Updated: April 2014
16 December 2009
All freelancers and home-based service providers in the Philippines are classified under the professional taxpayers category. I'd like to call them the intellectual elite. ;) The requirements for this taxpayer type include the registration of freelance business, BIR-stamped books of accounts, and issuance of official receipts.
A. Registration (Section 232, NIRC*)
Requirements for registering a freelance business:
- Two copies of filled-out BIR Form No. 1901 (or electronically fill out this form using the Excel file)
- Letter of intent (you may use this sample as template for writing your own letter of intent)
- Birth certificate (photocopy)
- Business location sketch (this can be your home office)
- Registration fee of PhP500, with filled-out BIR Form 0605 or electronically filled-out form using the Excel file (as per Section 236, NIRC)
B. Books of accounts (Section 232, NIRC)
For a new freelance business. Books must be registered before their use, before the commencement of the business, or upon registration of the business. The registration/update (i.e., stamping) of books is free of charge.
For a renewing freelance business. New books to be used during the succeeding year must be registered (stamped by the BIR personnel) on or before December 31 of the current year. Buying new books and registering them will not be necessary though, unless the old registered books have been consumed. Old books may be used within three consecutive years, from the date of stamping.
If you need new accounting books to be stamped, remember to bring the following when you visit your BIR-RDO:
- Photocopy of BIR Certificate of Registration (COR)
- CMS clearance from the BIR Collection Section
- Attach CMS clearance to BIR Form No. 1905 (Fill out: Part I - items 1, 2, and 3; Part II - Place an X mark on "Update of Books of Accounts"; then proceed to item 4 I and sign item 5.) You may also electronically fill out the form by using the Excel file.
- BIR Payment Form 0605 with the attached revenue official receipt of the registration fee paid the previous year
- Previous account books used (see list of typical account books below)
Typical accounts books of freelancers. We only have four to think about--thank God! :) They are as follows:
- Cash disbursements
- Cash receipts
To give you an idea on how to fill out these books, you may refer to the sample entries of accounting books for the Filipino freelancer.
You may choose the stylish books for the same purpose, or you may purchase the inexpensive ones like the Best Buys of National Bookstore. You may definitely request a certified public accountant to accomplish these books for you. But if for some reasons, you are restrained to hire a CPA, then consider this good news: You may fill out your own accounting books based on what you know, as I was also told by a BIR officer of the day.
I learned to fill out my books approximately three days. I have included the above link to sample entries, just in case you need templates or samples for your bookkeeping. You may also add or remove headings based on your day-to-day business transactions. The number of columns (i.e., for the cash disbursement book) will largely depend on the number and type of transactions you make. The important thing is that these records remain truthful whichever angle the BIR people will look at them. Do request for the assistance of the BIR officer of the day for details or clarification.
C. Issuance of official receipts (Section 237, NIRC)
BIR has constantly urged us to "ASK FOR OFFICIAL RECEIPT" from business establishments and individual service providers who receive payments for products or services worth PhP25 and up. Professional freelancers are also expected to issue official receipts to their clients. While some clients don't need an OR, the freelancer should at least fill out one each time payment has been received. This entry will then be reflected in the cash receipts book.
Official receipts are not the ones bought from any bookstore. These receipts have serial numbers that appear with the service provider's tax identification number registered at the BIR. For reference, I only paid PhP650 for the ten OR booklets which I believe I will consume within two to five years.
In the process of registering your business, you may request a BIR-accredited printer to assist you in securing from the BIR an authority to print your OR booklets (as per Section 238, NIRC).
D. Freelance business renewal
As of this year, 2012, a freelancer can renew his BIR registration by simply visiting his BIR-RDO (if the BIR has not yet set up a payment acceptance booth at the municipal office), presenting his filled-out BIR Payment Form 0605 (three copies), and paying for the PhP500 registration fee to the BIR personnel in charge of accepting payments. He will be issued the revenue official receipt and his copy of payment form.
*National Internal Revenue Code