get you a penalty of up to P20,000, while refusal will get you up to P50,000.
But those are not the main issues. In reporting your income to the BIR, you are required to substantiate them with supporting documents (receipts and invoices being one of them). If you fail to provide the right documents, then you just opened yourself to hefty penalties once the BIR audit comes around.
What's more, if you're on the other end of the spectrum and do not ask for receipts, then you won't be able to claim those expenses as allowable deductions.
Issuing and asking for receipts is important, not just for these reportorial requirements, but in properly managing the finances of your business.
If you had committed these violations before, you might want to check out the tax amnesty and see whether it will be beneficial for you. Keep in mind that there are other alternatives for you as well. The Center for Strategic Reforms of the Philippines organized the Tax Amnesty Roadshow with the support of the BIR to guide taxpayers on how to maximize the tax amnesty.
Mon Abrea, popularly known as the Philippine Tax Whiz, is one of the 2017 Outstanding Persons of the World, a Move Awards 2016 Digital Mover, one of the 2015 The Outstanding Young Men of the Philippines (TOYM), an Asia CEO Young Leader of the Year, and founding president of the Asian Consulting Group (ACG) as well as the Center for Strategic Reforms of the Philippines (CSR Philippines). Assisting him in his column is JM Miñano, communications associate of ACG. He graduated with a bachelor's degree in Communication Arts from the University of the Philippines Los Baños.