Business

Talks about Mommy Ginger’s business tips and advice for momtrepreneurs. She shares valuable knowledge on topics like branding, marketing and consumer insight.

Online Sellers Taxes: A Guide and Important Things to Know

So I’ve been reading through a lot of online seller groups and there were a lot of questions on online sellers taxes.

My friend Welly and I are starting this online selling business and we’re just waiting for our samples before we start production. But feel free to pre-order.

So going back to these online seller groups, I’ve noticed that there are a lot of questions on online seller taxes. Not surprised, actually. Discussing about online sellers taxes is quite a complicated topic, and you actually get a lot of confusing answers.s

I’ve seen a lot of answers from random people in the group, and I know they mean well, but some are still quite confusing. So let me answer some of these questions that I see in these groups for you. For full disclosure, I am not a CPA. I am a business owner like you, as well, but since 2016, my company, Taxumo, has been in the forefront of helping MSMEs and self employed professionals with understanding, filing and paying their taxes and being compliant.

So in the close to 8 years that we’ve been in business, we have understood and confirmed a lot of things with the BIR. Taxumo, as an accredited tax software provider, has also helped cascade information about the new rules and regulations shared by the Bureau of Internal Revenue.

Okay, so now that you know who we are and what we do, let’s deep dive into the common questions that I see from online sellers. Get ready for a long post since we’ll try to cover a lot of stuff from online sellers registration process to online sellers taxes.

How do I register? Do I register as a sole prop? Do I need a Municipal Hall or Mayor’s permit to be able to do business?

Paano ba ako magreregister? Mag-reregister ba ako as a Sole Prop? Kailangan ba ng Mayor’s Permit?

For online sellers, BIR requires them to register as a sole proprietorship business. To register as a sole proprietorship, you’ll have to go through 3 government offices: DTI, LGU and the BIR. If you need a guide on the requirements needed for these, check this guide: https://www.taxumo.com/business-registration/sole-proprietors/

I have registered with the BIR and I got my BIR form 2303 or Certificate of Registration. What are the types of taxes that I should see in my registration as an online seller?

Nakapag-register na ako sa BIR at nakuha ko na ang BIR Form 2303 o Certificate of Registration. Ano ba ang buwis na dapat kong i-file at bayaran bilang isang online seller?

As a sole proprietor, (usually) you’d see these type of taxes:

  • Income tax return (filed Quarterly): 1701Q and 1701 or 1701A (for those who opted for 8% tax rate – earning below Php 3 Million Gross Revenue per year)
  • Sales Taxes (filed Quarterly): Percentage (for Non-VAT entities; earning below Php 3 Million Gross Revenue per year) or VAT (earning more than Php 3 Million Gross Revenue per year)
  • [Some entities with employees] Withholding Taxes on Compensation: 1601c (monthly) and 1604c

Some IMPORTANT things to note on filing online sellers taxes:

  • Tax rate types are 8% or Graduated Income Tax Rate. You can change your tax rate ONLY at the start of every year, before you file your first form. You can indicate it on your first Percentage tax form / Income tax form for the first quater.
  • For the 8% tax rate, you can only choose this if you are an individual tax payer (i.e. sole proprietor, professionals) and Non-VAT (earning below Php 3 Million Gross earnings per year)
  • Now that you’ll receive a 2307 form for the taxes withheld from your pay, these forms are very important. The total amount withheld will be tax credits that will be deducted from the total tax that you need to pay for your income tax return. These forms are “attachments” to your income tax return form.
  • These attachments also needs to be submitted to the BIR. If you’re using eBIR forms, you’ll need to use the Alpahlist validation tool of BIR to submit the attachments. I personally use Taxumo because Taxumo also submits the attachments for me. What I need to do for income tax filings is to submit all of the forms, confirmations, etc. via the EAFS tool. It makes submitting easier.
  • By the way, regardless of whatever tax rate you choose for Income tax return, you will need to write on your Books of accounts. BTW, I personally use Taxumo for filing, payment and even updating Books of Accounts. No need to know how to compute or have an accounting background. Join this FREE tutorial session with Taxumo: https://calendly.com/consultnow/onboarding
  • For mixed income earners (those with businesses who are still employed), you will need to file the taxes indicated in your COR then for your Annual income tax (use 1701 form), you will need to include the details in your 2316 (given by your employer).

