The gig economy is a growing alternative a lot of Filipinos are taking advantage of right now. And with the pandemic forcing a lot of people out of their jobs, most people turn to freelancing as their main source of income.
But because freelancing isn’t widely accepted (yet), there exist few resources about it. So if you’re looking for an updated guide on how you can register your freelance business, this guide is for you.
Under the eyes of the Philippine government, any income you earn is taxable. That includes income coming from freelancing projects. That’s why it’s essential you register your freelancing business early on in order to avoid unnecessary headaches later.
Here’s an overview of what you’ll learn in this guide:
Why register your freelancing business
Aside from the legal consequences, there are a lot of benefits of registering your freelancing business:
- Show credibility—when you register your business, you will have a document called the Certificate of Registration (also known as BIR Form 2303) that serves as proof that you are a legitimate business
- Ability to issue receipts—most companies here or abroad require official receipts as proof of their expense. Without it, they cannot legally use it in their business, that’s why they are looking for this.
- Updated tax records—while you may not think about it now, but you may need a bank loan or get a travel visa in the future. One of the requirements for these things is always an income tax return (ITR) for at least the previous year. If you are not registered, you will not have an ITR to produce.
Registering your freelancing business with the BIR solves these and other potential headaches later on.
Do you have any questions? Or did you notice any discrepancies from your experience? Let me know in the comments so I can update the article. Today, there is no single and reliable source of information for everything related to the government agencies. With your help, we can transform this website to help others like you overcome the same challenges you’ve faced before.
Other information you need to know about being a freelancer
A freelancer is a self-employed, skilled professional who offers their services or specialized craft for a fee and it could be a part-time or full-time working relationship. There is no expectation of a permanent single client unlike in the field of regular employment or corporate jobs.
Freelancers get paid either per hour, per project, per contract, or depending on the agreement between the employer and freelancer. Being the most rapidly growing business market in the world, it is no wonder that many people jump the fence to carve their own career paths.
In the Philippines, freelancers fall under what the government calls self-employed individuals. They are defined as:
- Persons engaged in business and derive their personal income from such business;
- Professionals such as (1) “persons who derive their income practicing their profession” like lawyers, and those registered with the Professional Regulation Commission (PRC) such as doctors, dentists, certified public accountants, and others; and (2) those “who pursue an art and make their living therefrom,” including writers, athletes, and others.
These include popular freelancing jobs like virtual assistants, graphic artists, content writers. Bloggers, vloggers, and podcasters all fall under this category too.
Freelancer registration requirements
There are a couple of requirements and documents that you need to prepare beforehand.
Below is a high-level overview of the documents and information you need to have/know. In the next section, you’ll see how they all work together. And as with most requirements, you need the original and photocopies of them throughout the entire process.
- Tax Identification Number (TIN) – You normally get your TIN from your first employer. If you don’t have any yet, BIR has made an easier and faster way using BIR eReg and you may follow these steps on this website.
- Revenue District Office (RDO) – If you are a freelancer then you need to make sure that your TIN is in your current RDO that also covers your current home address. Generally speaking, your current RDO is where you last worked. You can ask your previous employer about this. If it is different from the address that you will use in your registration, you will need to transfer your RDO using BIR form 1905 first.
- Birth Certificate – If you don’t have any, you may request from the nearest Philippine Statistics (PSA) office or order it online. Make sure that you have a photocopy of your birth certificate as BIR will not get the original copy.
- Any government-issued ID that has your name, address, and birth date.
- Barangay Certificate stating you are working as an online freelancer and need to be registered as a self-employed professional
- PRC ID (if applicable)
- Occupational Tax Receipt (OTR) or Professional Tax Receipt (PTR**) – for licensed professions under the Philippine Regulatory Commission or OTR for professions where PTR is not required. You can get this in the city hall in which city you are planning to register (usually home address).
- BIR Form 1901 (Application of Registration) – 2 original copies
- BIR Form 0605 (Payment for Application of Registration) – 3 original copies
- BIR Form 1905 (for RDO change if applicable) – 2 original copies
- Books of Accounts***
*Barangay Certificate is different from Barangay Clearance and you need to bring your COE with you when applying for this
**Since online freelancers don’t need DTI Registration and Mayor’s Permit, BIR will require you to get PTR or OTR from your city hall or municipal hall. Just a bit of advice, because you don’t have a license then it is better to get an OTR and is relatively cheaper than PTR.
