It’s that time of the year once again when we have to deal with thick bundles of paper. Yes, I’m talking about our business documents.

I have a sole proprietorship established here in the Philippines. Most of the businesses here (99%+) are micro-small-medium enterprises or MSMEs. And to add to that, most of them are also Sole Proprietors like me.

So I would assume that most of the people reading this post are sole proprietors. I decided to focus on this segment also so as not to make the post long.

What do I need to do every January of the Calendar Year?

DTI Permit

First of, check that your DTI permit is still valid. The Department of Trade and Industry is the government agency that we deal with when we want to create a Sole Proprietorship. The DTI approves the “trade name” that we want to use. In my case, Manila Workshops’ trade name is GPA Events Management Services.

So if it’s already expired, fret not since you can actually renew your DTI certificate from the comfort of your own home. Just go to this site: https://bnrs.dti.gov.ph/renewal and renew your certificate online. I did it last 2018, and I think (I don’t remember) I used GCASH to pay for the fee.

Baranggay and Business PermitLetter of Intent to Renew your Business (3 originally signed copies)

Next, you will need to gather all these documents before going to the Municipal Hall and office of the Baranggay (usually each one is in the same building or at lease close by).

  • DTI Certificate (for sole proprietors)
  • Letter of Intent to Renew your Business (3 originally signed copies)
  • Original and photocopy of previous year’s barangay permit and official receipt
  • Previous year’s Mayor’s Permit/Business Permit and Official Receipt, original and photocopy
  • Community Tax Certificate (CTC) / Cedula from previous year
  • Contract of Lease or Certificate of Occupancy to use Premises (what I do in lieu of this is I photocopy the Real Property Tax Receipts, which are under my name. That’s the one I present)
  • Previous year’s Sanitary Permit to Operate
  • Certification list of employees as of December 2019 signed by President or HRD (if you don’t have employees, create a certification that you don’t have any employees)
  • Quarterly VAT Returns (if you are a VAT entity) or Percentage Tax Returns (if you are non-VAT) for the previous year with BIR Confirmation
  • Quarterly Income Tax Returns (1st, 2nd and 3rd Quarter); these are your 1701Q forms
  • Certificate of Gross Sales for previous year (just add up your gross sales for the entire year)
  • Previous stamped financial statements, audited or unaudited (if applicable); note that for those with Php 3 Million and below gross sales, you don’t need an audited financial statement. BTW, this is for the year before last year.
  • Comprehensive General Liability Policy Insurance (CGLP) / Local Insurance and official receipt from previous year; note that some Municipal Halls don’t require this. The CGLP fees are computed also based on the square meters of your registered address.
  • Authorization Letter (3 originally signed copies) and Special Power of Attorney (3 originally signed copies) — if you are making someone else process it for you

Once you have collated all of these, you can now go to the Municipal Hall. For the fees, it really differs from one City Hall to another.

If you need help processing your Business Permit Renewal at your Municipal Hall, you can get in touch with Taxumo. They offer this service provided you are in Metro Manila, Batangas, Laguna and Cavite. https://www.taxumo.com/blog/get-your-business-permit-renewed-this-coming-new-year-with-taxumo-until-december-30-2019-only/

They can still accommodate a few clients so please don’t mind the deadlines. Oh, Taxumo can also help you with Business Registration just in case you haven’t registered your business yet.

BIR Renewal

So we’re done with two agencies for Business Renewal for Sole Proprietorships. For BIR, it’s actually so easy. I just log in to my Taxumo account, and make sure that I have highlighted the tax types i’m supposed to pay for (check your Certificate of Registration or Form 2303 to be sure) in the settings page.

Go to the Tax Dues tab and click on file now for 0605. Please make sure that it’s for 2020! 🙂 For first time users, you can attend an online onboarding session by clicking on this link: https://calendly.com/consultnow/onboarding

If you need information to be changed in your COR, you will need to go to the RDO to do that using 1905. Else, if nothing needs to be changed, you only need to file this 0605 form via Taxumo. No need to go to the RDO of the BIR.

