Self-employed professionals as defined by the BIR fall under two categories: (1) “persons who derive their income practicing their profession” like lawyers, and those registered with the Professional Regulation Commission (PRC) such as doctors, dentists, certified public accountants, and others; and (2) those “who pursue an art and make their living therefrom,” including writers, athletes, and others. It helps to note that freelancers and home-based service providers also fall under professionals.
If you’re a self-employed professional based in the Philippines, chances are that you dread filing taxes. You’re not alone. Many people dread it due to the grim prospect of facing long queues, time-consuming processes and seemingly complicated tax rules.
But did you know by registering your business and filing taxes, you will be able to experience the full benefits of self-employment?
Self-employed professionals get offered a lot of opportunities for their expertise. Some of them include job referrals, international travels, and financial rewards.
However, you may not be able to avail of these if you aren’t registered with the BIR, or are not filing taxes. Here are 4 great reasons why filing taxes can enhance your career and your lifestyle.
#1 Having a TIN and ITR gives you access to Loans, Travel & Other Financial Transactions
When you register as a self-employed professional with the BIR, you are given a Tax Identification Number (TIN). You will need this when you apply for Driver’s License with the LTO, and Passport with the DFA. Also, opening of new bank accounts usually requires your TIN. You can also use your TIN card as a valid ID for financial transactions with banks or for money transfer transactions.
Filing taxes on the other hand gets you an Income tax return (ITR). This is the standard proof of income that you can use for obtaining bank loans or PAG-IBIG/SSS loans, applying for credit card, or for presenting documents for VISA application. So if you have don’t have any ITR to present, you might have to postpone your dream trip to Japan, Korea or France. These countries will surely require you to submit this form!
#2 Proof of Registration and Issuance of OR (Official Receipt)
As a business, it is necessary for you to think long term. You might find it easy to deal with cash payments today. But in the future, there might be a need to take bigger risks and offer different payment options for clients. That is where the necessity of getting yourself registered with the BIR comes in and having the proofs to show it. Upon successful registration, you receive a COR (Certificate of Registration). Having a COR certainly reflects the credibility and prestige of your profession, since it shows your clients that you are serious and dedicated to your work.
Also, being BIR-registered allows you to get your Official Receipts printed with accredited printers. That means that you are able to issue an OR to clients who require this. This is the case with many established businesses and corporations.
#3 Avoid Nasty Penalties & the Feel-Good Factor
Not paying taxes means breaking the law. If you get caught breaking the law, you will be penalized heavily by the BIR without question. That’s 25% to 50% of your income per year plus up to 20% interest. Also, it helps to think that despite the issues you may have with our local government, you at least you did your part as a citizen of this country. It also feels good to know that you’ve chosen to do the right thing. That means choosing to be a responsible tax payer despite the opportunity to evade taxes.
#4 Spend Time on the Important Things
You may think that you can live without a credit card or a particular service, but as your business grows and your ideas encourage you to go forth and be risky, you will need other payment methods besides cash. Applying for a credit card, a phone line, an internet connection, etc. will definitely be easy if you have ITRs, SSS, and other income-related documents on hand.
Better yet, it also helps you to free yourself of the energy you spend on worrying about lost trips, clients and funds due to lack of ITR or tax evasion. Instead, you are able to refocus this energy to things that really matter such as establishing your profession / business, and spending time on your passions.
So there have you it! Hopefully, this article convinces you enough to start considering registering your profession with the BIR, and be well on the way to filing taxes!
But let’s admit. Business Registration and Tax Filing can be a pain especially if you’re a self-employed busy-bee professional. No too many are keen on the thought of spending the time and energy in complying with complicated tax rules and procedures.
Luckily, there’s an online tool like Taxumo that can help you register your business and file taxes. No long lines, no fuss. Just enter your income and expenses and Taxumo does the job for you – by auto-calculating your tax dues, and auto-generating your tax forms. With a click of a button, you can submit and pay for your taxes.
File & Pay Taxes Online In Minutes!
Need help with business registration or filing your taxes? Contact us at email@example.com or check out taxumo.com!