So these are some of the things that I can think of, but if you have other questions, feel free to chat with Taxumo or send a message in their Facebook page. They are super duper helpful! They also have webinars specifically for online sellers.

I am part of the “cooperative / coop”, should I still register?

Yes, based on the BIR rules, all of us online sellers should register. You are required to register your business as the 1% withholding tax in the new BIR law for online seller taxes will be reported to be for your business.

To know more about the 1% withholding tax for online sellers, read this: withholding tax for online sellers

There are a lot of deductions in seller platforms like discounts for customers, etc. Which number should I report and how do I write it down in my sales invoice?

Ang daming kaltas sa seller platforms tulad ng diskwento sa customers, etc. Alin sa mga ito and dapat kong ireport at ilagay sa sales invoice?

Here is a sample breakdown that you can refer to. FYI, this is for those who want to use Taxumo to file their taxes.

Here are the steps to set up your account in Taxumo.

Step one: The first thing that you need to do to pay your online sellers taxes is to set up your profile in the settings page of Taxumo.

Step two: You’ll need toadd some “Categories” in Taxumo. As seen in the sample above, there are 4 DIRECT COSTS that are indicated: Commission, Payment Fee, Shipping Fee and Raw Materials. The other costs, not directly related to your business’ core activity (in this case… it’s selling goods), will be under deductible expenses.

This is where you can set up the categories in Taxumo.

If you need help in setting up categories and have other questions, you can also book a consultation session with Taxumo CPA partners in this page: Taxumo Consult.

So for the 4 direct costs for online sellers taxes that I’ve mentioned, 2 of these needs to be set up. So copy and add these 2. See screenshots below.

So the 4 direct costs will be categorized as such:

Commission: (to be added as a category as mentioned above)

  • Group classification: Services – local
  • Category Name: Commissions
  • Type: Direct
  • VAT Classification: Domestic Purchase of Services

Payment fee: (to be added as a category as mentioned above)

  • Group classification: Services – local
  • Category Name: Payment fee
  • Type: Direct
  • VAT Classification: Domestic Purchase of Services

Shipping fee: (existing category in Taxumo)

  • Group classification: Services – local or Services – foreign
  • Category Name: Services – local or Services – foreign
  • Type: Direct
  • VAT Classification: Domestic Purchase of Services or Services Rendered By Non-Residents

Raw mat cost: (existing category in Taxumo)

  • Group classification: Merchandise/Raw Materials – local or Merchandise/Raw Materials – imported
  • Category Name: Merchandise/Raw Materials – local or Merchandise/Raw Materials – imported
  • Type: Direct
  • VAT Classification: Domestic Purchase of Goods Other Than Capital Goods or Importation of Goods Other Than Capital Goods

Step 3: Encode all of your revenue and expenses in the Cashflow tab of Taxumo.

Remember that one invoice equals one entry on Taxumo. For the new rules on BIR Invoices, you can read this: Navigating BIR Rules on Receipts: Transitioning to Invoices Encode diligently since every time you encode your revenue and expenses, you will see an automated approximation of the taxes that you need to pay in the “TAX DUES” tab.

Step 4: Encode also all 2307 forms received in the “WITHHELD TAX” tab. It’s very easy to fill out. Just copy what is shown in your 2307 form.

Step 5: If you have subscribed to Taxumo, you can FILE AWAY. Go to the tax dues tab and file the forms that you need to file.

I think this post is becoming a bit too long already (LOL!), but feel free to comment below if you have questions on online seller taxes or better yet, go directly to Taxumo’s FB page and send them your questions.

Hope this helps! 😀

P.S. Some other articles that will help you: https://mommyginger.com/end-of-year-business-checklist-for-sole-proprietorships.html

The Role of Diversity, Equity and Inclusion in Modern Businesses

Embracing Diversity, Equity, and Inclusion (DEI) isn’t just a moral imperative—it’s also a strategic necessity for business success. 

