Taking on freelance work is such an exciting venture. Not only does it increase your income potential but it also expands your skillset. We’ve talked to many freelancers, and most of them made a real sustainable career out of it. Here are some of the questions they wish they knew the answer to when they were starting out:
Do I need to pay taxes as a freelancer?
Yes, as a freelancer in the Philippines, you are required to pay taxes. According to the Bureau of Internal Revenue (BIR), all income earned from any trade or business, including freelancing, is subject to taxation.
How do I register as a taxpayer?
To register as a taxpayer, you need to apply for a Taxpayer Identification Number (TIN) at the BIR. You can do this by submitting the required documents, such as a government-issued ID and proof of income, to the nearest BIR office.
What taxes do I need to pay as a freelancer?
As a freelancer, you may need to pay several types of taxes, including:
Income Tax: This is a tax on your earnings from freelancing. The rate varies depending on your income bracket, but typically ranges from 5% to 32%.
Value Added Tax (VAT): If your annual gross sales or receipts exceed Php 3,000,000, you are required to register for VAT and charge 12% on your services.
Percentage Tax: If your annual gross sales or receipts are below Php 3,000,000, you may be required to pay percentage tax, which is a tax on your gross receipts or sales. The rate varies depending on your business activity, but typically ranges from 1% to 3%.
How do I compute my taxes as a freelancer?
To compute your taxes as a freelancer, you can use Taxumo’s Income Tax calculator or seek the help of a certified public accountant (CPA) from the trusted pool of Taxumo CPAs. The tax calculator allows you to input your income and deductions to compute your tax liability.
When do I need to file my taxes?
The deadline for filing and paying your taxes depends on the type of tax you are paying. For example, Income Tax Returns (ITR) for individuals are typically due on April 15 of the following year, while VAT and Percentage Tax returns are due on the 20th day of the following month.
Are there tools that can help me do all of these online?
Yes! 70% of Taxumo customers belong to the professional sector, and we have been helping them prepare, file and pay their taxes all 100% online. Most of these customers have been using Taxumo since 2018 and have been with us ever since.
You can create your Taxumo account for free today! Once you’re ready to file, you can choose from any of our affordable plans (watch out via email too cos we sendout discounts!)
If you’re curious to know how Taxumo works, we have a free learning session that you can book at your most convenient time here: https://calendly.com/consultnow/onboarding
Want to read the full Freelancer Tax Guide? Click here to read more: https://www.taxumo.com/blog/freelance-tax-philippines/