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As professionals, we need to consider all the tax consequences and benefits that we
will be encountered during the commencement of our service. With this, we can have
the foresight of what will our business be in the future without the anxiety of being
Every professional (a consultant, an agent, an artist or an underwriter and the like),
whos required to register as a self-employed individual, but still not registered with the
BIR and not filing income tax returns, should consider registering with the BIR.

You might also want ask, what are the benefits and advantages of professionals who
register with the BIR?

First, youll be having official receipts (OR) under your name which will give more selfassurance to your clients in getting your professional services. Remember, no client will
feel kindly toward an agency that doesnt comply.

Second, you can practically save money in the future by paying the right taxes on time
and avoiding penaltiesinterests, surcharges and compromise. Non-compliance will
only give you headache in the near future. Make sure to comply properly and inquire to
your RDO if uncertain as to what you need to do.

Third, you will not be afraid for the BIR to knock on your door and file tax evasion case
to youwhich, of course, is punishable by the law. You might think that what youre
doing (not being registered with the BIR) is okay as you are only avoiding paying taxes.
Remember, theres a huge difference between tax evasion and tax avoidance.

Tax evasion is bad while tax avoidance is good if done correctly. Avoidance, as it is
technically called, is the attempt to minimize tax liabilities by lawful means. But, not
registering with the BIR is avoiding your social obligation as citizen of this country.

Lastly, paying the right taxes will give you the emotional benefit of having a peace of
mind and just focus in growing your business. Sometimes, it is not the burden of paying
the right taxes that gives you the emotional distress but the burden of paying numerous
penalties and compromises.

Now, given that I want to pay the right taxes. What are the taxes I need to pay? Is there
a way to reduce my tax obligations? Sometimes, it is not always the willful attempt to
avoid taxes that is keeping us from paying the right taxes. But not knowing what to do
keep us from noncompliance.

Upon registration, BIR will issue Form 2303 or Certificate of Registration (COR) where
the tax types you are required to file and to pay are enumerated. A reminder of the
deadlines for filing and payment is also printed at the bottom part of your COR:

a. Income Tax Return is due within 60 days after the end of each quarter while
annual return is due every April 15;
b. Value Added Tax is due monthly on or before the 20th of day of the succeeding
month and quarterly on or before the 25th day following the close of each taxable
c. Withholding Tax Expanded/Compensation/Finalis due on or before the 10th
day of the month following the month the withholding was made.

A taxpayer engaged in business or in the practice of profession may choose optional

standard deduction (OSD) or itemized deduction in determining his/her allowable
In OSD, an individual taxpayer shall only be allowed a maximum of 40% of gross sales
or gross receipts as deduction. But anyone who opts to avail this deduction need not
submit financial statements. Thus, if you dont have significant expenses to claim or
sufficient evidence to support your itemized deductions, you may avail of OSD. Unlike
itemized deductions, it does not require official receipts or invoice to support the
standard deduction.

In addition, an individual taxpayer is entitled to deduct the basic personal exemption

(P50,000.00) and additional exemption (P25,000.00 per qualified dependent) with
maximum of 4 dependents.
Lastly, dont forget to update you books of accounts and issue official receipt or invoices
for every transactions. These simple things might be little, but big problems started with
simple little things. Have you ever had a moment when things are going quite smoothly,
then something small happens and your whole world is turned upside down?
As I always say, our enemy is not the BIR, but our ignorance, arrogance, and greed.