DEI initiatives encompass a range of policies and practices designed to create inclusive environments where individuals from diverse backgrounds feel valued and respected. Across the globe, there’s a growing recognition of the significance of DEI in organizational settings. 

In the United States, 54% of employees affirm that their employers are actively prioritizing DEI efforts. Similarly, in Southeast Asia, 43% of workers report the presence of diversity programs within their organizations as of 2023.

Understanding the pivotal role of DEI in today’s business landscape is essential. By fostering diverse perspectives and creating equitable opportunities, DEI not only enhances employee satisfaction and retention but also drives innovation and fosters a positive corporate culture. 

Let’s delve deeper into how prioritizing DEI can fuel your company’s success and propel it toward a brighter future.

Why Should Organizations Embrace DEI?

A thriving organizational culture that prioritizes diversity, equity, and inclusion (DEI) is pivotal for optimizing every facet of your business operations, spanning from attracting and retaining top talent to driving innovation and maximizing performance. 

To ensure your company embodies these principles effectively, it should strive to meet the following standards:

  • Equality – Establishing fairness and transparency in all aspects of employment, including pay, recruitment, promotions, and access to resources. This can be achieved through strategies such as benchmarking salaries and leveraging reliable payroll software solutions to ensure equitable compensation practices.
  • Openness – Cultivating a company culture that fosters respect and fairness towards all employees, where open communication and feedback are encouraged, and grievances are addressed promptly and fairly.
  • Belonging – Creating an environment where individuals from diverse backgrounds feel a sense of belonging and are empowered to share their perspectives, talents, and experiences freely. 

Championing diversity, equity, and inclusion (DEI) in your business yields numerous advantages:

More Creativity & Innovation at Work

Encouraging collaboration among employees from diverse cultural backgrounds and expertise levels fosters a fertile ground for innovation and creativity. 

Diverse teams bring together unique experiences, perspectives, and knowledge, fueling the generation of novel ideas. Research underscores this effect, showing that companies with diverse management teams experienced a remarkable 19% increase in innovation revenue compared to their homogeneous counterparts.

An Improved Reputation

Prioritizing DEI not only broadens your talent pool but also deepens your understanding of customers, building trust and enhancing your reputation. In an era marked by mass employee resignations, known as the “Great Resignation,” job seekers are increasingly scrutinizing potential employers’ commitment to DEI initiatives.

For Gen Z and millennial workers, a company’s stance on societal and environmental issues, including diversity and inclusion, significantly influences their career decisions. 

Studies reveal that a substantial portion of these younger employees (52%) are dissatisfied with their organizations’ progress in creating diverse and inclusive workplaces, emphasizing the need for businesses to intensify their DEI efforts.

A Culture of Trust Is Built

Establishing a culture of trust is vital for your company’s success. This involves fostering an environment where every employee feels a sense of belonging and confidence in their workplace interactions. 

Leadership must initiate honest dialogues with diverse team members, demonstrating vulnerability and actively listening to their experiences. Addressing instances of discrimination and bias is essential, with managers encouraged to engage with diverse employees, understand their concerns, and incorporate their feedback. 

By embracing this approach, your organization fosters genuine connections, promotes inclusivity, and drives collective success and innovation.

High Retention Rates

Replacing resigned employees consumes significant resources, impacting morale and productivity. Strengthening your DEI efforts is a proactive strategy to mitigate turnover.

Research underscores the importance of prioritizing DEI: 78% of employees prioritize working for companies that value diversity, with 50% considering it very important. Those satisfied with their organization’s DEI initiatives report higher levels of happiness and job satisfaction, particularly regarding compensation and professional growth opportunities.

Gen Z and millennial workers, in particular, are attuned to DEI’s influence on employee retention. They are more likely to reject job offers lacking purpose or ethical alignment. Conversely, those satisfied with their organization’s DEI efforts are inclined to stay longer, recognizing the value of a socially and environmentally responsible workplace.

Everyone is Encouraged to Reach Their Full Potential

A DEI-centric culture empowers employees to reach their full potential, fostering connection, loyalty, and performance improvement through constructive feedback.

Deloitte’s 2022 study highlights Gen Z’s desire for workplaces where they can freely share ideas and contribute to building inclusive environments. Nearly 90% of employees whose employers empower them feel a strong sense of alignment with their company’s values and objectives.

