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A Freelancer’s and Consultant’s Guide to Using Taxumo

Think about all the attention given to the following:

  • Decluttering your closet and keeping and displaying things that bring you joy…
  • Following the footsteps of Bill Gates, Mark Zuckerberg when they only have one style of shirt or attire…
  • The rise of planners and productivity apps that help you with time management.

All of these “hacks” introduced to us because man has finally realised that TIME is the most important asset.

And this realisation is what makes most entrepreneurs, freelancers and business owners successful. They never WASTE time. It’s more important than money. This is why service apps like GRAB, and even Upwork thrive, because successful people know that money is something that you can earn back but when you lost time, it’s lost forever.

This is the reason why Taxumo exists as well. If you value your time, and if you’d much rather spend your time earning money than computing your taxes or lining up at the RDO or the bank, this application is for you. We exist for people who see that they would much rather outsource computing, filing and paying to a system or application than spending time figuring out how to file and pay or when to file and to pay. It’s basically Taxumo giving you that gray sweater of Bill Gates and all you need to do is to wear it 🙂 haha! 

To make it even more convenient for you, freelancer or consultant, I have made this step by step guide on how to start using Taxumo and how to maximise using Taxumo.

SETTING UP A TAXUMO ACCOUNT FOR FREELANCERS OR CONSULTANTS

Sign up to Taxumo using these settings (Yup, just copy your Certificate of Registration). Here is a sample Certificate of Registration and see the parts. It contains the Tax Type that you need to file.

If you don’t have this, check out Taxumo’s Business Registration Service for Freelancers. Click here: https://www.taxumo.com/business-registration/freelancer

Have your COR by your side when you set up your Taxumo account. If you don’t have it while setting up, it’s okay. You can still change the details later on. Copy EXACTLY what is written in your COR. Example, if the Taxpayer’s Name in your COR is Arboleda, Ginger Palma, please copy it as is in Taxumo.

As you can see, you can turn the notifications (email notifications) on and off. We highly suggest that you turn these on.

For your Business Profile (see image above), just copy the line of business in your COR. For “I want to file my Taxes From”, place the date when you received your Certificate of Registration OR place the date when you want to start filing with Taxumo (if you’v been filing taxes manually before).

For Freelancers / Consultants who earn below Php 3 Million Gross Revenue or Gross Sales a year, the above settings are the suggested settings. Just copy it.

Business Type: You are providing services

Income Source: Income from Profession BUT if you are still employed AND doing consultancy / freelance work on the side, choose “Mixed from Business and Employment”.

Income Tax Rate Type: If you earn below Php 3 Million Gross Revenue or Gross Sales a year and have minimal business expenses, we suggest that you choose the 8% Flat income tax rate option.

TaxPayer’s Type: Choose Professional

Deduction Method: Just choose Optional Standard Deduction but this won’t matter when the system computes your income tax since you chose 8%.

For each year also, Taxumo allows you to save a business setting! 🙂 So cool! Since you can only change Deduction methods and income tax rate types at the beginning of the year, you can choose and save settings for each year.

And for the last part of the settings page, choose and highlight (color aqua) the taxes that you need to pay. Again, based this on your Certificate of Registration. Then upload your COR and your Digital Signature (which is both optional at this point).

VERY IMPORTANT: Please don’t forget to click on SAVE for every YEAR – Business profile that you set!

ENCODING INCOME AND EXPENSES AS A FREELANCER OR CONSULTANT

The next step is to encode your income and expenses. Click on Cashflow on the left side of the screen, and this is what you’ll see (empty cashflow tab). You can look for entries that you have encoded before by clicking on show filter. To add income, click on the “Add Button”.

This is how an empty Cashflow view looks like.

Each income entered in Taxumo should match an official receipt that you prepared for your client. The OR/SI number portion is the OR number of that transaction. For freelancers/consultants, always choose Sales – Services.

Business Name here is the name of your client. For foreign clients who don’t care about ORs, you don’t need to send them a copy of the official receipt. Just keep it in your booklet.

