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FBP 069: BIR Registration for Freelancers in 3 Simple Steps with Al Sabado

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BIR registration and taxation for freelancers has been one of the hottest topics that has been asked of me and, I am sure, many other of you freelancers out there.  If you have not been asked the question, maybe you yourself have these questions in your mind but have no one else to ask.

Thankfully, there’s freelance editor, Al Sabado, a previous guest on the show.  She appeared in www.freelanceblend.com/7 (listen to our interview here).  Together, we presented at the Freelance Camp last 2014 and there she talked about how to become a legitimate, tax-paying freelancer.  That’s why invited her back on the show to answer all our questions about taxation, especially now that I am a freelancer.

So in this episode, we dive deep in the steps required on how to register with the Bureau of Internal Revenue of the Philippines and we also made sure to simplify the steps since it will be quite difficult to explain it in a podcast.

What’s more, I created a free guide that you can use to bring with you when registering with the BIR.  Just look for the “Subscribe” button below this post and leave your email address so we can send you the free guide.

Meanwhile, here is an outline of what we discussed in the show:

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The 3 Simple Steps on How to Register with the BIR as a Freelancer:

1. Registration

A. Requirements for Registering as a Freelancer

B. The 5 Books of Accounts

C. Issuance of Official Receipts

2. Attend the Briefing for New BIR Registrants

3. Prepare for the Filing and Payment of Taxes

Step 1: Registration

A. Requirements for Registering as a Freelancer

1. BIR Form No. 1901 “Application For Registration”: Page 1 and Page 2 (2 copies)

Item 1: Taxpayer Type:

– Choose “Single Proprietorship” if you have a physical location and accepting both local and foreign clients.

– Choose “Professional” if you don’t have a physical office and accepting mostly foreign clients.  This option is best for Upwork freelancers.

Item 19: Primary/Secondary Industries – List of PSIC and PSOC codes

2. Letter of intent (see sample here)

3. NSO Birth certificate (photocopy)*

4. Business location sketch (your business or home office)

5. Pay the Registration fee of Php500 at any BIR-authorized agent bank along with BIR Form No. 0605 “Payment Form”

6. Come back to get your BIR Certificate of Registration (COR).  BIR will tell you when to come back.

*NOTE : The BIR may have varying lists of requirements.  Please go to bir.gov.ph or check with your local BIR office.
 

B.  Books of Account

– For a new freelancers: Books must be registered (stamped) before their use — upon registration of the business or before the business commences.
– The stamping of books is free of charge.

1.  The 5 Books of Accounts for freelancers – click here for the samples.

A.  Journal

B.  Cash disbursements – record of expenses.

C.  Cash receipts – record of gross payments received.

D.  Ledger – summary of expenses and income for the quarter

E.  Official appointment book

 2.  If you need new accounting books to be stamped, remember to bring the following when you visit your BIR-RDO:

A.  Photocopy of BIR Form No. 2303 Certificate of Registration (COR)

B.  CMS Clearance Form from the BIR Collection Section

C.  Attach CMS Clearance Form to BIR Form No. 1905

D.  BIR Form 0605 “Payment Form” with the attached revenue official receipt of the registration fee paid the current year

E.  The 5 Books of Accounts (see above)

C.  Issuance of Official Receipts

– Once you have received your BIR Form No. 2303 Certificate of Registration (COR), you can now request for printing of your Official Receipts.

– About P1,500 for 10 booklets.

Step 2: Attend the Briefing for New BIR Registrants

– A required 1-2 hour briefing or seminar conducted by the Regional District Office (RDO) of the BIR in your area.  In this briefing, you can freely ask all your burning questions.

– You should receive a Certificate of Attendance.

Step 3: Prepare for the Filing and Payment of Taxes

  • Refer and prepare your 5 Books of Accounts before filing of your income tax reports.
  • Freelancers should file and pay taxes within the calendar year of their business operation.  These taxes include:

1.   Annual Registration

– Deadline: On or before January 31 every year

– How much: Php500.00

– Form: Attach BIR Form No. 0605 “Payment Form”

2.  Income Tax Returns (Quarterly and Annual)

Schedule for Filing and Payment of Taxes Due

Period  Months BIR Form Deadline
1st Quarter  Jan-Mar 1701Q  April 15
2nd Quarter Apr-Jun 1701Q  August 15
3rd Quarter Jul-Sep 1701Q  November 15
Annual Jan-Dec 1701  On or before April 15

of the following year

3. Monthly Percentage Tax Returns

– Deadline: On or before the 20th day of the month following the applicable month

– How much: 3% of your Gross Monthly Pay

– Form: Attach BIR Form No. 2551M

Summary of BIR Forms

  1. BIR Form No. 1901 “Application For Registration”: Page 1 and Page 2
  2. BIR Form No. 0605 “Payment Form
  3. BIR Form No. 2303 “Certificate of Registration” (to be provided by the BIR)
  4. BIR Form No. 1905 “Application for Registration Information Update”
  5. BIR Form No. 2551M “Monthly Percentage Tax Return”
  6. BIR Form No. 1701 “Annual Income Tax Return for Self-Employed Individuals”

Other Notes and Links

  • Renewal of BIR Registration – deadline is January 31.
  • Just start the process of registering with the BIR.  It’s easy.
  • BIR Forms from bir.gov.ph
  • For all your questions about this taxation topic, you may go to the following:
  • DISCLAIMER: It will best to consult your accountant, lawyer or the BIR RDO nearest you if you have any more questions or concerns.  This article and interview was meant as quick reference guide to lessen the confusion when it comes to taxation and hopefully, help you get started.
  • We will collect all your questions and answer them in one of our coming Q & A episodes with Ms. Al Sabado.
  • riche-atos_FotorThanks to my podcast editor Riche Atos for this splendid podcast episode.  If you need superior podcast editing, I would highly recommend Riche.  You may reach her at [email protected]

Download Our Free PDF “The 3 Simple Steps on How to Register with the BIR as a Freelancer”

Leave your email address below and we will send you this handy free PDF that we created just for you so you can save it in your mobile phone or print it and bring it with you when you register with the BIR.  Check you inbox after submitting your details below.

Any questions on BIR Registration or taxation for freelancers? Please share in the Comment Box below and we will try to answer all your questions in another Freelance Blend Podcast episode.

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Marv de Leon of Freelance Blend
Marv de Leon - Founder of Freelance Blend

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