Tag

solopreneur Archives - Taxumo

Taxumo

Income tax rate of just 1%?

By | Tax Rules | No Comments

The Department of Finance has just released more info on proposed tax reform proposals it aims to be approved next year, and yes it includes much lower income tax rates. How much lower? How about as low as 1%? Have I got your attention?

But just who are qualified under this low income tax rate? Let’s assume JCRuz (aka Juan de la Cruz) is a starting triathlon coach who makes P30,000/month and as part of his work, racks up expenses of P9,000/month. JCruz is also single and currently dating his childhood crush. Under the current tax rules, the income tax for the year would be:

Annual income
30,000 x 12                                          360,000

Less allowed deductions:
Business expenses – 9,000 x 12       108,000
Personal tax exemption                      50,000
Dating childhood crush                                  x  sorry, hindi pwede
Taxable income                                  202,000

Tax due (current rules)                       38,000

 

Under the proposed lower income tax rates, those earning P250,000 and below will be taxed a fixed P2,500, and 20% on the next P150,000 of income over P250,000.  So JCruz could see his P38,000 tax sliced to just:

Annual income                                   360,000

Less allowed deductions:
Business expenses                              108,000
Personal tax exemption                                  x  let’s assume this could go away
Taxable income                                  252,000

Tax due                                                     2,900

The lower rates should encourage more people to register and file their taxes and could lead to higher total tax collections to improve our country’s infrastructure and public services.

Isn’t this more awesome that catching that rare Pokémon?

Important advice for aspiring Filipino entrepreneurs

Before You Start a Business, Focus on the Most Important Thing

By | New Business | No Comments

Important advice for aspiring Filipino entrepreneurs

I’ve been approached by numerous solopreneurs and home-based businesses for advice on how to sort out their bookkeeping.

The three most common hiccups are:

  • mixing personal and business-related funds;
  • having trouble segregating or splitting personal and business expenditures; and
  • ultimately, not having a clear picture of how much profit they’re truly making.

A younger me would have immediately put the accountant hat on, and fire off a number of tips and best practices, most simple would be maintaining a separate bank account exclusively for business and listing down all their regular expenses and identify those related to their business and pay those bills through that separate bank account.

But when someone approach me nowadays, the first thing I’ll do is congratulate them.

It’s takes a great deal of creativity, passion and courage for someone to put their dreams into action and leave their comfort zone (e.g. a stable corporate career.) That is awesome!

And the thing is, when you’re getting to point of being overwhelmed with the paper works, it’s highly likely that your business/vision has taken off.

It may still be at a low altitude, but you’ve gone through the first hurdle. So I always say: “You’re now having to deal with bookkeeping and taxes, which means you’ve made it.” (It’s sort of a good problem to have, one way of looking at it.)

What’s the point?

For aspiring entrepreneurs, my view is just make sure that your idea is groundbreaking/innovative/and revolutionary, and that you deliver the best product and service. The rest will be secondary.

Say you’re into baking. Competition might be stiff, but if you focus first on perfecting those irresistible pastries and creating that eye-catching brand/marketing. When your creation becomes a hit, I suppose it’s not too late to then shift your lenses onto your costs and expenses and look for cheaper suppliers for your ingredients? Yes, that stack of receipts and bills surely have to be taken care of, but when one’s business takes flight, the rest will be easy.

Do you want us to help you with business registration?

We’re trying out a new business registration service and you may qualify to be one of our pilot registrants! Details here:

Business Registration for Sole Prop, Freelancers, and Professionals