For expenses, those expenses that you can justify to be part of the delivery of your services is what you can encode. Please make sure that the receipts are under your Tax Payer’s Name (especially for expenses that are Php 1000 and above in amount). For transportation and foreign system invoices, please save emails as PDF and save it in your computer. You can also upload it to Taxumo as backup.

PRO TIP: Encode both income and expenses on a daily basis. This will allow you to maximize Taxumo’s Real Time Tax Calculation tool. You can see how much taxes you need to pay at any given time (para hindi kayo nabibigla when tax due dates come).

FILING TAXES

To file taxes, be sure that you are done encoding your income and expenses for the applicable period. Go to the Tax Dues tab and you’ll see all the tax cards with the Tax Dues and the deadlines.

Click on the file button and pay your taxes. Taxumo will then show you a summary of that tax.

If there are things that you need to change, you can go to your settings page. Some fields are also editable here.

For paying your taxes, you need not go to a bank within the city of your revenue district office. You can pay using any of these available channels.

  • Grabpay
  • Debit or Credit Card
  • PayPal
  • Mobile or Online Banking
  • Bank over the counter or Non-Bank over the counter like Bayad Center, SM Payment Counters, Robinsons, 7-11, etc.

PRO TIP: If you have chosen Dragonpay, please ALWAYS check your email for the completion of payment. They will send instructions for you to complete your payment.

Once you have successfully filed and paid for your taxes, you can visit the Past Filings tab on your Tax Dues tab.

If you see “Unpaid filings”, these are the tax cards that you have clicked but have not yet paid for. All you need to do is to click on CANCEL FILING so that the tax card returns to the CURRENT FILINGS TAB.

If you have successfully files and paid for a tax card, it will be marked COMPLETED (it will be marked temporarily IN PROGRESS for 2-3 days before it will say COMPLETED). Once marked completed, you can download and save the copy of the (1) form (click on view form and then click print form — print to PDF if you want to save it in your computer), (2) Download the BIR Confirmation and (3) Download and save the tax payment record.

It’s important to save backups of these in your computer. An OC person like me always want to have “back-ups” for everything. 🙂

After this, you can sit back and relax!!! Fun times!

If you want to maximize your Taxumo subscription, here are some things that you may not know about Tauxmo…

  1. If you receive 2307 forms, you can encode them directly to Taxumo’s Withheld Taxes tab (received tab) and the system will consider it when it computes your Income Tax return. Some people don’t know that these “attachments” should also be submitted and declared to BIR using another system called Alphalist Data Entry and Validation Module. Failure to submit these will also incur penalties.
  2. For your manual books of accounts, you will need to update them frequently. When a BIR examiner visits you, s/he will check if your books are updated. If you don’t know how to update your books, worry no more as Taxumo’s Books of Accounts view formats your entries in columns and all you need to do is copy these entries to your manual books.
  3. If you need to pay SSS voluntary contributions or loan payments, you can click on Pay bills. Compared to other systems, Taxumo already generates the PRN or the payment reference number for you which you can get also from the SSS site. You need not shift from one site to the other.
  4. Entries are exportable and downloadable via Taxumo’s Books of Accounts view. All income is under cash receipt and all expenses are under cash disbursements.
  5. You can give access or delegate access to two more people. Example, if you are using an accountant or bookkeeper, you can give one access to him or her.

Rest assured that Taxumo is constantly innovating and looking for ways that can help you become more productive as a freelancer or consultant.

For Taxumo’s pricing for their subscription plans, click on this link: https://www.taxumo.com/taxumo-pricing/

For those who copied the 8% option above, pricing is at Php 700 per month or at Php 10,000 for a year’s access.

For those with a lot of expenses and who would like to opt for the Graduated Income Tax Table — OSD or Itemized Deduction, pricing is at Php 1500 per month or at Php 20,000 for a year’s access.

If you have any more questions on how to use Taxumo, feel free to leave a comment or message me through https://www.facebook.com/mommyginger/.

