Are you someone who earns income by rendering professional services? Then you are a self-employed individual. You do not belong to the bracket of employees who earn wages. Instead, you only earn income when you provide services to your various clients. In this case, you are responsible for your own accounting, so you can pay the correct taxes on your income.
Notably, there are some professionals that are mandated to pass regulatory boards. Some examples of these professionals are accountants, architects, doctors, engineers, lawyers, and the like. They are required to get licenses and a PRC Card or Professional Regulation Commission Card.
Furthermore, there are also some professionals that are not required to pass a regulatory board just like those who engage in blogging, writing, freelancing, graphics designing, and many other creative services. Take note that a professional refers to anyone who is self-employed, licensed (some), and is not employed. If you fall under this category, then you are required to register yourself as a professional with the BIR.
Why is there a need for Professionals to Register with the BIR?
Under the section 236 (j) of the Tax Code states that any person who is required under the Internal Revenue Code to file an income tax return, financial statements, or other supporting documents should be assigned with a TIN or Tax Identification Number so proper identification can be done for tax purposes.
If you are a professional and a law-abiding citizen, you must register as a professional with the BIR to file your tax returns. The law mandates that you register for proper documentation and pay corresponding taxes if you earn an income above P250,000 annually. Seek help from tax services in Manila for proper compliance.
The Benefits of Registering with BIR
- Your annual income tax return or your BIR Form 1701A will be proof of your earnings. It will be useful if you want to apply for credit cards and loans.
- Registering yourself as a professional with the BIR will help you avoid paying hefty penalties by making sure you are paying your taxes on time. If you delay paying your taxes, the interest and surcharges will become worrisome.
- You can provide official receipts with serial numbers to increase the confidence they have in your services. The majority of large companies will not transact with you if you have no official receipt.
- When you abide by the law, you can work with a clear conscience. Being ethical in rendering your services to your clients will allow you not only to sleep well at night but also allow you to imbibe positive karma.
- You can avoid getting charged with tax evasion. Tax evasion is a crime and is punishable under the law. Seek tax and audit services in the Philippines for assistance.
What are the Requirements for the Registration?
You are required to present the following documents:
- Birth Certificate or any document showing your name, address, and birth date that’s issued by the official government. If the ID has no address, bring with you proof of business address.
- Valid PRC ID Card only if applicable to your profession
- If applicable, you will also need payment of Professional Tax Receipt from the local government
- BIR Printed Receipts/Invoices or the final and clear sample of your own receipts
How Can You Register?
The following are steps that can help and guide you:
- Secure your own Tax Identification Number or TIN through the BIR website.
- Go to the Revenue District Office near your business
- Fill out the BIR Form 1901 also known as Application for Registration for Professionals, Mixed-Income Individuals, Trusts, and Estates.
- If you want to change your business or if you lost your original TIN, fill out BIR Form 1905.
- Submit the forms you filled out with identifying documents to be evaluated by the RDO officer.
- Fill out BIR Form 0605 (Payment Form) which can be validated when you pay your annual registration fee in any authorized bank by the RDO.
- Pay the P15 Documentary Stamp Tax and P15 Certification Fee to get the form you need to attach to your registration certificate later.
- Wait for your BIR Certificate of registration and ARN or Ask for a Receipt Notice to be released.
- Register your book of accounts and have the RDO stamp them.
Registration is not the final step. In case of an audit, be mindful and maintain your books of accounts using accrual accounting and proper bookkeeping. For professionals earning more than P3,000,000, your book of accounts needs to be audited by a CPA so secure tax and accounting services in the Philippines.
The Tax Code is complex and can be very overwhelming so if you’re struggling with it, getting advice and help from a CPA would be a good idea. Call our team for guidance because we provide tax and accounting services in Pasig, including business registration services.