***For online freelancers, you only need two books of accounts: Journal and Ledger
Step-by-step process to register your freelancing business with the BIR
Please take note that this registration process is for individuals or freelancers only and doesn’t apply to non-individual or companies or firms.
However, if you register a business to offer these said services, for example setting up your photography studio or a graphic design agency, then you might want to register a company (like an OPC) instead of yourself.
1. Update your TIN through BIR Form 1905
If you have your TIN as an employee from your first employer, you need to update it and fill out a different form and you can download it here: BIR Application for Registration Update Form 1905.
You can either register your TIN online or go to the nearest BIR office.
Here are the two different scenarios you will most likely encounter:
- If you have an existing TIN under an employer and will be transitioning to a full-time freelancing career, you need to change your status from employed to self-employed.
- If you are still in a corporate world and freelancing at the same time, you can declare yourself as a mixed-income earner, indicating you earn from both being employed and self-employed means.
2. Update your personal information and RDO through BIR Form 1905
When filling out the form from Step 1, make sure that you have also updated your other personal information such as your registered address and Regional District Office (RDO), if applicable. That form is also for information update, correction, or cancellation.
Your RDO should have jurisdiction over your place of business (if with establishment) or residence. If not, you need to request a transfer of RDO in BIR.
For example, if you previously worked in Makati but you live in QC (and this is the address you plan on using), you need to also transfer your RDO.
This also applies even if it’s within the same city. Let’s use Makati again as an example. If your company is in Legaspi Village (RDO 47), but your home is in Salcedo Village (RDO 50), you will need to transfer your RDO.
There are two ways to do this: Either go to your old RDO and personally request from there or go to the new office where you want your RDO to be, fill out a BIR Application for Registration Update Form 1905, and request them to fax it to your old RDO.
Here’s a list of RDOs on the BIR website and has a detailed list of areas and information within the RDO’s jurisdiction.
3. Accomplish BIR Form 1901
Fill out a BIR Application for Registration Form 1901 and print it out in two copies.
4. Accomplish BIR Form 0605 and pay the annual registration fee
This form is for printing receipts, invoices, and proof of payment of annual registration fee.
Fill out BIR Payment Form 0605, print it out, have three copies, and pay the annual registration fee of Php 500 at the BIR’s cashier or any accredited bank within your district.
This will be paid every January of every year. You will need to show BIR Form 1901, BIR Form 1905, and the Barangay Certificate upon payment.
Here’s a list of Authorized Agent Banks (AAB) that can also accept the payment. Don’t forget to photocopy the payment form and receipt from the bank and have it in 3 copies.
5. Pay other fees
Pay for the Php 15 certification fee and the Php 15 documentary stamp tax.
Payment receipt and taxpayer’s verification slip will be given to you together with forms 1901 and 0605 after.
Keep all of these as you need to attach to the Certificate of Registration later on.
6. Submit requirements together with BIR Forms
Collate all BIR Forms 1901, 1905, and 0605 and submit these together with the required documents above* to your RDO. Head to the New Business Registrant Counter. Don’t forget to also present your receipt from the bank, both original and photocopy.
*see requirements for BIR Certificate of Registration
7. Attend the required seminar
Attend the taxpayer’s seminar and initial briefing which will be conducted at and by the RDO for new registrants. It is free and you need to know your rights and responsibilities as a taxpayer.
This will also guide you on how to file your income taxes properly. If you are unable to attend the seminar, an officer-in-charge is present daily at your RDO to assist you with your concerns and clarifications.
8. Claim BIR Certificate of Registration Form 2303
Usually a day after, the RDO will issue you the Certificate of Registration or BIR Form 2303 together with the “Ask for Receipt” notice and Authority to Print (ATP).
9. Apply for invoices or official receipts using the BIR Form 1906
You are also required to issue an official receipt for client earnings whether you are earning locally or internationally. You need to have an official receipt printed by a BIR-accredited printing press facility.
This Official Receipt (OR) is what makes you a legitimate professional. Along with your COR, these government-issued documents are needed to be issued to your clients in the future when you receive compensation for services rendered.
