Registering as a self-employed, freelance designer with the BIR

Registering as a self-employed, freelance designer with the BIR

February 21, 2021

Last updated October 17, 2023

I just registered with the BIR as a self-employed human being. It can be confusing at first, so I’m sharing here what I did just in case any other artists entering the field might want to learn about the process.

Please note that I am NOT a tax professional. You must contact the BIR or a tax professional for the latest and most accurate updates. I also suggest watching How to file Income Tax Return for freelancers on YouTube for more information. If you have the resources (after doing your research and you still have questions), Taxumo offers online consultation for around P1,000 pesos for 45 minutes.

Before you read further

For the most updated details from the Bureau of Internal Revenue or BIR, find the requirements for self-employed registrants here. I first registered as of February 2021 sometime before the writing of this post, so if you read this anytime afterwards, it is best to also review the latest information on the BIR website.

Also, I already had a Tax Identification Number or TIN from being employed previously. If you do not yet have a TIN, you can create one upon registering with the BIR.

Why I registered

To give Original Receipts or ORs

Now that I’m doing freelance work full-time, I am required by clients to give Official Receipts. To do that I must register as self-employed with the BIR. Before this, I had worked full-time for several years for a non-profit, which took care of my income tax.

To qualify for loans, and for other business transactions

If and when the time comes I need to show proof of income (for home loans or other business transactions) having tax documents counts as proof. If you get income from services or selling goods, but are unemployed, you will need tax documents of this income to apply for loans for a house, your business, and similar transactions.

Do I register if I’m not making money?

If you don’t have paying clients yet, don’t worry. I suggest you build your portfolio and make it strong enough so that it gets you art projects. Once you start getting clients or have decided that freelance graphic design or illustration is indeed going to be your focus, you can proceed with registering.

Even if you have no income, simply report it every time you file. Even though you might not have taxes to pay, you must still file as long as you are registered and have not formally closed or ended your registration with the BIR.

Should I use my real name, or a business name?

I decided to register under my full name, and not my social media handle or website name for the time being. If you decide to have a business name, there are additional steps you’ll need to take to get that to happen. Here is one video from Ready2Adult PH on YouTube that explains registering a business name and how it differs from a brand name.

My blog post is primarily for those who will do business under their real name as freelance artists.

My taxpayer type

Taxpayer types listed on the Application for Registration form 1901.

When I registered, I was at first confused by all the taxpayer types. Especially from the following three below, which I thought could be me at first. I got the definitions below from this website.

  • Single Proprietorship: Self-employed and has income outside of a service (selling of goods on Lazada).
  • Professional: Self-employed and has income from a service (graphic artist, law, health, teaching, etc…)
  • Mixed Income Earner: Has income from any two of the following: single proprietor, professional, or as an employee.

Because I was unemployed and would be getting income by providing freelance graphic design and illustration services, I registered as a Professional – In General, as indicated in the above image. (Special thanks to Ena for the head’s up on this part of the registration form).

If you are still unsure about which taxpayer type you are, call or visit your BIR Regional/District Office or RDO to make sure you choose the correct taxpayer type for you. Depending on where you live, there is a RDO for your location.

Fees I paid when registering (as of Feb 2021)

  • P500 – payment for registration
  • P32 – BIR-issued Original Receipts
  • P30 – loose stamp for the Certificate of Registration or COR.
  • Bring some extra cash in case there are other fees that are new or not listed here for your unique situation. You might also need to make xerox copies.
  • Note: Eventually you might want to print your own OR, this will incur a separate printing fee. When I printed my own ORs from my printer’s template, it cost me P2,500.

Forms I filled out

  • 1901 – Application for Registration for Self-Employed (Single Proprietor/Professional), Mixed Income Individuals, Non-Resident Alien Engaged in Trade/Business, Estate and Trust.
  • 0605 – Payment form.

What to bring

  • Print out and fill-up the two (2) forms above.
  • Bring two (2) government-issued IDs with photos and birthdate.
    • One (1) government-issued ID should have your address. If no address is listed, you can obtain a Barangay Certificate noting your permanent address.
  • Bring your latest client invoice or contract as proof of work 1.
  • Durable and secure folder for the above documents.
  • Face shield with face mask, and small bottle of alcohol spray.
Additional “new normal” guidelines when visiting your BIR office in-person.

Note the location of your BIR Regional/District Office or RDO 

Depending on where you live, there is a BIR Regional/District Office for your location. Find it by browsing the RDO directory here.

Once you find it, I suggest emailing or calling the contact information listed to ensure you get the most updated information on how to get registered.

