Sharing this article with Sole Proprietorships and Freelancers / Professionals.
It’s almost December 31 and we’re still as busy as ever. I’m personally busy also as I need to “close” some things for my Sole Proprietorship business. As you know, I am a co-founder of Taxumo, but I have my own personal business which is registered as a Sole Proprietorship. We often hear the term “closing” from business people when it’s December, but we don’t know exactly what they mean. This is especially true if you are new in running a business or not in business at all but exploring this world (might be a plan for next year).
So I decided to write this as a guide for all Sole Proprietorships and Professionals/Freelancers, because we normally need to do the same things anyway when it comes to compliance.
The things that I will share in this article are the things that I personally do.
Collect all Pending Receivables
Receivables are funds that you need to collect from clients. So in my case, I monitor all of my collections in Trello. My handler, Niña and I then go through it and we try to contact the clients that we have to ask if they can pay before the year ends.
The reason why I do this is because I need to issue official receipts and collect 2307 (Creditable Tax Withheld) forms from these clients so that I can include it for this year.
Track and Compute the Taxes that you need to pay for January
People usually forget that you need to pay for their Percentage or VAT taxes as Sole Proprietorships in January, need to Renew their Mayor’s or Business Permits and even pay the Annual Registration Fee for the tax ministry (BIR or Bureau of Internal Revenue). Since they forget it, they usually end up not having money to pay these taxes or to even renew their businesses.
I use Taxumo so I know exactly how much I should set aside for my taxes for January and even for April’s Annual Income Tax Return (Annual ITR) tax deadline as early as now. This is how I efficiently plan my finances. It’s actually good that I collect in December, because I don’t have a problem anymore when it comes to funding these. I can sleep soundly at night.
What I do is I actually set aside these funds and place it in my ING account so it earns higher interest rate. I don’t touch it, too. 4% is huge so “yey” for me!
As for Business Permit Renewal for Sole Proprietorships, I secured the services of Taxumo for this. They have limited slots though since the government process in the LGUs is still very much MANUAL. To be honest, I’m not sure if they have slots to help you process your Mayor’s Permit / Business Renewal in your LGUs. Tauxmo Can cater to Metro Manila, Rizal, Cavite, Laguna, Tarlac, Pangasinan and Baguio clients. If you are interested to check if they have a slot, email customercare(at)taxumo(dot)com.
By the way, for Freelancers and Professionals, check your occupational tax receipts and professional tax receipts. Some of the LGUs require that you renew that on a yearly basis. You may need to go to your barangay to renew those. Some also require an NBI permit and a health certificate so that you can renew it (just a heads up!).
But, here is a checklist that you can use of what you need to compile. I’m proud to say that I’ve completed all of these things. I “printed” (shucks! super wasteful process 🙁 haay!) all of my tax filings and BIR confirmations that the Municipal Hall needs. They will need to know your gross sales for the year.
As for this, if you know someone from your Municipal Halls or work for Municipal halls, please let me know. For full disclosure, we at Taxumo have ways to help them really simplify all of these.
So going back, yes, you have to print all of these. Check out my complete files!
I’m so proud… I’m going to tear up. For some reason, I love that sense of accomplishment after completing this checklist. I feel like an adult! haha! Wait, I am one! haha!
It took me just a couple of hour printing since all of my filings (files and documents) are in Taxumo. I didn’t need to scramble through all of my files. I printed the form, BIR confirmation and the Payment record. I then signed all of the forms and used binder clips to distinguish the Income tax forms with SAWT attachments and confirmation, versus my VAT forms (I am VAT so for Non-VAT entities, you’ll have Percentage tax forms) versus the Annual Renewal fee or the 0605 form that I paid via Taxumo last January.
Update your Books
So I finished updating all of my books, too. For those who are wondering, YES, I write them all by myself. Taxumo allows you to generate and print a report that’s formatted already so you just need to copy it per column. Check out the picture above. The papers on the right side are the reports from Taxumo and one of my books is the one on the left. These books of accounts reports come with any of the subscription plans of Taxumo.
So there, that’s what I do at the end of the year. I got my stuff all in order, and I feel that I can enjoy celebrations now!
How about you? What’s your “end-of-year” business process? Shout out to all Sole Proprietorships and Professionals! Share it with us. Let’s help one another.
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