Fill out the BIR Form 1906 by downloading the form here: BIR Authority to Print Form 1906. You need to following requirements to for BIR Official Receipts:
- BIR Form 1906
- Barangay Certificate
- One government-issued valid ID
- Photocopy of your BIR Form 0605 with receipt from the bank
- Photocopy of COR and payment receipt
- Money to be used as payment for your OR orders
This may take weeks before you can claim your official receipt booklets. The receipts are valid for 5 years and price varies depending on your chosen printing press.
10. Register Books of Accounts
Once you have your OR and COR, you need to learn how to manage your books. As an online freelancer, you’ll be given a Journal or a Ledger. Subsidiary Professional Income Book, Subsidiary Purchases, or Expenses Books will do as well.
Register your Books of Accounts and have it signed and stamped by the same RDO where you are registered at.
What to do after completing the registration process
After receiving your BIR form 2303 and your receipts/invoices, take note of these reminders:
- Issuance of registered Sales Invoice or Official Receipt for every sale of goods or services to clients/customers/buyers;
- Keeping of registered Books of Accounts and other accounting records of business transactions;
- Withholding of taxes, as applicable;
- Filing of required tax returns; and
- Payment of correct taxes due on time.
If you are unfamiliar with the different taxes, when you should file, or how to fill-out your receipts, check these out. Of course, nothing beats talking to a qualified accountant who has helped other freelancers before.
Do you have any questions? Or did you notice any discrepancies from your experience? Let me know in the comments so I can update the article. Today, there is no single and reliable source of information for everything related to the government agencies. With your help, we can transform this website to help others like you overcome the same challenges you’ve faced before.
Frequently asked questions
What are the benefits of registering my freelancing business?
When you register your freelance business, you have the ability to issue receipts that most companies are looking for. You also demonstrate your credibility and trustworthiness. After all, if you register with the BIR, you are showing that you are a legitimate business. Lastly, by registering, you’ll also be able to obtain income tax returns (ITRs) which can be used later for loans or visa applications.
What’s the difference between OTR and PTR?
Occupational Tax Receipt (OTR) and Professional Tax Receipt (PTR) is a receipt you pay to the city hall you plan on registering with, which is usually where your home (or office) address is. Their function is the same except the main difference is PTR is used for professionals covered by the Professional Regulation Commission (PRC). Think nurses, lawyers, and the like. If you’re not covered by the PRC, you’ll use OTR.
Is a freelancer the same as a sole proprietor?
In some cases, yes. But from a legal standpoint, a sole proprietor is the owner of a company, while a freelancer is an individual. There are different laws and policies that apply to a company and an individual. For example, a sole proprietor can have an employer-employee relationship (hire people) but a freelancer can’t.
When should I file my taxes
You must file your income tax on time to avoid penalties. Here are some important dates to remember:
- January 30 of every year – Payment of annual registration fee
- April 15 – Annual income tax of the previous year
- May 15 – 1st quarter income tax
- August 15 – 2nd quarter income tax
- November 15 – 3rd quarter income tax
Not only it is essential to register yourself as a self-employed professional, but it is also ethical to file your taxes. Taxes are an integral part of the development of the economy and also the lifeblood of many government employees and public school teachers.
With this sought after laptop-lifestyle, a freelancing career empowers individuals to take pride in what they do and offers them the freedom and flexibility that they have been dreaming of.
It comes with immense privilege and independence to work anytime, from anywhere in the world as long as the freelancer delivers quality work on time.
But learning the ropes of being a bonafide freelancer or skilled professional is not easy. With great freedom comes with even greater responsibilities and legal obligations.
Two of those duties are registering as a self-employed professional and keeping a good record of your income taxes.
When registered with BIR in the Philippines, you will receive an annual income tax return which is also proof of your earnings. This can prove helpful for other transactions that will need authentication of your income such as bank loans, travel visas, and credit cards. Being registered also establishes a better reputation and trust among your clientele because you are a legitimate business entity already.
If taking full ownership over your own success is interesting to you, then this new lease of life will also open many opportunities, connections, even failures to learn from, and eventually, a self-made success.
