My Two Cents: BIR Registration for the Self-Employed
Suck at money? Congrats. You’re part of the 99 percent of people in their 20s floundering when it comes to finance. Adulting is hard, and money is harder—especially when it’s your own and not your parents. My Two Cents is here to break down everything you need to know about finance, business, and entrepreneurship. We’ll tackle all the basics, from how to get a business permit to how to invest in stocks, to educate the fledgling adults on how to not go broke.
Welcome to the idiot’s guide to money. Third lesson: BIR registration for the self-employed.
Getting a business permit is only one part of the long journey entrepreneurs have to go through in order to set up their business. Another important step is registering as a self-employed individual with the Bureau of Internal Revenue (BIR). The amount of startups and freelancers continues to grow, but no one is exempt from paying their taxes.
Registering as self-employed with the BIR is a precedent for paying your taxes from professional, entrepreneurial, or freelance work like a good citizen. Self-employed individuals don’t have employers to handle their government paperwork for them, so they have to take responsibility for their own taxes and forms with the BIR. Long story short, time to level up your adulting skills.
And here’s where to start:
Who counts as a self-employed taxpayer?
A big misconception is that only freelancers make up the self-employed workforce. And while writers, photographers, artists, and such make up a fair amount of self-employed professionals, this group of people also includes entrepreneurs, lawyers, doctors, and business owners who run their own business or practice.
Individual taxpayers are classified as either employed by a company or self-employed, and self-employed individuals are further categorized as single proprietorship entrepreneurs or as licensed (lawyers, doctors, accountants) or unlicensed (writers, photographers, home-based workers) professionals.
What requirements do you need to register with the BIR?
You’ll need the following documents for BIR registration:
NSO Birth Certificate
Any government identification card that indicates the place and date you were born
Business Name Certificate from DTI
Professional Tax Receipt (for licensed professionals) or Occupational Tax Receipt (for unlicensed professionals)
Affidavit indicating the rates, manner of billings, and the factors considered in determining service fees (as specified in BIR Revenue Regulation 4-2014)
You’ll need the following forms:
BIR Form 1901 – Application for Registration For One-Time Taxpayer and Persons Registering under E.O. 98 (to secure a TIN and be able to transact with any Government Office)
BIR Form 1905 – Application for Registration Information Update/Correction/Cancellation
BIR Form 1906 – Application for Authority to Print Receipts and Invoices
BIR Form 0605 – This is the form to accompany your payment to register with the BIR.
How do you actually register?
1| Accomplish BIR Forms 1901 and 1905 and submit them with the other requirements at your RDO that has jurisdiction over the location of your office or home (if you work from home).
2| Pay the P500 fee at any authorized bank within the RDO’s jurisdiction and submit the fee along with BIR Form 0605. There may also be a payment counter at the RDO office.
3| Return to the RDO. Pay the P15 Certification Fee and the P15 Documentary Stamp Tax, pick up your BIR Certificate of Registration, and “Ask for a Receipt” Notice.
4| Now you can proceed with securing your Authority to Print (BIR Form 1906), which will allow you to print official receipts for your business/freelance transactions. Ten booklets of ORs cost approximately P1,200.
5| For the last step, register your accounting books and ledgers and have them stamped by the BIR.
Mastering BIR registration is just the first step as a self-employed individual—the next step is figuring out how to file your own Income Tax Returns as an entrepreneur, professional, or freelancer, but that’s a lesson for another day.