Tax 101: What Every First Timer Should Know

Doing your taxes is probably one of the most frustrating things every working person does. Even the more veteran people, when it comes to taxes, would find it hard to do when they don’t prepare for it well. In the Philippines, tax computations are one of the things that a lot of people fear, just because of how stressful it can get.

That being said sooner or later, everyone will have to do their taxes as part of their lives. And for those first timers that have no idea how to do them yet, don’t fret, because if you start out early, you might find it easier to do in the future! Plus keep in mind that there are a lot of helpful websites and applications that make it easier for you to do your taxes! That being said, here are some of the most important things that every first-time taxpayer should know.

BIR Forms

There are many kinds of BIR forms that are dedicated solely to paying business taxes. For example, there are specifics forms applicable for self-employed individuals, employees of companies, and business owners. And there are forms that are to be used by Partnerships and Corporations.

It’s important that you know which one you should use so that you can fill out the right form and avoid penalties. Freelancers fall under self-employed individuals. We, freelancers, are considered non-licensed professionals. They, along with business owners who are sole proprietors usually do their own taxes. While people that are employed would usually have their companies do their taxes for them.

Documents Needed

There are as many steps to the processes as there are BIR forms. Haha! I may be exaggerating, but the what’s for sure is that the steps to be taken take a whole lot of time from a business owner’s day. On the average, a business owner in the Philippines takes 2 days in a month (according to a PWC and World Bank report on taxes) spent just complying with taxes. When starting a business, I highly recommend that one should at least be familiar with the 101s of preparing and submitting your own taxes.

A good example would be to know more about income tax returns. These are forms that need to be submitted as long as you are making some kind of income or receiving compensation. Income is basically your gross revenue less expenses and when you do this, you get your taxable income. This is the basis for your taxes (income tax return). A self employed individual submits and pays for income taxes every quarter (Form 1701Q), the fourth quarter being the “famous” annual income tax (Form 1701 or 1701A).

If you are employed (have a day job) and running a business at the same time, you are considered to be a mixed income earner. How do you report taxes? You will secure BIR Form 2316 from your employer at the end of the year and use the values there and combine it with the income / expenses from your business. You do this only for form 1701 or Annual income tax form.

If you need help in preparing tax form 1701 and 1701A, feel free to check out https://www.taxumo.com and check out their blog. They have useful information for everyone!

Payments

The final step is to print out all of these documents and pay for it at the Authorized Agent Bank (basically a bank that accepts BIR payments in the city of your business).

Please prepare 3 copies for all of your accomplished BIR Forms along with the required deposit / bills payment slip and your payment.

In some cases, you won’t be needing to pay anything, and that would entail a “No Payment” Situation. These include refundable/ creditable tax returns, returns with excess tax credit carry over, and returns that are qualified for a second instalment. These “no payment” transactions just need to be filed and stored together with the BIR confirmation via the eBIR Forms system.

Key Takeaway

This article detailed the very basics of what you need to know about taxes. In the Philippines. Tax computations are frustrating, however, as long as you prepare everything and do it as early as you can, you won’t have a problem with doing your taxes any time soon.

If you need help with understanding all of these still, just ask Taxumo.

P.S. I’m a co-founder of Taxumo, whose mission is to help people start and sustain a business! 🙂 Feel free to contact us!

Online Tax Preparation with a Heart

Never in million years would I have guessed that I would be a TECH STARTUP company co-founder AND focus on online tax preparation. When I was little, I never liked math. One of the reasons why I chose marketing was I assumed it had a few subjects where I had to compute or use a calculator. When I graduated and helped my dad handle the family business, I would be so bored looking at excel spreadsheets that showed profit and loss statements.

I think I only got to love numbers when I joined a bank. Of course, in the beginning, I forced myself to look at spreadsheets and reports containing mostly numbers — all kinds of numbers and computations. Plus, I had to force myself to understand banking language like ADB, MBR, TPR, NPV, TITF, JA, CASA, FLOATS, etc. But, for anyone who knows me, I am a competitive person. I loved the challenge. So when I started understanding number, I found that I loved it and it was “actually” useful! haha! My almost 7 years of service in that bank was the best years of my life. I learned a lot and challenged myself A LOT!

