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

 

 

Now you’ve probably already made your new year’s resolution list, and I hope you’ve started to make some progress when it comes to realizing each of your goals. But if you’re still looking for a little direction, I thought I’d come up with a few things to start or update yourself on this year to make sure that by the end of it, you’re happier, healthier, and wealthier!

Amp up your graphics game.
Learn to use graphics apps and services like those offered by Canva.com. I’m not a very artsy person, but Canva has made my life wonderful! Whether you’re an entrepreneur or a professional, you’ll find this skill useful for social media promotions and ads, poster-making, sprucing up presentations, and so on. Even if you’re not using this for business, you can prettify your personal messages and posts, add personalized graphics to your blog, and more.

CANVA BASIC TUTORIAL

Open an online payment account.
If you’re not already using PayPal or a similar online payment gateway, this year’s the year to do it. It’s getting more and more convenient to buy and sell online, and this is one way to keep your credit card information secure. Plus, you can use this to send money to loved ones anywhere, anytime.

Transition to online shopping.
Like I’ve mentioned, online shopping is becoming more and more popular and convenient. Whether you get home, fashion, tech and more from Lazada, makeup and skincare from BeautyMNL, restaurant food and groceries from HonestBee, or whatever else you shop for online (and these are just a few of the local options), you have to admit that online ordering and delivery is one way to beat the traffic and save hours on your shopping trips.

Use transport networks.
Ride services like Uber and Grab have been around for years, but if you haven’t been using these too much, now’s the time to embrace them. And before you start thinking using them regularly is too expensive, perhaps you should also count the cost of parking, gasoline, car maintenance, and either wages for a driver or your own driving stress. Plus, there are ways to save, by sharing a ride with officemates who live close to you or with neighbors who work in the same area as you, by creating a “carpool” system so your kids can share a car with schoolmates from the same area, and so on.

Start or grow your rainy day fund.
This is one of those things that makes just about everyone’s new year’s resolutions list, but rarely gets resolved to your satisfaction. It’s understandable—expenses pile up, and temptations to spend are everywhere. But this year, start thinking about a sustainable way to save money. Better yet, look into investments that will grow your money instead of simply saving it.

Schedule regular date nights with your partner—and your gal pals.
It’s so easy for life to get in the way of romance, so make sure you and your partner take time out to rekindle that flame. Add it to your weekly schedule so you never forget to spend some quality time together.

On a related note, your monthly schedule should also include time with your BFFs. One study I read about has shown that, for women, spending time with your best friends can help your body fight stress and create more serotonin, which is a mood-balancing hormone essential to staving off depression. And another study mentioned we are more likely to live longer if we maintain a large network of friends as we get older.

Maintain a skin care regimen.
Time and aging only move forward, never backward, so it’s never too early or too late to start taking care of your skin. This doesn’t just mean slapping on some facial wash and moisturizer each morning and night. Pamper your skin and it’ll keep you looking and feeling fresher and younger. Plus, you’ll need less makeup if the canvas you have to work on—your face—already has a healthy glow to it. Check out this 10 Step Korean routine video that I created using Nivea products!

Explore freelancing and entrepreneurship possibilities.
Whether you’re already a freelancer or entrepreneur or you are working a corporate job, it’s always a good idea to diversify your income stream. And who would say no to making a little (or even a lot of) extra money? Explore ways to supplement your current income, and if you need a little help doing that, check out the events we have planned for this year at ManilaWorkshops.com.

Start journaling.
Bullet journaling and similar practices can help with your efficiency and productivity, so I’d definitely recommend this. But what I really would suggest doing this year is journaling for your state of mind. Here are some ideas for your journal. go over the events of your day to put things into perspective and clear things for the next day, make a list of things to be happy about and grateful for, have a daily goal and write about what you did to achieve it. You’ll find yourself happier and healthier just for having picked up the pen more regularly.

Manage your taxes.
There are a lot of changes related to taxation coming in 2018. Make sure these things don’t take you by surprise. Plus, if you aren’t filing your taxes properly, now’s the time to make sure you do that. After all, you don’t want to risk heavy penalties from BIR for failing to file the right taxes at the right time! And to make things easier for you, make sure you check out Taxumo and the services we offer, which are ideal for freelancers, entrepreneurs and mixed-income professionals.

Do you have a recommended must-do for 2018 I didn’t get to list? I’d love it if you’d share in a comment. We all have our personal goals this year, and it would be great if we could work toward them together!

A lot of people have been discussing the TRAIN law and how will it affect us. I’ve been reading about it and I’ll be sharing some of the things that I read about with you. Also, I’ll be sharing a Philippines BIR Tax Software that I have been using.

What is TRAIN?

President Rodrigo Duterte signed the Tax Reform for Acceleration and Inclusion (TRAIN) into law last December 19, 2017. It’s the first package among the other tax reform measures to be issued by his administration. It expected to make a considerable impact on the prices of goods and services, take-home pay of Filipinos and their purchasing power.

About 70% of collected revenues will go to infrastructure projects that the Duterte’s administration plan to build. His administration has planned to allocate P8.44 trillion for its “Build, Build, Build” program for 2017-2022. They plan to build more road networks and better mass transportation rides for the public.  These will enhance the economy and create more investment opportunities, thereby creating more jobs or income sources for the Filipinos.