75 thoughts on “Freelancer Business Registration Guide: How to Register Your Freelancing Business with the BIR”
Hi. I would like to register as a freelancer. I also have a day job so I’ll be a mixed-income taxpayer then. Are these instructions still updated? I would like to visit my nearest RDO but as we all know, sometimes they are not approachable as they should be. I’m thinking if I should do all of these but worried if these are all still applicable and updated so it will save some time.
Hoping for your response.
Thanks for commenting. Yes it’s still updated. But note that because there is NO standard process (or more specifically it doesn’t get implemented), each RDO will have its own set of nuances. Some would be strict and require more documents, while some won’t. The advice we often say is to go early in the morning. That way, heads are cooler.
What if you are currently employed at a private company and also doing freelancing at the same time? Does registering your freelancing business in BIR cause conflict in how your employer remits your tax? For example, your employer has a different RDO code?
– No. But mixed income means you COMBINE your employee earnings (form 1700) with your freelance earnings using form 1901. It might be best to seek advice from a tax professional for how to do this exactly so you avoid issues later on.
Hi! My father is a Freelance Delivery Man because he is not affiliated to any company but not an online freelancer. Can you call it as a freelance also? or not? If yes, can he register to BIR as a Freelancer? Thank you!
I would say yes. Freelancer is a vague term. It’s usually referred to a person who is not employed. So using that, yes your dad is covered.
Hi. I am a freelancer and recently decided to have an outsourcing small agency which I have my relatives working with me. I want to register it. Is this process applicable? Or I can register as individual freelancer and not the agency?
Thanks for dropping by Liz. Remember, this is not legal advice and I would recommend you get in touch with a lawyer.
Answering your question, it depends on what you want to do. An agency, based on how your comment is a company that would hire other people, in this case your relatives.
The main difference between a company (whether that’s OPC, sole prop, corporation, etc) and an individual freelancer is the type of relationship you would have with your “workers.”
A company will have an employer-employee relationship in most cases. That would mean labor laws on wages, salaries, benefits and all those will apply. You would be required to give them the government mandatory benefits like SSS, Philhealth, HDMF. You would need to withhold taxes on their salaries, remit them to the BIR, and pretty much everything a regular company does. It doesn’t matter if it’s a small company, or you’re hiring relatives. You are required by law to do all those things.
Contrary to a freelancer, you will only have a supplier relationship with them. In essence, you are hiring them to do one specific job or project. Tax implications here are different as well. They will need to take care of their own taxes and providing you with official receipts for the services rendered (and they would need to register individually as well because if not, the receipts that you print yourself or buy in bookstores are not registered with the BIR. If you use them, there are tax implications as well).
If you want to keep your business simple, register as an individual freelancer and hire your relatives as contractors (i.e. as freelancers that are providing you services). Then, once you see some growth, consider registering a company.
By the way, as a company, you can technically still hire other people as contractors and not employees. But that has some its own pros and cons.
i suggest you talk to a professional about this as there may be nuances in your case.
Hi! If my existing employer is in Pasay but my intended freelance address is my residence in Makati, which RDO should I file my taxes, Pasay or Makati?
This would depend on what you use in your registration. If you use Makati, that’s where you file because that’s where your RDO will be.
Since you’re also employed, you will then need to combine your earnings from your employer. This usually comes in the form of 2316 or 1700. So, when you file your own taxes, you will add that to your freelancer earnings.
Note that this is only referring to income taxes. Depending on your registration, you might need to file for VAT or percentage taxes in addition to the income taxes.
I strongly encourage you to talk to a tax professional to discuss your specific scenario.
Hello, I just wanna ask about shifting from employed to self-employed. I already have my TIN ID from my previous job. I am an online English teacher at a company and resigned last June 2020. I got my work (freelance online teacher) last October 2020 and up until now, I haven’t changed my status from employed to self-employed. Do you think they will incur penalties on me?
It is always a possibility. The chances are low based on observation. But personally, I would not risk it. It is far simpler and easier to comply than worry.
Remember, registering does not mean you need to pay taxes. You need to consistently file tax returns and renew your registration every year though. And there are different taxes applicable to freelancers as well. I suggest you talk to a tax professional about your specific scenario.
But to give you an example, say income tax. If you didn’t receive any income from January to March, you don’t have to pay income taxes at that period. For the next quarter, you may pay a little bit. Then Q3, again you won’t pay anything. It would depend on your operations.
