Are you one of those freelancers who still ask why you need to pay your taxes?
I have heard many freelancers express their fear and disappointment about paying their taxes. “Why should we pay when we don’t have a stable income?” “Why should we pay when we can hide what we earn since we earn online?… the government doesn’t have to know!” Well, for the record, it’s not only freelancers who feel this way. For the longest time, this has been the sentiment of Filipinos in general.
It’s tough to live in a country where tax laws are so complicated. These laws are so complicated that you end up not paying at all. It’s difficult balancing understanding taxation with looking and working for clients as a freelancer. There’s just not enough time.
If you are facing these same dilemma as a freelancer, then I am here to tell you that there is nothing to fear. Instead of thinking of all of the disadvantages, let me share with you why I pay taxes as a freelancer. Let me give you the lo down why it’s actually beneficial to pay taxes and become “legit” self-employed individuals.
Enjoy your income! Enjoy being a Freelancer.
What good is hard-earned money when you can’t enjoy it. We all want to travel, have cars, own a house, etc. But in order to get our VISA approved or our car or home loans approved, we need to show proof of income. Since we are not “employed”, we don’t have a payslip to show or a Certificate of Employment to present. The chances that our VISA will be denied is high.
When you regularly pay your taxes as a freelancer, you have your tax forms that you can show as supporting document when you apply for a VISA or for loans. Your chances to get approved are higher, and you don’t have to worry about not ever having any proof of income. Remember though that you need to be a regular and consistent tax payer, meaning you have tax forms for every kind of tax that you need to pay and you never skipped filing / paying your taxes. To make it easier for you, you can check out https://www.taxumo.com to help you with your taxes.
Easily verify your PayPal account and will never encounter problems if your Business Documents are in place
PayPal is now strict when it comes to presenting proof of your existence. PayPal will require you now to present these “proofs”. This I think is a good move. This keeps all scammers away and protects all of us non-scammers! Here are the requirements from PayPal.
Proof of Identity: Present a valid proof of identity
PayPal accepts a copy of:
– Your national ID card (front and back),
– Your driving license (front and back),
– Your Passport, or
– Other photo ID that was issued by a government body
All of the information below must be visible on the document:
– First and last name
– Date of birth
– Date of issue and expiry
– Document ID number
Note: The document needs to be fully visible. Partial documents cannot be accepted as a valid proof of identity.
Proof of Business Address: Verify your business address by providing a valid proof of address
PayPal accepts a copy of:
– Utility bills (phone and broadband services, health insurance, gas, water, electricity, etc.)
– Bank or credit card statements
– Any other government-issued letters or statements in your name
You can take a photo of your document and upload it to your PayPal account. You can also send us a copy or a screenshot of your online bills/statements.
They do not accept:
– Purchase receipts/invoices
– Partial documents
– Screenshots of your online banking or service pages
- The name and address on the documents must match those on your PayPal account.
- The proof of address document must be dated within the last 6 months.
- We cannot accept P.O. Box addresses as physical address verification.
Business Info: Verify your business entity by providing a proof of business documentation
What is a valid proof of business?
Please submit a copy of your Business Registrations (Business registrations, Memorandum/Article of Association, Certificate of Incorporation or equivalent).
This document(s) must collectively contain the following information:
- Who owns or controls your business,
- The business name, registration number, and
- The latest validity period of the business.
These are the things that you need to present. When you register with the Bureau of Internal Revenue in the Philippines as a Freelancer, you will have a Certificate of Registration or a COR. You will be able to submit this as proof of business. Once you have a COR though, you will need to regularly pay your taxes for your freelancing business.
If you don’t have a PayPal account, you can sign up here: http://bit.ly/GA_O_PayPalSignUp
Here is a quick video on how to sign up for a PayPal account:
Get bigger and higher paying Local Clients!
The thing about getting international or foreign clients is that there is a lot of competition. I’ve seen though that the local landscape is in dire need for more suppliers.
Local companies are now open to hiring independent contractors. In order to land a job with huge corporations or even just so you can haggle your pay, you need to be able to issue an official receipt.
Official receipts are documents that support sales of service, and it is issued upon collection of payment from customers. The large companies use official receipts as supporting documents for accounting entries that they create, and they also use it as “expense” when they compute for their own taxes.
So as a freelancer, this is what I do. I go through a supplier accreditation process. This process requires me to submit all of my business documents.
Then when I win a project, I send an invoice so that I can bill for services. Most local clients accept paperless invoices, such as a PayPal invoice. You can prepare your invoice conveniently using PayPal then you can send it through email. You can also use it as a reminder to collect payment and even send recurring payments to continuous projects.
After payment has been given, this is the time when you send the BIR Official Receipt.
Be a Responsible Filipino Citizen
Paying taxes is our duty as Filipino Citizens. If we truly want to help our country grow and prosper, we need to pay your taxes as a freelancer. Every day, we are experiencing things that we paid for with our taxes (drive through highways, take public transportation, etc.). If we want to see more improvement, we need to do our part and contribute by paying your taxes.
Also, if we want a voice, we need to earn that voice. I don’t think we have the right to complain if we’re not at least paying our taxes 🙂
Avoid being Penalized
In my opinion, this is the last and the least of your worries. If you are regularly paying then you need not worry about this. But for your information, yes, you can be imprisoned for tax evasion and non-filing of appropriate forms.
Failing to file and pay your taxes come with hefty penalties and can range from imprisonment for 2 to four years. Summed up, it can reach as high as up to five times than your original tax due. So, it would be better to pay your dues and avoid being penalized.
Personally, my freelancing business grew, because I’m legit and I pay taxes. Business partners, brands, and other people that I work with and plan to work with respect and trust me more, because I have a legit business. Having business documents will open you up to more opportunities and tools that you can use.
It’s always good to start your freelancing career the “legit” way, so you need not backtrack and fix stuff.
Work well and do it right! Pay your taxes as a freelancer!
P.S. For more information, click here: https://mommyginger.com/freelancers-questions-taxation-answered.html