I love that everything is easy! 🙂 If you have other questions on renewing your business permit and registrations and certificates, leave your questions in the comment section below!

Start the year right! I hope this somehow give you an idea of how to go through Business Renewal for Sole Proprietorships. Fix all of these and don’t wait for the last moment to avoid penalties!

I completely understand. We’ve been receiving thousands of inquiries via our chat button in Taxumo’s site this April asking a lot of things about the 8% Income Tax Rate option. So, I thought writing about it would be a good idea (and note that this is based on my understanding). Full disclosure! I am not a tax expert. I am just relaying what I have heard from our BIR contacts. And if you read opinions on this post, this is MY own personal opinions and not the opinion of Taxumo. Got it? 🙂

What is this 8% Income Tax Option and who can avail of this?

Because of the TRAIN Law (aka R.A. 10963), a lot of changes have been happening and a lot of people don’t know what to do. For sole proprietors, like yours truly, I just take in and digest parts of the TRAIN LAW that is applicable to me. One of the things that is an option now is the opportunity to avail of a simpler 8% Income Tax Rate Option.

The BIR released Revenue Regulation or RR 8-2018 which details how the income tax changes as per TRAIN will be applied. Although it explains a lot of things, there are still things that are not explained thoroughly. According to the regulation, the 8% Income Tax Rate on Gross Sales/Receipts can only be availed by any self-employed individual whose gross sales/receipts for the year does not exceed P3,000,000 (aka the VAT Threshold).

Check out this video from Taxumo:

So should I choose the 8% Income Tax Rate Option?

Choosing the 8% tax rate option is simple because it’s a flat rate! No hassle, no computations 🙂

But for me, I actually did not choose this. But I have my own reasons, and these are:

    1. The Regulations said one thing but when I called my RDO, it seems they were not following what was on the RR. Case in point: RR No 08-2018 says: “If the taxpayer is unable to timely update the required registration, s/he shall continue to file the percentage tax return reflecting a zero amount of tax with a notation that s/he is availing of the 8% income tax rate option for the taxable year.” BUT, when I called my RDO, they said that for them (whatever that means), they don’t accept these forms filled out according to what the RR said.

  1. So two (2), I personally called BIR and asked what the process is to opt for 8% and the gave me the process (as seen below) BUT I personally don’t have time to do that (hahaha! again, it’s just me and my laziness!)
  2. And three (3), as an events coordinator, we have a lot of expenses. So, based on this calculator, I think the 3% plus income tax is still a better option for me.

So how do you tell the BIR that you’re opting for the 8% Income Tax Rate Option?

Step one: Go to your BIR RDO and bring your Certificate of Registration (COR) and a Letter of Intent. They will ask you if you haven’t gone beyond the threshold of Php 3 Million (They will also check your records and see if there are open cases, etc.)

Step two: Wait for them to release the new COR. It will not include “percentage tax” anymore. It will only show you that you need to pay for Income Tax and your yearly renewal. When do you get the new COR? Well, it really depends on how fast your Revenue District Office can release it.

It’s not that bad really and it’s very simple. I’m just lazy (haha!). After you receive your new COR, you can use Taxumo for filing taxes all throughout the year at just Php 250 per form. We just don’t have the rate yet for the 8% filing and the annual income tax filing, but we’re really affordable so you don’t have to worry about that part.

Please don’t forget to still file the first quarter Percentage Tax form for this year and just indicate zero filing. This is what the BIR Officers in different RDOs told me.

For opting in for the 8%, you need to update your COR before April 30, 2018. 

What else did I miss?

Oh, for the Quarter 1 Income Tax Return filing due in May, don’t forget to indicate that you’re “opting in” to avail of the 8%. If you miss indicating this in the form, you will have to file your Income Tax Returns using the Graduated Income Tax Table AND also file quarterly percentage tax returns. I’m not sure if you need to change your COR back again to indicate that you’ll pay percentage tax though, but it’s most likely that you will.