The other projects under the 70% collected revenues are the following: infrastructure for the military, drinking water facilities in all public places and sports facilities for public schools. The remaining 30% will be spent on social mitigating measures and investments for health, nutrition, hunger and education.

What is it to Employees?

Under this law, there is a zero percent tax for low-income earners with an annual income of P250,000 and below. Those with an annual income of P8 million and above are taxed with 35 percent. The 13th month pay and other bonuses at P90,000 and below will remain not to be taxed. This new law lightens the financial burden among low-income earners. With the previous income tax law, about 5 percent is deducted from earners with P10,000 and below income. Those with an annual income of P500,000 and above get to have 32 percent of off their income.

What is it to us Business Owners, Freelancers and Professionals?

For business owners, sole proprietorships and licensed and non-licensed individuals, those earning below Php 250,000 per year will be tax exempt. Those who earn Php 3 Million and below per year now have the option to file and pay for a 3% percentage tax + income tax (paid quarterly) or an 8% percentage tax of gross receipts (paid annually).

Although the 8% percentage tax paid annually may seem attractive, you may want to check what is better for your business. There is still a level where 3% percentage tax + income tax (paid quarterly) is a better option.

Here’s how to check:

One – Download this calculator by a my friend Mark Ong, who is a CPA.

Train bill – compare: Train bill – compare

Second Option – This is a blog from Taxumo, Philippines’ BIR tax software.

TRAIN’s New 8% Tax – Does it really save you money?

What else did change?

The BIR placed a higher tax rate on coal, mining, tobacco, sweetened beverage petroleum, and automobiles. Some may not find it as good news. They fear that companies will increase the prices of their goods for consumers to shoulder the higher tax rates.

What’s next? 

Everyone’s awaiting the other packages and the Implementing Rules and Regulations of the BIR. If you want to know more about the Philippines Tax Reform law, join the workshop of Manila Workshops on January 27. Check it out in this link: http://manilaworkshops.com/events/understanding-tax-reform-for-msmes-self-employed-professionals-freelancers

Personally, our team in Taxumo studied the law and thought about how to easily cascade it to our users. If you haven’t checked out this Philippines BIR Tax Software, you should. It really makes your life as an entrepreneur, freelancer and professional easier. How? Taxumo is the first in the industry to have automated calculations of your tax dues. And guess what? The Taxumo Income Tax calculations now uses the formula from the TRAIN law (RA No. 10963).

Once the Implementing Rules & Regulations are released by the BIR, Taxumo will be updating the forms & formula speedily and accurately to make sure that you’re using the latest forms when you’re filing your taxes.

If you want to try out Taxumo, sign up now for a FREE trial.

I Love You

Hello, world! I love you!

Happy love month, you guys! I’m sorry I haven’t been regularly updating my blog these past weeks. Things have been crazy. How crazy?

Well, let me first start with my business. Manila Workshops has been really active since the beginning of this year. It seems that corporations are now looking for workshops like ours. I’ve been receiving a couple of emails asking for proposals for workshops to be conducted and ran in their place of work. To that I say! SURE! No problem! Just email me.

We have some exciting workshops coming up this year, too, and it’s with the support of one of the biggest tech (or social brands…or probably both. haha!) Can’t divulge that yet, but it’s pretty exciting. I’m sure MSMEs, freelancers, and even employees of different companies would want to attend these upcoming, cool workshops!

My event directors are so busy these days! I love that they are so active in our messenger. We have this internal incentive where I will be giving out a fitness wearable to the winner. But the more exciting thing is that we will be running internal workshops for ourselves. Yup, we will have a Manila Workshops team learning session every month. This month, EJ (https://www.linkedin.com/in/eugenearboleda)  will conduct a How to Test if your Workshop will Fly session. Next month, I am arranging a Human Centered Design workshop with the one and only (and definitely one of the best in design, Edmond Gozo – https://www.linkedin.com/in/edmondgozo). I don’t pay these speaker so the least I can do it give them a shoutout here! Thanks for the support!

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And then there’s Taxumo! We had a pretty busy month also for Taxumo. The number of sign-ups is growing and hopefully, the number of users, too, for this coming February 20 tax deadline. Don’t forget that the deadline of Taxumo is February 15, so please try out the system already.

Hmmm, well, we have had some interesting meetings with different VCs. We are raising our seed round and have been meeting some interesting VCs. We have upcoming meetings with other people also. But enough about VCs! We have made amazing progress and we will already be servicing VAT clients any time soon! Woohooo!

If you have time, please do meet us at Commune on February 11, from 1-4 pm. We are holding this mixer for business owners, freelancers and professionals. Please do drop by and say “Hi!”. This mixer is in cooperation with Payoneer and FullSuite.

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Hmm, what else! Oh, thank you to those who consistently read my blog. I have interesting topics lined up for you in the coming weeks. By the way, the topic for this month is (can you guess what it is? hint: it’s in the box above!)… LOVE. Yup, it’s love.

I can’t wait to start writing, because I have a lot to say about this topic. 😀

So, those are my personal updates. I’m sorry I haven’t been updating my blog, but I am battling to keep my eyes open now just for me to drop this note. I love you, my dear readers, and I haven’t forgotten you!

XOXO,

Mommy Ginger

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