Each RDO has an Authorized Agent Bank where your tax payments will be made

Once you find your RDO, find the closest Authorized Agent Bank of your RDO. This is the bank where you will be paying your taxes to. Note your RDO number, and then find the list of banks on the BIR website here.

Steps I took

As mentioned before, I suggest that you contact your BIR Regional/District Office or RDO and ask them what forms, processes, and fees are needed to register as a freelance designer.

With that said, here are the steps I took to register with the BIR as a freelance designer as of February 2021. Special thanks to my partner Rocel who basically guided me through the whole process after going through all of this by herself.

  1. Identify the BIR Regional/District Office or RDO where you live.
  2. Contact your RDO for any updates on the registration process.
  3. Once you identify your RDO, find the Authorized Agent Bank where you can submit tax payments.
  4. Go online and download the necessary forms to register as a self-employed freelance graphic designer.
    • 1901 – Application for Registration
    • 0605 – Payment form
  5. Fill up the forms (you can do this on the pdfs on your computer, or print out and fill-up).
  6. Gather two (2) government issued IDs with photo and birthdate.
    • One of the IDs must list your current address.
      • If none of your IDs list your address, obtain a Barangay Certificate noting your permanent address. This will cost from P100 to P200 depending on your barangay policies.
  7. Make 3 copies each of the following:
    • The two (2) BIR forms you filled-up above.
    • Your two (2) government issued IDs.
  8. Bring all of the above documents (have a durable folder that is secure and provides easy-access to your documents).
  9. Visit the Authorized Agent Bank of your RDO. Pay the P500 fee and submit Payment Form 0605. Keep the receipts and add to your folder of required documents.
  10. Visit your RDO.
  11. Inform the welcoming officers or guards that you want to register as a freelance artist, and be sure to provide the necessary documents so they can help you further.

Once you arrive at the RDO, the officers and employees there will help guide you along the process. You might find yourself going back and forth between different offices of the RDO building, but be patient and remember that government employees see hundreds of people every week. Simply communicate what you need, and ask for clarification when needed.

Get your Certificate of Registration or COR

Depending on the RDO and how early in the day you register, you can get your COR later that day. However I got mine a few days later because the signatory was not available that day; so I simply gave the BIR staff my number, and they texted me to pick up my COR.

Don’t forget to ask for your BIR Official Receipts, which they give to all new registrants. You may use this initial batch when accepting payments for your freelance work.

Tax seminar for new registrants

You are also required to attend a short tax seminar for new registrants, but don’t worry, this seminar is now available as a Zoom session in which BIR will text you the link.

BIR Certificate of Registration or COR.

Official Receipts

Now that you’re registered, you can give clients Official Receipts. The BIR gives new registrants a small batch of Official Receipts to start with.

A page from a batch of OR provided by the BIR upon registration.

However if you would like to print more, or even design your own Official Receipts, you must have them printed by a BIR Accredited Printer of Receipts/Invoices.

Simply download the PDF list of printers here, and search for a printer under your RDO. I learned that you can design your own OR and have them printed for you, but it might be more expensive than using the default OR templates the printers use.

Once you identify your BIR accredited printer, you can input their information in form 1906 “Authority to Print” (find the form in the BIR list of forms here). You must also ask the printer for a copy of a sample receipt emailed to you. Print this and bring along with your 1906 form. For more information visit the BIR website regarding Authority to Print.

Additional notes:

  • If a client does not require or request an Official Receipt, you are still required to fill up a copy for yourself in case BIR requests additional proof for your income (like in an audit).
  • For additional information on Official Receipts see this article from MPM consulting.
  • As of June 2022, the BIR no longer requires a 5 year validity limit on ORs made via Authority to Print above.

Paying, and filing, my taxes

Income taxes I pay

As a freelance artist who earns less than P250,000, and definitely less than P3 million pesos every year (or what BIR calls NON-VAT), I had two options on how to pay my income tax:

  • Graduated tax rate AND Percentage tax rate
    • The graduated tax rate is a table or list of tax rates depending on your income. You can find the table here. Since I make less than P250,000, I qualify for 0% (hopefully I make more later!). You file this quarterly.
    • The percentage tax rate is also required, and applies to those of us who make less than P3 million pesos a year. With guidance from BIR staff, and their webpage on percentage tax here, I will only pay a flat 3% of my income. You file this quarterly.
  • 8% Income tax rate

When you choose your tax rate, you must stay with that rate for that tax year

Be sure to consult with the BIR about these options when you register, because you can only choose the 8% income tax rate at the beginning of the tax year. If you realize that 8% is a better rate for you after registering and paying the graduated and percentage tax rates, you will have to wait until the next tax year to apply for the 8% rate.

