Preparing for an LGU (Local Government Unit) or BIR (Bureau of Internal Revenue) inspection

📋 Complete Checklist for LGU & BIR Office Inspection in the Philippines

Licensing
September 08, 2024•3 min read

Published Date: September 08, 2024

Published By: Jac Cantos, Upcloud Accounting

Preparing for an LGU (Local Government Unit) or BIR (Bureau of Internal Revenue) inspection?✔️

Don’t stress! We’ve got you covered with this ultimate compliance checklist to ensure your business passes smoothly.

Why Are These Inspections Important?

Regular inspections ensure your business complies with tax laws, safety regulations, and local ordinances. Failure to prepare can lead to penalties, fines, or even business closure!

✅ LGU Inspection:

  • Checks if you have a valid Mayor’s Permit, barangay clearance, and other local permits.

✅ BIR Inspection:

  • Verifies tax compliance, proper invoicing, and accurate bookkeeping.

Documents to Prepare for LGU Inspection

1. Business Registration & Permits

  • Business Permit / Mayor’s Permit (Original & Copy)

Legal Basis: Local Government Code (RA 7160), Sec. 143 & 147

  • Barangay Clearance (Updated)

Legal Basis: RA 7160, Sec. 152 (Businesses must register with the barangay)

  • DTI Registration (Sole Proprietorship) or SEC Registration (Corporations)

2. Location & Safety Compliance

  • Lease Contract or Proof of Business Address

  • Fire Safety Inspection Certificate (FSIC)

Legal Basis: Fire Code (RA 9514), Sec. 9

  • Sanitary Permit (For food businesses)

Legal Basis: Sanitation Code (PD 856), Sec. 12

  • Occupancy Permit (If applicable)

Legal Basis: National Building Code (PD 1096), Sec. 301

3. Employee & Tax Records

  • Community Tax Certificate (Cedula) of Owner/Representative

  • SSS, PhilHealth, Pag-IBIG Employee Contributions

📌 Pro Tip: Display your Business Permit & Barangay Clearance visibly in your office!

Documents to Prepare for BIR Inspection

1. BIR Registration & Tax Filings

  • BIR Certificate of Registration (COR) – Form 2303

➡️Legal Basis: Tax Code (NIRC / RA 8424), Sec. 236

2. Bookkeeping & Invoicing

  • Books of Accounts (BIR-stamped if manual)

➡️Legal Basis: RR No. 17-2013 (Computerized Books) & RR No. 5-2014 (Manual Books)

  • Official Receipts (OR) & Invoices (BIR-registered)

➡️Legal Basis: RR No. 18-2023 (Updated Invoicing Rules)

3. Withholding Taxes & Employee Records

  • Alphabetical List of Employees

  • BIR Form 1601-C (Withholding Tax on Compensation)

  • BIR Form 1604-CF (Annual Alphabetical List of Employees)

➡️Legal Basis: NIRC, Sec. 79 & RR No. 2-98

📌 Pro Tip: Keep digital and physical copies of all tax filings for easy access!

Additional Requirements (Depending on Business Type)

  • Franchise Agreement (For franchised businesses)

  • Environmental Compliance Certificate (ECC) (For manufacturing)

  • FDA/LTO Permits (If applicable)

Quick Tips to Ace the Inspection

✔️Organize documents in labeled folders 📂
✔️Train a staff member on compliance procedures 👩‍💼
✔️Keep receipts & invoices properly recorded 🧾
✔️Display permits visibly in your office 🖼️

Additional Legal References

✔️SEC Registration (For Corporations) – Corporation Code (BP 68)
✔️DTI Business Name Registration – RA 3883 (Business Name Law)
✔️SSS, PhilHealth, Pag-IBIG Compliance – Labor Code & Social Security Laws

Where to Verify These Laws?

🔹 BIR Website: www.bir.gov.ph
🔹 DILG (For LGU Rules): www.dilg.gov.ph
🔹 Official Gazette: www.officialgazette.gov.ph

Upcloud Accounting: Virtual Outsourced Accounting and Bookkeeping Services in the Philippines

Upcloud Accounting offers accounting, bookkeeping, tax compliance, and business licensing services specializing with startups and SMEs in the Philippines.

Our goal is to increase efficiency, automation, and transparency across the accounting and finance functions of our clients with our cutting-edge technology. If you want to move your company’s finance function online, contact our Team of Expert Accountants and Bookkeepers directly via [email protected] or visit www.upcloudaccounting.com to learn more about how Upcloud Accounting accounting services can support your PH business!

Disclaimer: This article or blog is only for general knowledge and guidance and is not a substitute for an expert opinion. For technical advice, please consult your tax / legal advisor for your specific business concerns. For comments, suggestions, and feedback, feel free to email us at [email protected].

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