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Freelancers, here’s our comprehensive guide to managing your taxes

It’s that time of the year, taxpayers.

Tax season is upon us, and I figured you might need a quick memory jogger that, uh, yes, you have to pay your taxes. The word “free” in freelancers does not, sorry to pop your bubble, exempt you from anything.

And that brings us here: our comprehensive freelancer’s guide to taxation.

Register as a freelancer

You need to go to BIR and file a registration (if you haven’t yet) as either, a.) a self-employed professional, or b.) a business. Note that these two has differing requirements, features, and benefits. This is what you’ll do.

Fill out and submit the BIR Form 1901 along with the required documentations writtenon the form. You may have to pay the Php500 annual registration. You will also receive the BIR Form No. 0605 from your assigned BIR-accredited bank. This document must also be attached when you file the BIR Form 1901. When filing this form, make sure you only check the tax types that are relevant to your line of work. This will save you from a lot of stress in paying unnecessary tax returns.

If you’re already registered as an employee of a corporation, you still need to do this. You must update your taxpayer’s details at your assigned BIR office.

Keeping your books

As a self-employed professional/business owner you are required to transparently record all your transactions. Otherwise, you can expect a penalty of Php1,000 and the likely charge of tax evasion. You must maintain all job orders in order to do this which is, I know, is a huge pain. Therefore, if you can afford it, hire a reliable bookkeeper or finance specialist to help you out.

What taxes you are required to pay

If you registered as a business, note that if you earn more than Php1,919,500 every month, BIR requires you to pay the mandatory 12% value added tax. If you don’t, you’re required to settle only 3% tax of your gross receipts. You must file the BIR Form 2550M (VAT) and the BIR Form 2551M (percentage tax) on the 20th and 25th of the month.

There’s also income taxes for self-employed professionals, which is filed quarterly and annually. You must completely fill out BIR Form 1701 and 1701Q and settle the amount. You must pay your quarterly income tax return, which is calculated from your total taxable net income on or before the 15th of the first month after the applicable quarter (for the quarter income tax return) and on or before April 15th (for the annual income tax return)

Go out and pay your taxes

Now that you know how taxation works, you’re left without any excuse not to settle it. Go do yourself a favor and do right by our nation’s law, pay your taxes, and enjoy a hassle-free freelance career.

For more in-depth articles on taxation, visit Taxumo. They’re a great service professionals and businesses can use in handling their taxes stuff. In short, it’s perfect for taxation dum-dums like you and me.

Armand

Lifestyle & Culture Editor // Secretly a dog.

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