Let’s say your entire 2021 expenses is greater than your income. Then for 2021, you don’t need to pay any income taxes. You would still need to file tax returns though.
It’s best to talk to a qualified tax professional in order to discuss the details of your situation
I recently asked our city hall in Valenzuela about the OTR, but they told me they don’t issue OTRs. What options to I have, so I could register as an online freelancer?
If that’s the case, I suggest heading to the BIR where your RDO is then ask there. Sometimes, they won’t ask for for it in their requirements, which means you can register there.
Hello! Thanks for the information. Just want to ask, can I create a business name instead of using my name in registering/filling up the BIR form?
Or I should register my name?
I’m a freelancer and I don’t want to use my name eg in receipts
If you’re registering as a freelancer with the BIR, last I checked this wasn’t possible. You are registering yourself as a person. If you want to use a trade name/brand, you can register as a sole proprietor. This will give you the chance to “do business as” whatever name you want. Just like Jollibee is doing business as Jollibee Foods Corporation. Also, I’m sure you already know this, please don’t forget to file for a trademark at the https://www.ipophil.gov.ph
Hello, I’m new to freelancing and want to have a different trade name. Although I don’t plan to hire or expand. Just wanted to ask if I still need to file for Mayor’s Permit? I’ve read BIR no longer requires it for registration but not sure if it’s still needed.
Also, what would be the cons if I use a trade name instead of just my name given I don’t plan to hire? Any help will be appreciated.
me too. same question.
Answering your question: yes, you no longer need a mayor’s permit to register as a freelancer.
As for the trade name, to the best of my knowledge, you can use any brand you want. You can file for copyright and trademark for those as well. But, it won’t be legally tied to your name as a trade name. Meaning, it won’t be in any business papers. the only way for that to happen is to register a company—a sole prop, partnership, corporation, one person corporation. This will give you the option to do business as that entity.
For your hiring question, under PH law, you only need to think about the “relationship” between you and the person you’re hiring. Employee-employer relationship requires salary, government contributions like SSS, etc. The only way to get those is to register a company, not as a freelancer.
You can hire others though via a contractual or project basis. This means are a freelancer doing business with another freelancer or agency. This might be more suited for you. You’ll also don’t have to deal with a lot of tax complications like withholding tax, exemptions, benefits, tardiness, etc. The downside is if they are not registered as well, and you use payment to them as an expense (which means you won’t have a receipt), it might be a risk for tax complications for you later.
Please consult a professional to get guidance on your exact situation.
Hi, I work part-time for a private company. I also do few free lance art commission works. Do I need to register as freelancer? If yes, is it still applicable that below 25k monthly earning one’s income is non taxable?
Hi Elisa! I would still recommend you register that way you don’t encounter issues in the future. Since you also work full-time, what would happen is you will have two sources of income, or a mixed income earner.
As for the tax, both your income from your work and freelance will be used for the computation of your income tax.
Lastly, regarding your non taxable question, i think you have a different understanding of this. If you earn income, it is taxable. I suggest speaking with a tax professional so you can share your exact situation.
There is an income bracket that isn’t taxable already. For those in working class, it is those who earn in minimum wage. As far as I remember, 250k plus is the taxable one.
Thanks for your input! Yes, you are correct. But taxable/being registered is different from not paying taxes.
It is your duty/obligation to register because it is the law. Period. No ifs and buts.
If you fall under minimum income tax bracket, you dont have to pay any taxes. But you are and should still be registered. No way around it.
Im a freelancer and recently registered as professional-general in BIR. I think i was registered under 8%. My question is, Am I suppose to file 1701Q and 2551Q? For the first 3 quaranters?
I think it’s best you speak with a tax professional.
The answer should be in your BIR 2303 / Certificate of Registration. It will include all the tax returns that are applicable to you.
Check your COR if it has 8% on it no need to file 2551Q but you need to file 1701Q
Thanks for this guide, Ariel. Question. If I register today, then I will need to pay the annual registration fee on January already? And when should I start filing and paying taxes?
Yes, you will need to pay the renewal again unfortunately.
As to when should you start filing and paying taxes (i like that you know the distinction between this), the date on your COR will be your answer.
