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!

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

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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

I was always busy and worried at certain times of the month, and it was always because of tax preparation. I have already paid a cumulative amount of probably Php 20,000 worth of penalties. My previous freelance accountants would forget to pay (because of the multitude of clients that they had to service). I, personally, would forget deadlines, because of my busy schedule. For some forms, I didn’t get to file because I didn’t know that I needed to file them. I do love math, but I really don’t get  how taxes are computed.

My husband wanted to help me. He would see me suffer and he saw that the stress was killing me. Being the programmer that he is, he found a rudimentary way to automate the tax preparation that I did from home. From there, we saw the benefits of the automated process. We then wanted to share this with other business owners, freelancers and professionals.

Paying taxes should be something we do and we should see as our duty. We should do it because it will greatly help our country. We will do our share by making it simple and easy for each and every one of you. This is the reason why we created Taxumo. Taxumo is a do-it-yourself web application that computes, fills out forms and send the data directly to the bank/BIR. You don’t need to start loving math! haha! You don’t need to line up at the bank or the RDOs.

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What makes our team the best people to talk to is that we genuinely understand the pain that you are going through, because we have been there. We know that BIR has been trying to come up with a way to have a robust online tax preparation process and to automate collections. We are here to help both the end users and the Bureau of Internal Revenue.

Taxumo is a web application that helps in online tax preparation and filing — so we take care of computing, filling out the forms and submitting it to the BIR/Bank.

Although, right now, we don’t handle payments that needed to be paid in the past. What you could do is to use this online tax preparation application for your payments moving forward. Right now, we cater to percentage or non-vat payers. By December, we will also be ready to cater to VAT taxpayers. If you don’t understand these terms and if you want to know if you are a vat or a percentage/non-vat taxpayer, you can check out your certificate of registration of Form 2303. Here is a sample:

cor-sample-for-taxumo

cor-sample-for-taxumo

All of the information you need to complete your profile page is in this document. If you lose it, you can visit your Revenue District Office or RDO (usually in the area where your business address is) of the BIR to secure a copy.

I also created this video so that you have a guide on how to use Taxumo.

The next deadline is on December 20 for Percentage Tax payers! 🙂 I hope you can sign up now while the system is FREE. Just go to http://taxumo.com and see how easy paying taxes can be!

If you have questions, feel free to write it on the comment section below!

My friend and I were discussing the other day during the mompreneur meet up sponsored by Mommy Mundo about our accountants and what they do for us. Although, I did the legwork in registering my business and although I’m good with numbers and I like manipulating numbers for projections, I can’t seem to do the filing of my quarterly income tax. I do the filing of my monthly percentage tax, but not the quarterly reports and my book keeping. My accountant (who is a freelancer by the way from 199jobs.com) does all that for me. But when my friend, Mariel, mentioned that I could actually do even the quarterly reporting, I was inspired to learn more about how to do it.
Book keeping though will never be done by me. I want to understand how they fill out the journals and ledgers, but I think I would want to do it myself.

For some reading this, they might say, what the hell is she talking about?! I was like that before, allergic to the terms, names of forms, etc. There are so many forms to know about especially when you’re paying taxes in the Philippines, 0605, 2551, 1701, 1702, etc. What are all these numbers? What are all these forms?

Well, to help out mompreneurs (especially, but this is open to all entrepreneurs), Manila Workshops has created a series of Tax and Accounting workshops to help all of you understand taxes and accounting.

Tax and Accounting Classes

Tax and Accounting Classes

It’s a course where you can take all three classes (which will be really beneficial for you at Php 3000 for all three classes or you can choose to take two courses at Php 2500 or 1 at Php 1500. I highly suggest though that you take at least the second one if you really want to learn about taxation and paying the right taxes here in the Philippines.

Project 39 Accounting and Tax Poster_about the courses

As a momprenuer, even if we are just a sole proprietor or even if we just want to learn in the hopes of really doing our taxes by ourselves in the future, it’s always nice to have someone help us. We can’t all be superwomen and the world understands that. We can be everything to everyone and our business will not grow if we just have ‘ourselves’ to rely on. We need other people to help us like accountants, etc. Even if we have people who are willing to help us, we still need to know our business’ ins-and-outs.

So, with this, I hope to see all of you there and after this, I would like to hear that you’ve finally understood taxes and accounting!

Sign up here!