3 Best Accounting Practices During a Crisis
The global crisis has had profound effects on our lifestyle and the way we manage our businesses. With companies having to quickly adapt to this situation, it is equally important to remain compliant and ensure that financial practices are sound.
Last week, we spoke to Grace Morfe of Morfe Ceneta, CPAs to give us a better idea of how to address different situations brought about by this crisis.
Pivoted to a new business? Check your business license to ensure its covered
Sheila was running a successful fashion business until this crisis changed everyone’s priorities to more basic needs. Within a month, she leveraged what she knew about e-commerce and started selling groceries instead of tops and dresses.
Tony has an Italian restaurant with nice décor in a great location. Now that his usual customers no longer able to dine-in, he decided to launch a delivery service.
These are great examples of adapting to a new reality, and entrepreneurs who want to survive need to look at all possible avenues to sustain revenues.
For instance, Tony’s introduction of food delivery probably won’t have any impact on his business license. However, if he starts selling face masks, then this is likely not covered in his restaurant permit.
For Sheila, it really depends on what items her e-commerce license allows her to sell.
It’s important, however, to check if this pivot is covered in your current business license registration.
It also makes sense track expenses for this new line of business or product separately to avoid accounting issues later as well as to have visibility on its’ profitability versus the previous or other business.
Always secure official receipts (ORs) even for online purchases
Purchasing office supplies from an online platform instead of going to an office supply store? Had your team lunch delivered from a delivery app instead of going to the restaurant?
Official receipts are still a must in order that your company can effectively use these as expenses.
With regard to online purchases, the email you get from the platform or vendor may not be the official receipt. Contact the vendor so that they can issue a receipt which contains the information your company needs. Ensure that the sales invoices and/ or official receipts to be issued by the vendor are duly registered with the BIR and completed filled-out your information such as:
Your company name
Your company TIN
Type of business
Discount, if any
Address, otherwise, the expense will not be considered as valid.
Reimbursement OR Allowance
With remote work being more prevalent, companies are looking to pay (or at least subsidize) their employees’ internet and electricity bills. The question is: should this amount be given as an allowance to employees or as an expense that they reimburse to the company?
There are various points of view on this, but Grace Morfe of Morfe Ceneta advises that these expenses be treated as reimbursements rather than an allowance because such are business-related expenses.
These are just some of the topics covered in the webminar “Best Accounting Practices During a Crisis”.
Watch the replay of the webinar here:
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