How to Handle Petty Cash Purchases for BIR Tax Purposes

A petty cash fund is one of the most common places a small business loses its expense substantiation, because it’s treated as “just cash for small stuff” instead of a documented account — but RR No. 17-2013 holds petty cash vouchers to the same recordkeeping standard as any other supporting document the BIR can inspect. Setting the fund up properly from the start — a fixed float, a voucher for every disbursement, and a clear replenishment cycle — is what makes petty cash spending actually defensible as a deduction.

What does the BIR actually require for petty cash vouchers? #

RR No. 17-2013 treats petty cash vouchers as part of the “other accounting records” the BIR can demand during an inspection — required to be kept at the taxpayer’s place of business and produced immediately on demand. The regulation states:

“All books, registers and other records, and vouchers and other supporting papers required by the BIR shall be kept at all times at the place of business of the taxpayer, subject to inspection by any internal revenue officer, and upon demand, the same must be immediately produced and submitted for inspection.” — Revenue Regulations No. 17-2013, issued September 27, 2013

There’s no separate BIR-prescribed petty cash voucher form, but the same substantiation logic from NIRC Section 34(A)(1)(b) applies to each one: it needs to show the amount and the business purpose of the expense clearly enough to survive scrutiny. A workable petty cash voucher includes:

• A date and a sequential voucher number
• The amount disbursed
• A specific description of what it paid for
• The name of the payee or the person who received the cash
• The signature of the person receiving the cash, and of whoever approved the disbursement
• Any supporting document attached (a delivery receipt, a small store’s issued slip, or similar)

How does the imprest system keep a petty cash fund auditable? #

The imprest system fixes the petty cash fund at a set amount — say, ₱5,000 — and replenishes it back to that exact figure each time it runs low, based on the total of the vouchers accumulated since the last top-up. At any point, the cash remaining in the fund plus the total of the unreplenished vouchers should equal the fixed float. This matters for substantiation because it forces a direct link between every peso spent and a specific, numbered voucher — there’s no unexplained gap between what the fund started with and what it currently holds.

A typical cycle looks like this:

1. Establish the fund at a fixed amount appropriate to the business’s actual petty needs (transportation, small supplies, minor repairs).
2. Disburse against a voucher every time cash leaves the fund — no voucher, no disbursement.
3. Accumulate vouchers until the fund is running low.
4. Replenish by totaling the vouchers, recording that total in the Cash Disbursement Book, and topping the physical fund back up to the fixed float.
5. File the vouchers with any attached supporting slips and preserve them for the required retention period.

A worked example: replenishing a ₱3,000 petty cash fund #

A small accounting office keeps a ₱3,000 imprest petty cash fund for incidentals — courier fees, office supplies, coffee for client meetings. Over two weeks, the office manager issues eleven vouchers totaling ₱2,650: a ₱450 courier fee with the courier’s own receipt attached, ₱600 in bond paper and ink from an office supply store, ₱300 in transportation reimbursements logged individually, and several smaller purchases under ₱200 each, every one numbered and signed by the person who received the cash. When the fund drops to ₱350, the office manager submits the eleven vouchers for replenishment; the bookkeeper records a ₱2,650 disbursement in the Cash Disbursement Book, tops the fund back up to ₱3,000, and files the vouchers together by replenishment batch — giving the business a complete, numbered trail for every peso the fund ever paid out.

How long do you need to keep the vouchers? #

Ten years. RR No. 17-2013 sets that period for all books of accounts, subsidiary books, and other accounting records — reckoned from the day after the deadline for filing the return (or the actual filing date, if later) for the taxable year the last entry was made:

“All taxpayers are required to preserve their books of accounts, including subsidiary books and other accounting records for a period of ten (10) years reckoned from the day following the deadline in filing a return or if filed after the deadline, from the date of filing of the return, for the taxable year when the last entry was made in the books of accounts.” — Revenue Regulations No. 17-2013

Petty cash vouchers, as supporting papers for entries in the Cash Disbursement Book, fall under this same rule — they can’t be discarded once the fund is replenished. For the fuller retention framework covering all of a business’s accounting records, not just petty cash, see BIR Books of Accounts: Manual, Loose-Leaf, and Computerized Accounting System Requirements, and for how the underlying substantiation rule applies to any expense — petty cash or otherwise — see Can You Deduct Business Expenses Without an Official Receipt? BIR Rules for Sole Proprietors.

Frequently asked questions #

Does the BIR require a specific petty cash voucher format? #

The BIR doesn’t prescribe a mandatory petty cash voucher template, but RR No. 17-2013 requires that “vouchers and other supporting papers required by the BIR” be kept at the taxpayer’s place of business and produced on demand during an inspection. In practice, a compliant voucher needs a date, a serial number, the amount, the purpose, the payee, and the signature of whoever received the cash — enough to satisfy NIRC Section 34(A)(1)(b)’s substantiation requirement for the expense.

How long do I need to keep petty cash vouchers? #

Ten years. RR No. 17-2013 requires all books of accounts, including subsidiary books and other accounting records, to be preserved for ten years from the deadline (or actual filing date) of the return for the taxable year the last entry was made — and petty cash vouchers, as supporting papers for entries in the books, fall under that same retention rule.

What is the imprest system, and do I have to use it? #

The imprest system means the petty cash fund is replenished back to a fixed amount each time it’s used up, based on the total of the vouchers accumulated since the last replenishment — so the fund’s balance plus outstanding vouchers always equals the fixed starting amount. It isn’t a specific BIR-mandated format, but it’s the standard bookkeeping practice that keeps a fund auditable, since every peso disbursed traces to a specific, dated voucher.

Can I use petty cash for large purchases to avoid other paperwork? #

No — petty cash funds are meant for small, incidental, recurring expenses, not a way to avoid documenting bigger purchases. Using the petty cash fund for a large payment doesn’t change the substantiation rule under NIRC Section 34(A)(1)(b); a large, undocumented disbursement is just as exposed to disallowance on audit whether it came from petty cash or the main cash account.

Where do petty cash disbursements get recorded in the books of accounts? #

Individual petty cash vouchers support the underlying transactions, and the fund’s replenishments are recorded in the Cash Disbursement Book (or its computerized equivalent) as a summarized entry when the fund is topped back up — not vouchers one by one in the general books, but the voucher-level detail must still be kept and be available for inspection alongside the summarized entry.

Summary #

A petty cash fund is only as defensible as its vouchers — RR No. 17-2013 treats them the same as any other accounting record the BIR can inspect, kept at the place of business and preserved for ten years. Running the fund on a fixed imprest amount, numbering every voucher, and replenishing against a documented total turns “small cash for small stuff” into a fund that survives an audit, rather than a gap in the books.