If you apply on NOV 15 for example. Then finally received your COR on DEC 1, your tax obligations will start on december of that year.
Say your registration says you need to file for vat and income tax.
So, on January, you will (1) need to renew your registration and (2) file your vat return for december. Pay if you received income.
Then on april (or before) file your annual income tax return for 2021.
Hope this helps.
Hi! My fiancé is a freelance pet groomer here in our city and he has an assistant. Should we consider on registering our small freelance business in BIR?
You need to determine what “relationship” your fiance has with the assistant.
An employer-employee relationship has its pros and cons. For example, you are required to provide the government mandated benefits like sss, etc.
They can both be “freelancers” in this regard so the relationship can be that of your typical project based one. Meaning, whatever you agree upon, say x% of every booking or a flat rate of Y per day, is clear. Each one will be responsible for filing their own taxes, vs a company where you’re required to withhold and file every month.
Remember: this is not legal advice. Please consult with professional.
What are the requirements for getting an OTR?
It depends on every city. Sometimes, they don’t even require one as mentioned in one of the comments here. From what I can remember, only your birth cert and TIN (proof of identification) is needed. Sometimes, they also ask for a proof of address (phone bill) to verify you’re living in that city.
This is really helpful, but in my case, I’ve been a freelancer (VA) for almost a year, and we are planning to get a real estate property next year, one of the requirements is a business permit, do you think I should just get an OTR or should I be a sole proprietor? I’m quite confused.
I think it would be best to consult with a lawyer on this matter.
But to clarify, you said real estate property– is that for business purposes or personal? I’m kind of assuming it is for business that’s why they are requiring business permit. Either way, just make sure you clarify those before buying. Also check if there are issues with the property in terms of taxes of permits.
I know of several instances where they went through the entire purchase process only to find out that the building itself had permit issues. So since they bought the entire place, they had to fix those first. Meaning, until they do, they couldn’t use the building.
Answering your question–without knowing other details, it may be better if you go for an OPC instead of a sole prop. That way, you limit the risks to yourself.
Again, please consult with a legal professional about your specific situation.
This is really useful information. Great help for the pinoy gig community.
My question is, what is the difference between paying your taxes as a registered as a freelance business as opposed to registering as a self-employed individual?
I think the process of registering as a business is easier because it can be completed online? Do any BIR guidelines prohibit freelancers from choosing between the two?
Thank you for your kind words. My response below assumes self-employed individual you were referring to is a sole proprietor (registered with the DTI).
Nothing really. You are still subjected to the same income tax bracket. As a sole prop, you may be liable for other types of taxes like withholding tax on compensation (1601-C) for your employees. As a freelancer (only BIR reg), you don’t have this because you “cannot” hire an employee. You can partner / outsource others though. This is important because an employer-employee relationship is different from a supplier-company relationship. Both have different laws applicable to them.
The process of registering a business (a complete company) is NOT easier. I don’t have the exact details but this article might help clarify a few things: a business name registration doesn’t mean you have registered a business. I have a feeling that’s what you’re thinking here, but i could be wrong.
Yes, you can register a business name online. But that is not a business. You only reserved the name. You still have to complete the barangay permit, mayor’s/business permit, and the BIR registration for that business —all of which are mostly offline. Only the name registration is online.
Hope this clarifies your questions. Let me know if you have more questions.
I am in the US and would like to employ a freelancer. Where can I find information on my obligations to be in compliance with Philippine law? Thank you for your reply! Lani
This is a tricky situation. I suggest you speak with a qualified tax professional on this. There are lots of factors affecting this such as your US tax status (visitor? green card/permanent resident? or citizen?) and what registration type (VAT vs nonVAT) and many more.
If you are located in the US there are no compliance in the Philippines the freelancer will be the one who needs to comply not you
Hi, as a freelancer can I engage in both services and physical products economic activities?
Hi! If a freelancer rented an office? Is she required to secure fire safety, environmental, sanitary permits? Thank You
No, you don’t have to– assuming you’re renting from a commercial place. You can get a copy of those permits from them. Unless you are using them as a “business address,” you don’t need them (except for peace of mind to ensure they are following standards).
