Freelancing in the Philippines has become popular for many individuals who want to take control of their careers and work independently. However, as a new freelancer, navigating the various aspects of starting and running a successful freelancing business can be overwhelming.
That said, it’s crucial to clearly understand the basics of freelancing, such as determining your niche, setting up your business, and managing your finances. This guide aims to provide new freelancers like you with the necessary information to get started on the right track–from registering your business to tips on filing your local tax requirements in the most convenient way possible.
[lwptoc]What is Freelance Work and Its Categories
Freelancing allows professionals to provide their skills or services to clients on a project basis. Freelancers work independently and are not bound by traditional office hours or workplace rules. They can work from home or any location with an internet connection and are paid for their work based on their agreement with the client.
As a freelancer, you can choose clients, set rates, and work on projects that align with your interests and skills. This flexibility is one of the most significant advantages of freelancing, as it allows you to create a work-life balance that suits your needs.
Categories of freelance work
There are many categories of freelance work, each requiring its own set of skills and requirements. See this list below and see if anything applies to your experience and expertise.
Creative and Design
The creative and design category includes professionals specializing in creating visual and digital content, such as graphic designers, web designers, illustrators, and animators. These freelancers work on projects that involve creating branding materials, designing websites and apps, developing user interfaces, and producing multimedia content.
Programming and Development
Programming and development freelancers are responsible for creating software, websites, and other digital platforms. They work on projects that involve coding, testing, and debugging software and designing and implementing websites and apps. Standard programming languages used by freelancers in this category include Java, Python, and JavaScript.
Consulting and Professional Services
Consulting and professional services freelancers offer expertise in various fields, such as law, finance, and business strategy. They work on projects that involve providing advice, conducting research, and developing strategies for clients. These freelancers often have advanced degrees and certifications in their respective fields and may work with clients across various industries.
Marketing and Sales
Marketing and sales freelancers are responsible for developing and implementing client marketing strategies. They work on projects that involve social media management, email marketing, search engine optimization, and advertising campaigns. They also help clients to develop brand messaging, create content, and analyze market trends.
Support Services
Support services freelancers provide administrative and technical support to clients. They work on projects that involve data entry, transcription, customer service, and IT support. They help clients to manage their day-to-day operations and provide technical assistance to employees and customers.
Content Creation Services
Content creation freelancers specialize in creating written and visual content, such as blog posts, articles, videos, and infographics. They work on projects that involve creating content for websites, social media, and other digital platforms. These freelancers (popularly known as influencers) have excellent writing and communication skills and can develop engaging, informative content that resonates with target audiences.
Freelance Business Registration in the Philippines
By registering your business, you can rest assured that you’re operating legally and may avoid any potential legal or financial issues down the line. Here is a guide on how to register your freelance business.
Freelance business registration requirements
1. Your Taxpayer Identification Number (TIN)
When paying your self-employment tax, the most critical step is for you to register your TIN. Thankfully, it is now possible to register your TIN without the need to visit your previous RDO personally. To transfer your TIN registration to your preferred RDO, bring two (2) copies of BIR Form 1905 to the RDO of your choice.
If you don’t have a registered TIN:
You can apply for a TIN online or head to your nearest RDO. Here’s how to do it.
Step 1: Prepare the following documents:
- Valid email address
- Accurate profile details
- Fast internet connection
Step 2: Click this link to the BIR eReg page: https://ereg.bir.gov.ph/init.do;jsessionid=794F9293E04C394F60FE540B7D343561?app=ereg.
Step 3: Provide your details and ensure all fields are fulfilled.
Step 4: Review the personal information you provided before clicking Submit.
Step 5: Please wait for an email notification from the BIR confirming your TIN’s current status.
Please note that this process only applies to individuals obtaining their TIN for the first time. Typically, TINs are issued by your initial employer, and you are only allowed to have one TIN for the entirety of your life.
IMPORTANT NOTE: Currently, the BIR eReg portal is undergoing service maintenance. Individuals wishing to apply for a TIN may visit the nearest RDO as a temporary solution.
How to register for a TIN in your nearest RDO:
Step 1: Bring the following documents:
- A duly accomplished BIR Form No. 1901 version 2018
- Any proof of identification that shows your full name, address and birthdate (passport, OWWA e-card, UMID, PRC ID, etc).
- Payment fee of P500.00 for the registration
- 1×1 picture
- PSA birth certificate
- Community tax certificate or Cedula
- For married women, please bring your PSA marriage certificate
Step 2: Go to your nearest RDO and submit your requirements
Step 3: Wait for the RDO personnel to issue the Certificate of Registration (Form 2303) along with the ‘Notice to Issue Receipt/Invoice’, Authority to Print, and eReceipt.
