Bibo Global Oppurtunity Inc.

 

The number of self-employed individuals continuously grows as the rise of online remote jobs increases worldwide. With this being said, the taxes they contribute is just as big as contributions of people who are employed.

With the sudden rise of the gig economy, people didn’t have the time to catch up on the knowledge that even self-employed individuals do actually have to pay taxes as well. It’s not simply in our culture to know and practice paying our own taxes. This article will guide on this confusing journey on how to pay your taxes as a responsible adult.

Who is Considered Self-Employed?

Before we start discussing the complete details on self-employed taxation, let’s first answer the question: who is considered self-employed? Self-employed workers are those who work on their own account or with one or a few partners or in a cooperative. These include freelancers and independent contractors.

Why Should I pay for my Taxes?

After passing all the requirements that you need, if you don’t receive revenue more than Php250,000.00 (according to the TRAIN Law) you will be not subjected to expanded withholding tax, and percentage tax. The table below will discuss the rates that are required to pay based on your annual income.

In addition, there’s this thing called tax evasion. I’m telling you, my friend, this is not the bear you want to poke. Non-filing of appropriate forms come with huge penalties imposed by the law. These can range from imprisonment for two to four years and payment of fines, interest, compromise fee, and penalties which is definitely bigger than the original tax due.

What are the Requirements?

 

  • NSO Birth Certificate
  • Barangay Clearance
  • Mayor’s Permit (if applicable)
  • Business Permit (if applicable)
  • Marriage Certificate (if applicable)
  • Books of Account (ledger)
  • Payment of Professional Tax Receipt (PTR), if applicable
  • Proof of Payment of Annual Registration Fee (ARF) (if with existing TIN)

What are the Steps?

 

  1. Get a Tax Identification Number (TIN), if you already have one, make sure that it is updated to Self-employed or Mixed Income status (based on your income source).
  2. To apply, fill up the Application for Registration – BIR Form 1901 (or 1905 for those with existing TIN). Prepare with the other required documents listed above.
  3. Get form 1901 stamped and pass the requirements to Revenue District Office (RDO) and they will give you back the payment form (BIR Form 0605)
  4. Pay the annual registration fee (Php 500.00) to any authorized bank.
  5. Pay the ₱15 Certification Fee and the P15 Documentary Stamp Tax. After, a form will be given. You will be attaching this to the registration certificate later on.
  6. You need to attend the seminar at RDO before they will release the BIR Certificate of Registration (COR or BIR Form 2303). The COR will reflect the taxes to paid and the returns you should file.
  7. Apply for Invoices/Receipts using the Authority to Print form (BIR Form 1906).
  8. Lastly, register books of accounts (Journal/Ledger/Subsidiary Professional Income Book and Subsidiary Purchases/Expenses Book) and have them stamped by the same RDO.

 

The following is for computation of Income Tax

Tax Computation Example – 8% Flat Rate:

Tax Computation (Graduated Income Tax):

Tax Computation (Graduated Income Tax):

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