Typically, you would only need those permits when you register. For example, a virtual office or coworking space, they should have those permits already. When you sign a contract with them, often, they include it especially if you tell them that you are using it for business registration.
Hope this helps!
Hi, the municipal assessor, asked me to get a Mayor’s permit when she saw my income from my bookkeeping job, in my income tax return .. I am a freelancer , working from home. Where can I get a support and show to LGU that I am exempted to get a Business permit.
Hi Ariel, I used to be a virtul assistant before pandemic and I registered with BIR as a freelancer but since pandemic I am no longer active as Virtual Assistant and now I plan to build a small coffee shop. How can I change my BIR from Virtual Assistant to Business?
Hi Ariel, I just registered with the BIR as a freelancer. How would I know if I should file under Graduated Rates or the 8% IT rate? Is It indicated on the COR? I wasn’t aware that there’s an option on choosing what type of rate I’ll be taxed.
I suggest speaking with a tax professional about your specific situation. But to the best of my knowledge, if you didn’t mention that during your application, you need to change/update your filing status or records using 1905. There are some criteria for eligibility though so you need to check that first. Another option you can take is go to your RDO and speak with the officer in charge. They should be able to help you with your next steps.
Where do I write on my Form 1905 that I’m changing my tax status from locally employed to self-employed? Thanks!
I’m a Online social media person /youtuber paid by Google adsense and PayPal money gifts/tips for my channel. Question is do i still need a professional invoices 1906? I’m going to fully register through DTI, get a TIN, and go to RDO register to pay taxes. and register my books. I’m Filipino.my income will be over 300,000 peso year.
Good morning sir. Do we, freelancers, after getting registered to BIR still need to pay OTR every year at the cityhall? Or is it one-time payment only? Thanks.
Hi! Thanks for all this information. So far, your article is the easiest and the most updated I have come across. I have dual citizenship, US/Philippines. Never worked in the Philippines and now registering to be a freelancer here in Philippines. I have a TIN number only due to inheritance processing done by a law office so my TIN number came from them after applying for it on my behalf. I only received the number; no TIN Card. I have no clue what city or office this was applied from. How then do I complete Form 1905? Another question: what is OTR that I need to get from city hall? What is OE?
I am a full time employee on my day job and I take my night job (although full time) as freelance. My night job requires us to send over an updated BIR registration form. If I had it changed from employer to mixed income, do I need to tell it to my current employer or it would instantly changed on the next ITR?
I really always have this question in mind since I decided to (decide palang) mag freelancing. Should I already register even I’m not earning yet? Like in my case, I’m trying to do find client for 2 years and still I’m not getting any income. Isn’t it quite bothersome if I will pay an annual fee of registration when I don’t have income? And since I’m a PWD and living with senior parents, since I’m not getting income yet, would be my parents will choose to pay for my medicine and other necessary stuffs before this thing in BIR?
Hi, I’m freelancer artist and just registered to BIR but i forgot to ask them that since I’m an online freelance artist, how can i issue BIR receipts to international clients? Like do i have to like send over the BIR receipts just to get their signature like mail it to them or something? I hope you reply as i do need some answers and I’m new to these stuffs and could use some help.
Hey Peach, thanks for your comment. I actually responded to your inquiry via email. I’m sharing it here again:
I was in a similar situation before. What I did is filled out the peso equivalent of the currency using the BSP rates for that day. This way, it’s always standard and leaves out any room for misinterpretation.
I tear out the receipts and file them together with the printed copy of PayPal or other invoice.
By file I mean put it in a cabinet along with other tax records/returns/confirmation. After the client pays, I print that out and put it together as proof of payment.
That’s it. I don’t mail it or anything. I just make sure that if BIR audits me, i have all records properly.
One thing to make sure if you are VAT-registered is the classification of vat/vat-exempt/zero-rated sales. Typically, for foreign clients, unless you discuss it beforehand, your quoted amount is the gross value. Meaning, you “subtract” the VAT part out of it so your actual take-home is less. Again, that depends on your agreement. For some, it says VAT is not included and added on top, etc.
Best to speak with an accountant with experience dealing with foreign clients to discuss your specific scenario.
Hi and good day Ariel!
Thank you so much for taking the time to respond to me and helping. I understand now and I’ll do that then.