Increased Performance & Profitability

Research consistently shows that diversity, equity, and inclusion (DEI) significantly impact business success. Firms with the most gender-diverse management teams are 25% more likely to outperform those with less diversity. Similarly, higher levels of female representation correlate with stronger performance. 

Inclusive teams are 35% more productive, and businesses with ethnically and culturally diverse workforces in the top quartile experience 36% higher profitability. 

Prioritizing DEI initiatives is not only socially responsible but also strategically beneficial for driving organizational success. By fostering diversity and inclusion, businesses harness diverse perspectives and talents, leading to enhanced innovation, better decision-making, and increased profitability.

Embracing Diversity and Inclusion for Success

Diversity, equity, and inclusion (DEI) are essential components of successful business operations. By prioritizing fairness and equality, organizations experience heightened levels of innovation, employee retention, performance improvements, and increased profitability.

Moreover, championing DEI demonstrates empathy and support for both prospective employees and customers, showcasing an understanding of their challenges and aspirations. Effective initiatives aimed at fostering a sense of belonging throughout the employee experience and customer engagement processes are key to achieving this.

Addressing pay equity challenges is paramount. Partnering with Sprout Solutions for a payroll system in the Philippines ensures fair and timely compensation for all employees. Book a consultation today for more information about our digital payroll solution.

Simplifying Your Tax Filing: How to Calculate Your Income Tax Return with Taxumo

In the maze of tax regulations and the dread of deadlines, calculating your income tax return is a task many of us would rather avoid. However, understanding how to calculate your income tax return accurately is crucial for managing your finances effectively. With Taxumo, this daunting task becomes a streamlined process, allowing freelancers, self-employed individuals, and small business owners to file their taxes with ease and confidence. In this guide, I’ll walk you through the steps on how to calculate your income tax return, ensuring you’re well-prepared for tax season with Taxumo by your side.

Understanding Your Tax Obligations

Before diving into the calculation, it’s important to understand your tax obligations. The amount of income tax you owe depends on your total income, deductions, and the tax laws applicable to your specific situation. Taxumo simplifies this by providing a user-friendly platform that automatically considers these factors, ensuring compliance and maximizing your potential deductions.

Step-by-Step Guide: How to Calculate Your Income Tax Return with Taxumo

Step 1: Gather Your Financial Documents

Start by gathering all necessary financial documents, including the receipts or invoices issued to clients, receipts for deductible expenses, Certificate of Withheld taxes received (2307s) and any other relevant financial records. This will ensure that your calculation is accurate and that you’re taking advantage of all possible deductions.

Step 2: Log Into Your Taxumo Account

With all your documents ready, log into your Taxumo account. If you don’t have one, signing up is quick and easy. Taxumo’s dashboard is designed to be intuitive, guiding you through every step of the way.

I suggest that you also go through the Intro to Taxumo session. Here are the detials:

Book a session here: Intro to Taxumo Session

Step 3: Enter Your Income and Expenses

Enter your income and expenses into the system. Taxumo’s platform categorizes your financial data efficiently, making it easy to input your information accurately.

Step 4: Review Your Deductions

Review your deductions carefully to ensure that you’re claiming all applicable benefits. If you have copies of your Form 2307s that you have received, encode it and upload it into Taxumo. There is a withheld tax tab for that. This step is crucial for minimizing your tax liability and maximizing your return.

Step 5: Calculate Your Income Tax Return

With a click of a button, Taxumo calculates your income tax return. The platform uses the latest tax tables and regulations to ensure accuracy. You’ll see a detailed breakdown of your taxable income, deductions, and the total tax due or refunds (negative tax dues).

Step 6: File and Pay Online

Once you’ve reviewed your calculated tax return, you can file and pay directly through Taxumo. The platform is accredited by the tax authorities (accredited Tax Software Provider), ensuring that your tax filing is official and secure. Taxumo also offers various payment options for your convenience — from credit card, mobile banking, even installment plans.

Why Choose Taxumo for Calculating Your Income Tax Return?