When 2012 came, I went away to seek the life that I wanted, which was to become an entrepreneur. I would watch videos of Marie Forleo, Tyra Banks, Oprah and other influential women on the internet. I really admired each one of them and how they got to where they were. I saw the millions and millions of people whom they have helped. I wanted to be like them. I wanted to see how I could directly help others with a business. This dream was the foundation of Manila Workshops. When I started, it was a challenge getting our name out there. It was even more challenging to manage the “business” side of everything — from sustaining profits, controlling costs and most of all, dealing and paying taxes! I really hated that part.

I would always get stressed it if taxes was the topic. I wished for the longest time that someone would create anything like an online tax preparation system or whatever to make it easier for me. And so, with someone did notice and create a rudimentary system for me. This someone was my husband and my saviour. With this very rough local automation at home, we were able to expand the business of 3 directors to 20 directors.

The TAXUMO Story

taxumo-logo-full-black

And this is where our Taxumo story begins. We wanted to share this process and system with other small business owners, freelancers and professionals. We created a deck of the idea that we had, and started to pitch it to different people and in different competitions. This is where we started, because it seemed that others were doing this as well. With this, we were chosen as one of the 100 startups in Asia for the Echelon e27 Summit. During this time, we were already slowly developing the product. I was talking to different possible partners and was building alliances. EJ was developing algorithm, framework and the other stuff that we had to have before developing the software.

The next chapter of our story started when we were chosen as top 25 for the Ideaspace incubation program. We got some funds to build the prototype. With the money, we hired a freelance developer who would build the working prototype for us (A big shout out to Barry! Thank you! He developed our MVP and was really good, but had to let go of the project because we didn’t have enough funds to pay him.). This is the typical challenge of a startup. If you’re going through a financial turmoil, this is normal. We were bootstrapping as bootstrapping can be. Then, we were chosen as one of the top 10 startups for the Ideaspace Acceleration program. This came in at the right time. We used the funds to speed up development. A competent team is helping us develop the new system now (shoutout to Spectres Solutions! Wooohoo!)

During this time also, we invited people to be co-founders with us. Why and how did we decide on that? Well, we knew that we needed competent people to join our team to handle different aspects of the business. We knew that we needed an accounting and taxation expert, so we invited Mark. We knew that we needed to be covered legally, so we invited Atty. Kevin. And finally, after a few months of personally handling operations and marketing, the four of us decided to invite Evan, a marketing and advertising expert, and a freelancing advocate. So that’s how our team came to be.

Today is a really important day for us — it’s Ideaspace’s Demo Day. This is where we show the world the months of hard work that we have put into our startup (thanks Charz Medoza for the great design work, our new logo and the new UI/UX that everyone should watch out for!) But forget about us, because this is the time when we share the benefits of Taxumo for all of the Philippine self employed individuals — small businesses, freelancers and professionals. You can now concentrate on starting and building your business. This is the time to REFOCUS on what matters. Refocus on your passion!


 

We know that the reason that you started this business is that you want to make a difference. You long for time to use words or photographs to tell a story. You wanted to see the smiles as your customers run their fingers on that dress that you so painstakingly created. Hearing the conversations of people after a workshop session that they are now inspired to take action makes your heart skip a beat. Seeing an email of gratitude from a US client for great VA work done makes you feel that you can conquer the world. Giving business or life coaching advice to hundreds of people on stage or even through a one on one session makes you elated. All of these things make you remember that it was passion and a sense of purpose that made you decide to start your own business or pursue this profession. This is how we feel. This is how we all should feel about our business.

So join the tribe and worry less about taxes! Pursue your passion. Leave all the taxation worries and sign up for Taxumo (http://taxumo.com). It’s should all be about YOU this 2017!

P.S. Thank you to all of our mentors (Ms. Diane, Sir Manny, Prim, Phil, Gabe, Paul, Edmond, Jojy, Jojo, Jay) and to all of those who helped us make this happen! We love you all! #TeamTaxumo