The work arrangement of several businesses have changed because of the pandemic. Most employees work remotely to prevent health risks and to help in flattening the curve. With most people working remotely including your accounting team, this could cause confusion in handling business compliance and expenses. Don’t worry because Jocs Pantastico is here to show the best accounting practices to ensure our businesses compliance with this type of work arrangement!
It is important for businesses to remain in compliance even during these times. Be sure to be on time with filing and accurate with requirements because these will cost the business money and funds. The last thing you would like is to have unnecessary costs for your business amidst the pandemic. Here are some things to keep in mind when accounting for your business in the new normal!
Business registration
In the new normal, most companies are now online and many have also decided to start their own online businesses! With this, we must remember that all online businesses need to be registered. BIR also requires businesses to disclose all related party transactions – whether with parent companies, subsidiaries, and key management personnel.
Documentation
To limit any travel and exposure, sending of documents like official receipts and invoices can be done digitally. Though a scanned copy is allowed, make sure to keep the original copies with your accountant, which could be sent via courier.
These must still be compliant in accordance with the revenue regulations. If you purchase any supplies or services, this must be supported by sales invoices and official receipts. Do not accept documents that are not registered or valid. You can identify this by checking the BIR number.
Business expenses
Due to the pandemic, it is crucial to be accurate when accounting for business expenses. A common problem encountered is providing additional expenses for employees – such as the internet and electricity.
When spending for additional costs, everything should be documented as reimbursements to be more accurate with expenses. These must also be supported in writing by a contract or memorandum that states that this is a part of business operation expenses.
It is commonly misunderstood that anything could be reimbursed if it has a receipt. It is important to determine if these reimbursements are actual business expenses. One indicator would be to provide a comparison of expenses prior to remote set up. It would be ideal if the employee could attach the proof of the increase in electricity or internet bills since working from home.
Allowance or Reimbursements
Allowances are a part of your business’ compensation taxes, such as transportation or communications. The government gives an amount for non-taxable allowances, but this would also include the 13th-month salaries and other bonuses – everything that exceeds that amount is now taxable.
Having these expenses documented as reimbursements would help create more accurate results. This helps monitor the cash flow properly and avoid any additional costs, which is key for business continuity during times like this.
Your business must remain compliant to be able to properly distribute assets. These are significant details you need to know to be able to take control of things during this pandemic. Following these tips will help you avoid wasting any money and get you on the right path to bounce back from this crisis!