So that’s it! These are the things that I know about the 8% Income Tax Rate Option.

If you still want to talk about this, chat with us at https://taxumo.com

 

 

One of the things in my life list that I would want to cross out this year is to start my own Sole Proprietorship business (That’s #37 in my Life List). Aside from just simply crossing it out, I wanted to experience how it really was in opening a business. I had a partnership opened before (a partnership with my friend, Sharon), and most of the paper work was actually outsourced to a messenger. We, of course had to pay for them to process our papers.

I wanted to find out how hard (or how easy it was) to open a business. So what I did was I really went to DTI to go through the process. I went to the DTI Area 2 Office for (Makati, Pasig, Taguig, Muntinlupa, Las Piñas and Pateros) which was at the 2/F Atrium of Makati Bldg., Makati Ave. cor. Paseo de Roxas, Makati City. They are open from Monday to Friday from 8am-5pm (tel. No. 501-5135). For those applying with a business address in QC, this is where you should go instead: DTI Area 3 Office(Mandaluyong, Marikina, QC and San Juan) at G/F Highway 54 Plaza, EDSA, (Across SM Megamall) Mandaluyong City which is also open on Monday to Friday, 8am-5pm (Tel. No. 706-1767). Shout out to my sister-in-law, Neva!

When I got there, I didn’t have to get the form from the guard because I already filled up a form that I got online. So to save you time, just download this form, fill it out and create two copies.

BN Application Form (2011-06-13)

The guard got it and stamped a number. This will be your number while you wait in line. I got there at 1:30 pm and some of the DTI officers were still on their lunch break. I think it would be better to go in the morning instead. I think the line would be faster. When I got there, there was only 1 person receiving the application forms. Around 2:00 pm, three people arrived to help out, so the processing time was faster.

DTI in Makati

DTI in Makati

When I was called, I handed over my form. The first thing she said was that I had to change the name. I applied for Manila Workshops or Manila Workshop or ManilaWorkshop.com. Apparently, you cannot use any name of a place in your business name. That’s one tip I have for you. I had to change it to GPA Events Management Services.

Another tip is that you cannot be vague. That is the reason why my business name is long. It has to contain words that really tell of your service. The good thing about processing your own papers is that you can decide quickly. If you have someone else process it for you, that person will have to call you and ask for the name that you would like to use to replace what you wrote. Then he/she will have to ask the DTI processor again and then get back to you. That process would be tedious.

DTI Cashier Window

DTI Cashier Window

After we agreed on the name, the DTI processor asked for my ID. I gave my passport. It took her some time before she could finally type everything into her computer. Finally, she gave the document back and I went to the cashier’s window to pay for my fee. The fee that you have to pay depends on the scope of your business. Fees are:
Barangay: Php 200
City/Municipality: Php 500
Regional: Php 1000
National: Php 2000

You also have to pay Php 15 for the documentary stamp tax. After paying, you give your application form and the receipt to another processor. She will be the one to release your DTI Certificate of Registration.

DTI window for release of Certificate of Registration

DTI window for release of Certificate of Registration

 

When she calls out your name, be sure to check the spelling of your name, your business name and the address. This is very important! Don’t just leave. I found 3 errors, which I asked them to change.

After they retype it, you are done with the DTI process! 🙂 Congratulations, you have managed to pass through the first step in setting up a Sole Proprietorship Business.

The next step would be the application for Mayor’s Permit in the Municipal Hall of your place of business and then with the Bureau of Internal Revenue.

This is a great guide to follow when setting up your own Sole Proprietorship business:
http://www.dti.gov.ph/uploads/DownloadableFiles/A_Guide_to_Registering_Business.pdf

Hope this article helps!

Mommy Ginger

Mommy Ginger