2. Occupational Tax Receipt
To obtain your occupational tax receipt, visit your Municipal Hall and present two valid IDs and P450.00 for payment. The actual fee may vary depending on your municipality.
3. A photocopy of your valid ID that shows your birth date and current address
Prepare two copies of your valid identification card with updated personal information. It is also advisable to bring your actual valid IDs for reference purposes.
4. A duly completed BIR Form 1901 – Application for Registration
Print two (2) copies of your duly accomplished BIR Form 1901 version January 2018.
5. A duly completed BIR Form 0605 – Annual Registration Fee
You may pay the annual registration fee of P500.00 via GCash or bank transfers.
Step 1. Download and install the eBIR by visiting this website: https://www.bir.gov.ph/index.php/eservices/ebirforms.html
Step 2. Choose BIR Form 0605 – Payment Form and click Fill-up.
Make sure to fill out these important fields:
- TIN
- RDO code
- Line of business
- Registered name
- ZIP code
- Email address
- Calendar/fiscal year
- Due date
- ATC
- Return period
- Tax type
- Individual or non-individual
- Manner of payment
- Amount
Step 3. Confirm if all the details are correct, then click Validate.
Step 4. Save the form and submit.
Step 5. Print three (3) hard copies of the BIR Form 0605.
Step 6. Wait for the BIR to send you a confirmation e-mail. This usually takes 24 hours.
Step 7. Pay using GCash, then print and attach the proof of payment to every BIR Form 0605.
Those who prefer the traditional process can make payments through an authorized accredited bank (AAB). Bring printed copies of the necessary forms and a hard copy of the confirmation email.
6. A duly completed BIR Form 1905 – For Registration of Books of Accounts
You can buy your ledgers from office supplies stores. Once this is done, you will be given the following:
- General Journal
- General Ledger
- Cash Receipt Book
- Cash Disbursement Journal
7. A duly completed BIR Form 1906 – Application for Authority to Print Receipts and Invoices
This form is for the printing of your official receipts (OR). There are 50 receipts per booklet. The BIR will require you to purchase a minimum of 10 booklets, which costs around P1,500 to P2,000.
8. A letter with your intent to avail the 8% Tax Option (check this guide for more info)
Prepare one (1) copy of your intent to avail the 8% tax option.
9. DTI Certificate of Business Name Registration (optional)
Visiting the Department of Trade and Industry (DTI) for business name registration is no longer necessary. You can now register your business name by visiting https://bnrs.dti.gov.ph/registration and settling the fee online via GCash. The certificate will then be delivered to your email in PDF format.
It is important to note that registering your business name is optional. If you opt not to register, your business name will be your full name.
10. Special Power of Attorney
A special power of attorney (SPA) is required for individuals who wish to allocate the task of business registration to another person. A SPA is a legal document that grants someone else the authority to perform a specific task or act on behalf of another person.
In the context of business registration, you may execute a SPA to authorize another person to handle the process on your behalf. This is particularly useful for those who may not have the time, ability, or expertise to register their business themselves.
In case you need assistance in legalizing your freelance business, Beppo offers its free business registration processing services so you won’t have to do it on your own. This allows you to skip the long, tedious process of registering your business and staying on top of your tax obligations. We’ll discuss more about the Beppo App later.
How to obtain your freelance business license
To obtain a license for your freelance business, simply follow these steps:
- Check if your RDO is accepting online appointments.
- Once you have a schedule, go to the RDO nearest to you.
- Submit all your documents to the window assigned for New Business Registration.
- Ask the BIR officer to process your official BIR receipts and prepare your BIR Form 1906.
4.1. The BIR officer will inform you when you can claim your BIR Certificate of Registration, which usually takes 1-2 business days.
4.2. Once you’ve picked up your BIR Certificate of Registration and Official Receipts, bring the four books of accounts and the BIR Form 1905.
4.3. Register the four books and have them stamped and signed by the BIR officer attending to you.
5. Submit the following documents to complete your BIR registration:
- BIR Certificate of Registration
- Four registered books of account (cash receipt book, general ledger, general journal, and cash disbursement journal)
- Official receipts (10 booklets)
- Copy of BIR Form 1901 – Registration Application
- Copy of BIR Form 1905 – Books
For more detailed instructions on legalizing your freelance business in the Philippines, click here.
Taxes for Freelancers in the Philippines
As a freelancer, it’s essential to understand the different types of income tax returns you may need to file with the Bureau of Internal Revenue (BIR) in the Philippines. Depending on your income source and business structure type, you may be required to file annual or quarterly income tax returns.