Calculating your income tax return can be complex, but Taxumo makes it simple. Our platform is designed for ease of use, accuracy, and compliance, ensuring that you can manage your taxes confidently and efficiently. Here’s why thousands trust Taxumo for their tax needs:

  • User-Friendly Interface: Navigate the tax filing process with an intuitive platform designed for non-experts.
  • Automatic Calculations: Taxumo does the heavy lifting, ensuring your tax calculations are accurate and compliant with current laws.
  • Secure and Reliable: With encryption and data protection, your financial information is safe with Taxumo.
  • Expert Support: Have questions? Our team of tax experts and customer representatives is here to provide guidance every step of the way.

Conclusion

Calculating your income tax return doesn’t have to be a daunting task. With Taxumo, you can navigate the tax season with ease and confidence, knowing you’re maximizing your deductions and minimizing your tax liability. Whether you’re a freelancer, self-employed individual, or small business owner, Taxumo is your partner in simplifying tax filing. Sign up today and experience a stress-free tax season.

Embrace the simplicity and efficiency of calculating your income tax return with Taxumo. Take control of your taxes and focus on what you do best—growing your business and pursuing your passions.

The Impact of Gourmet Confectionary as a Corporate Token

In the world of corporate gifting, the significance of presenting a memorable and unique gift can’t be overstated. As businesses continually seek innovative ways to strengthen relationships with clients, employees, and partners, gourmet sweets have emerged as a sophisticated and delightful choice. This blog delves into how premium confections are reshaping the landscape of corporate gifting.

The Power of a Sweet Gesture

Gourmet confectionary, often associated with luxury and indulgence, make a powerful statement in the corporate world. A box of high-quality chocolates, artisan truffles, or handcrafted confections can communicate appreciation and thoughtfulness in a way that traditional corporate gifts often fail to achieve. These chocolates corporate gift boxes are also an experience, offering a sensory journey of taste and elegance.

A Reflection of Company Values

Choosing gourmet sweet treats as a corporate gift symbolizes more than just a gesture of goodwill. It reflects a company’s dedication to excellence and attention to detail, underscoring its commitment to providing top-quality products and services. 

This choice indicates an appreciation for fine craftsmanship and a desire to deliver a genuinely enjoyable experience, demonstrating that the company values and respects its relationships with clients and employees. By opting for such high-end gifts, the company sends a message of sophistication and thoughtfulness, showing that it considers its business connections as valuable and worth investing in with care and consideration.

A Cultural and Personalized Touch

The versatility of gourmet confectionary allows for a cultural and personalized touch. For example, chocolates can be customized to incorporate flavors and ingredients that reflect the recipient’s cultural background or personal preferences. This level of personalization can enhance the recipient’s experience, making the gift more memorable and impactful.

Building Emotional Connections

The act of giving and receiving a gift, especially something as universally loved as high-quality confectionary, can build emotional connections. These connections are crucial in the corporate world, where establishing trust and rapport can have a significant impact on the success of business relationships. A well-chosen confectionery gift can leave a lasting impression, fostering goodwill and loyalty.

Promoting Wellness and Enjoyment

In recent years, there has been a growing emphasis on wellness and enjoyment in the workplace. Gourmet sweet treats, especially those made with high-quality ingredients and less sugar, can align with this trend. They offer a guilt-free indulgence that can be enjoyed by the recipients, contributing to their sense of well-being.

A Sustainable and Ethical Choice

Many gourmet confectionary manufacturers are now focusing on sustainability and ethical practices, which can resonate well in a corporate context. Gifting chocolates or candy from brands that prioritize fairtrade practices or use sustainably sourced ingredients can reinforce a company’s commitment to ethical business practices.

Incorporating gourmet confectionary into a corporate gifting strategy can have numerous benefits. It will not only delight the recipients but also reflects the company’s values, fosters emotional connections, and aligns with modern trends of personalization, wellness, and ethical practices. As businesses continue to navigate the complexities of corporate relationships, gourmet sweet treets stand out as a sophisticated, memorable, and enjoyable choice for making a lasting impression.