I also have seen your response on my email and here with the VAT thing that isn’t included in the email and i also responded to yours. Anyway, have a great day and stay safe! Godspeed for helping newbies like me!
Hi! Thank you for the guide. It is really helpful. I want to ask… What will I do if my foreign clients send their payment via Paypal? Could I just issue receipt from there and inform BIR about it?
Hi Pamela, thanks for your comment. For your client’s purposes, the Paypal invoice serves as your receipt.
But for BIR and for your protection, the only way to “inform” the BIR is to issue an official receipt. The one that you print with them when you first register.
You can write the equivalent peso amount of your Paypal invoice in the OR. You don’t have to “send” it to the client. My advice is print out the Paypal invoice, attach the OR, file for your reference. That’s it. That’s how you ‘inform” BIR.
Of course, you’d have to report that income through your tax returns too.
Good day , Ariel Lim I’m freelance real estate agent registered in BIR i was not aware of Freelance Protection act during my service to buyer and seller , the situation is buyer required me search lots and location for his business , i earned my salary through broker’s fee shouldered by the seller/lot owner .The buyer doesn’t pay me for my effort to find/ search such property for his business , there are times that target location was not possible or above of his budget(expensive). If the sale consummate it is responsibility to work the transfer of title infavor of buyer and others related documents .I was also given a task to file reclassified agricultural lot into residential by virtue resolution of Sanguniang Bayan (LGU) my services was not paid , Do I have the right claim payment of services .
Thanks for your comment Ceasar. I think your best course of action is to reach out to a lawyer who is knowledgeable about this.
Hi. Does BIR require any proof of earnings like a contract or anything to determine your total income? I can’t see it in the requirements here but I’ve read that somewhere. Thank you.
To the best of my knowledge, no. Nor does the BIR need to.
The only time earnings are needed are during tax returns and business renewals. But for registering with the BIR as a freelancer, no, it’s not needed.
Hi.. you mentioned BIR registration. How about Business registration as a freelance… do i need to register DTI and SEC?
No, you don’t need to register to DTI and SEC if you are applying only as a freelancer
I am a foreigner living in The Philippines and working online for businesses worldwide (outside of PH).
Do I need to register as a freelancer in PH ?
Hi! This one is really helpful. Thanks. I want to ask. My cousin said that she became a freelancer (online instructor) last year but hasn’t registered yet. He’s planning to register in November. Are there penalties to that? Thanks!
Thank you for this helpful article.
Just a question here, I was employed in a private company here in Philippines, March 2021 I resigned. I started working remotely then in a company based abroad as a Data Entry Administrator, from 2021 to present.
Do you think I will be penalized already? Is it too late for me to update my status with the BIR to self-employed?
hi sir. i just wanna ask if a freelance logistic service is required to secure a bussiness permit or just get an OTR?
Hi, I am hired by a foreign company which based in Europe to be their service technician my work will be outside of the Philippines. They’d ask me to put up my own company that they can deal with to have a contract with them and the nature of my job is to service the machines they sold in many different countries. To summed it all I am salary base employed with fixed salary and employed by them which need to stay in the Philippines. I am taxable in this manner?
Thanks so much for this informative content online. Really appreciate it, that really help a lot of people who don’t know about this, like me. Thanks again. God bless.
Thank you so much for this article! This was exactly what I needed.
Aside from the official receipt which will take weeks to be released, and given that you have the other requirements ready, but you have to transfer your RDO (from employed to self-employed status), kailangan bang hintayin ang approval ng transfer bago mag-apply for registration as a self-employed? How long does it take para ma-approve?
And once approve na yung transfer, how long does it take to finish the registration and receive your COR on hand? Kaya ba ito ng isang araw lang magparegister tapos kinabukasan tanggap mo na COR mo?
I am a freelancer and I just wanted to ask regarding the invoice that I will be sending my client for payment of my service . Is invoice and BIR OR receipt is the same ?
No they are not. Sales invoice is used as proof of payment for goods. Official receipt is used as proof of payment for services. If you buy from a hardware store, the “official receipt” you should get is a sales invoice. If you go dine at a restaurant, the “official receipt” you should get is an official receipt. In your case, you’re a freelancer, so you offer services. The type of receipt you should get printed at the BIR is an Official Receipt.