Annual Income Tax Return (BIR Form 1700)
Individuals who earn income only from compensation or business or professional activities file the Annual Income Tax Return (AITR). This is applicable to employees who have worked for two or more employers within the same year.
Annual Income Tax Return For Individuals Earning Income Purely from Business/Profession (BIR Form 1701A)
Individuals earning solely from their business or professional services file BIR Form 1701A. This form is for those under the graduated income tax rates with an optional standard deduction (OSD) as a mode of tax deduction OR those who chose to avail of the 8% flat income tax rate.
Annual Income Tax Return For Individuals (including mixed Income Earner), Estates and Trusts (BIR Form 1701)
Individuals engaged in trade or business or practice a profession, including those with mixed-income (i.e., individuals who earn both business income and compensation income) should file BIR Form 1701. This annual income tax return is a summary of all the transactions that cover the calendar year of the taxpayer in accordance with Section 51 of the Tax Code, as amended.
Quarterly Income Tax Return (BIR Form 1701Q)
Individuals engaged in trade or business should file the Quarterly Income Tax Return (QITR) every quarter of the year.
Certificate of Final Tax Withheld (BIR Form 2307)
Freelancers in the Philippines may encounter BIR Form 2307, also known as the Certificate of Final Tax Withheld at Source. This form is crucial for individuals who receive payments subject to withholding tax. Withholding agents, typically clients or companies that hire freelancers, issue this certificate to provide evidence of the final taxes withheld from the freelancer’s income payments.
As a freelancer, it’s essential to be aware of BIR Form 2307, especially if you receive payments subject to withholding tax. Clients or companies you work with will issue this certificate, reflecting the taxes withheld at the source. It serves as documentation for the taxes already paid on your behalf, impacting your overall tax liability at the end of the fiscal year. Make sure to keep a record of these certificates for proper tax reporting and compliance.
Understanding and managing BIR Form 2307 is crucial for freelancers to ensure accurate tax filing and compliance with the Bureau of Internal Revenue regulations.
Assisted Tax Filing and Payments for Freelancers
Filing taxes and making payments can be a daunting task. The Philippine tax system is complex, and navigating the different forms and requirements can be challenging. Fortunately, freelancers now have several options to make the tax filing and payment process more manageable.
One such option is Assisted Tax Filing, a service that aims to help freelancers easily comply with tax requirements. This service includes Dormant Filing Service, 8% Tax Filing Service, and Regular Percentage Tax Filing.
Dormant Filing Service is a type of tax filing that is recommended for freelancers who have not earned any income or who are taking a break from work. This service ensures that your tax records are up to date and that you will not face any penalties or tax evasion charges for not filing your returns.
On the other hand, 8% Tax Filing Service is recommended for freelancers who earn purely from their business or profession and have opted to avail of the 8% flat income tax rate. This service streamlines the tax filing process and makes it more convenient for you to comply with your tax obligations.
Regular Percentage Tax Filing is the way to go for those who are not eligible for the 8% flat income tax rate. This service is suitable for those earning both business and compensation income. It involves filing a quarterly percentage tax return, which is based on the gross sales or receipts made during the quarter.
Assisted Tax Filing also offers payment services, making it easier for freelancers to settle their tax dues. This service lets freelancers pay their taxes through various payment channels, such as banks, online payment platforms, and mobile payment apps.
If you’re not sure how to process and file your taxes, you can check out Beppo. Beppo–the all-in-one tax and financing solutions app–offers Assisted Tax Filing Subscription services that allow you to file, manage and pay their taxes in the simplest, most convenient, and cost-effective way.
Where to File your Freelance Taxes
Tax filing can be overwhelming, especially for new freelancers who have to navigate a complex tax system independently. The good news is you can comply with tax policies and stay on top of your income tax returns through the Beppo App.
Beppo is an all-in-one financial management solution that aims to simplify tax filing and payments for freelancers in the Philippines. It has features like tax projection, expense tracking, and assisted mobile tax filing services. Beppo provides a user-friendly interface that allows freelancers to input their income and expenses effortlessly. It generates a tax projection that gives them an idea of how much they must pay in taxes.
Below are the features you can enjoy by using the Beppo App:
- Track your income and expenses to get a clear overview of your financial situation.
- Send invoices to your clients through various channels, including SMS, Viber, or email.
- Set limits and automate your budget to control your spending.
- Receive tax estimates to help you plan your finances.
- Connect and engage with other freelancers to expand your network.
- Get assistance when filing your taxes to make the process easier.
Addressing your tax struggles for your growing freelance business. Connect with Beppo to know more. Or visit our website https://beppo.com.