The Future of Payroll: Advanced Systems for Philippine Businesses

Payroll systems play a crucial role in the efficient management of employee compensation in the Philippines. These systems encompass the processes involved in calculating salaries, withholding taxes, and ensuring compliance with labor laws and regulations. For businesses, efficient payroll management is essential for maintaining employee satisfaction, adhering to legal requirements, and fostering financial stability.

In this article, we explore the intricacies of payroll systems and their vital role in managing employee compensation efficiently in the Philippines. We’ll examine how these systems handle salary calculations, tax withholdings, and compliance with labor laws, and why they are crucial in ensuring the financial stability of a business.

Current Challenges Faced by Philippine Businesses in Payroll Management

Let’s examine the current challenges faced by Philippine businesses in payroll management, from navigating complex tax regulations to ensuring timely and accurate salary disbursement.

Compliance with Changing Tax Regulations

One of the major challenges faced by businesses in the Philippines is the need to stay updated with the constantly changing tax regulations. Ensuring compliance with these regulations can be a complex and time-consuming task, requiring businesses to allocate significant resources to keep their payroll systems in line with the latest legal requirements.

Time-Consuming Manual Processes

Many businesses in the Philippines still rely on manual processes for payroll management, leading to inefficiencies and increased likelihood of errors. The manual calculation of salaries, deductions, and taxes not only consumes valuable time but also poses a risk of inaccuracies that can result in financial discrepancies and dissatisfied employees.

Risks of Errors and Penalties

Inaccurate payroll data can lead to serious repercussions for businesses, including penalties from regulatory authorities and potential damage to their reputation. The risk of errors in payroll management underscores the need for more efficient and reliable systems to handle these critical tasks.

The Future of Payroll Systems in the Philippines

Advancements in Payroll Technology

The future of payroll systems in the Philippines is poised for significant advancements driven by technology. The integration of artificial intelligence (AI) and machine learning into payroll systems is expected to streamline processes, enhance accuracy, and provide valuable insights for businesses.

Shift Towards Outsourcing Payroll Services

An emerging trend in the Philippines is the increasing reliance on outsourcing payroll services to specialized providers. This shift allows businesses to leverage the expertise of professional payroll service providers, freeing up internal resources and mitigating the risks associated with in-house payroll management.

For businesses in the Philippines looking to streamline their payroll processes, Sprout Solutions offers an excellent payroll outsourcing service. Their solution is designed to handle the complexities of local payroll regulations efficiently, ensuring accuracy and compliance. By partnering with Sprout Solutions for payroll outsourcing, companies can significantly reduce their administrative burden and focus on strategic growth and development.

Impact of Digital Transformation on Payroll Management

The digital transformation of payroll management is expected to revolutionize the way businesses handle their payroll data. Cloud-based solutions, integrated with accounting software programs, offer enhanced accessibility, security, and scalability for businesses of all sizes.

Benefits of Outsourcing Payroll Services

Streamlined Operations and Reduced Administrative Burden

Outsourcing payroll services enables businesses to streamline their operations by offloading the administrative burden of payroll management. This allows internal teams to focus on core business activities while ensuring that payroll processes are handled efficiently and accurately.

Cost Savings and Improved Efficiency

By outsourcing payroll services, businesses can realize cost savings associated with reduced overheads, improved productivity, and minimized risks of errors and penalties. Professional payroll service providers can deliver efficient solutions at a fraction of the cost of maintaining an in-house payroll department.

Access to Expertise and Compliance with Regulations

Outsourcing payroll services provides businesses with access to specialized expertise in payroll management and ensures compliance with the latest regulations, including the General Data Protection Regulation (GDPR) and other data protection laws.

Choosing the Right Payroll Outsourcing Partner in the Philippines

When selecting a payroll service provider, businesses should consider factors such as the provider’s track record, technological capabilities, data security measures, and the ability to customize services to meet specific business needs. Case studies and success stories of businesses that have successfully outsourced their payroll can offer valuable insights into the benefits of partnering with the right service provider.

Conclusion

The future of payroll systems in the Philippines is characterized by technological advancements, the growing trend of outsourcing, and the potential for significant improvements in efficiency and compliance. By embracing these changes and choosing the right payroll outsourcing partner, businesses can position themselves for success in an increasingly complex and competitive business environment.