Check this website here regarding a graduated tax rate versus an 8% tax rate. You can also check the BIR website here where they mention these tax rates under “income tax rates”.

Ready2AdultPH explains one of the differences between the Graduated Tax Rate and the 8% option.

Just remember: calculate your taxes for the different options before deciding, so you can see where you save the most.

Forms to fill up, and their due dates

For graduated tax rate plus 3% percentage tax rate:

  • 1701Q or Quarterly Income Tax return form
    • Use this form for graduated tax rate, you can find the graduated income tax rate table here. Since I make less than P250,000, I pay nothing or 0%. However, I must still file this return and indicate 0% tax.
    • Here are the due dates:
      • May 15 (quarter 1 or Q1)
      • August 15 (quarter 2 or Q2)
      • November 15 (quarter 3 or Q3)
      • January 15 of the following year (use form 1701, for this you show the full income you obtained for the entire previous tax year)
  • 2551Q or Quarterly Percentage Tax return form
    • This is for the percentage tax rate. More info from BIR website here. Here you pay 3% of your income, after deductions and expenses, every quarter.
    • Here are the due dates:
      • April 22 (quarter 1 or Q1)
      • July 25 (quarter 2 or Q2)
      • October 25 (quarter 3 or Q3)
      • January 25 of the following year (quarter 4 or Q4)
  • Lastly, the Annual registration form we must fill up and pay (P500 per year). Use form 605. Due January 31 of the following year.

For 8% tax rate:

  • 1701Q or Quarterly Income Tax return form
    • This is the only form you need for the 8% tax rate. It’s more simple than the above graduated & percentage tax rates.
    • Here are the due dates:
      • May 15 (quarter 1 or Q1)
      • August 15 (quarter 2 or Q2)
      • November 15 (quarter 3 or Q3)
      • January 15 of the following year (use form 1701, for this you show the full income you obtained for the entire previous tax year)
  • Lastly, the Annual registration form we must fill up and pay (P500 per year). Use form 605. Due January 31 of the following year.

Notice that for the graduated and percentage tax, you have to file two forms (1701Q and 2551Q) every quarter. With the 8% option you just file one form (1701Q). But remember, the 8% option is best for people with minimal deductions or expenses to report.

Just remember: calculate your taxes for the different options before deciding, so you can see where you save the most.

Notes:

  • If you register with the BIR after a due date, you file and pay on the next due date.
  • On form 1701Q, you give the income you obtain from the beginning of the year to the date due. You then subtract the taxes you paid on the form (1701Q, under “Schedule III”) so that you are not “double taxed.”

Deductions

Since I don’t commute and have minimal to low freelance expenses, I haven’t filled up the costs or deduction portions yet. But once I get more information regarding these fields, I’ll update here. I’m still learning about how to deduct!

Other than that, form 1701Q gives you an option on how you want to deduct costs from your freelance work. This includes transportation, software costs, and more. For a sample list of deductions, see this webpage here, but the rule-of-thumb is as long as you can prove to BIR that the expense is related to your work or business, it is allowed. You must also keep receipts of these expenses.

The 1701Q form deduction options are the following:

  • Itemized Deduction: your business costs listed by item, and then totaled for the form.
  • OSD Optional Standard Deduction: you tell the BIR 40% of your gross income are business costs. If your costs are 40% or above, use itemized deduction to save money.

The 2551Q form does not ask for your deduction because the percentage tax is applied to your gross income, or income before costs.

I recommend you consult with BIR for more information on how to determine and list your deductions. There is a bit more info regarding Itemized and OSD deductions at the BIR website here. Once I get more information here, I will also update this section.

For the 8% option, you don’t report deductions. This is meant to make it easier for the taxpayer, but only if you know you won’t pay more in taxes compared to the graduated tax and percentage tax option.

Just remember: calculate your taxes for the different options before deciding, so you can see where you save the most.

How to pay and file your taxes

  • Pay and file at home with eBIRForms Package v7.9.1.
    • This is the most convenient option, but the software is only for Windows operating systems, no MAC version is yet available. I have to use my partner’s PC to do this since I use a MAC. BIR recommended that I use a computer at an internet cafe, but for privacy and security issues, I am opting for a computer owned by someone close to me.
    • Simply download the package above and run the .exe file. Choose the appropriate forms, fill them up using the software, and submit. For payments, you can use G-cash or other options as noted in the software.
  • Pay and file at your RDO’s Authorized Agent Bank.
    • You can pay your taxes by submitting your forms and payment at the Authorized Agent Bank. However if you have a 0% payment, the bank will not file your tax form. You must submit it via the eBIRForms Package above.

Now that we are in a pandemic, I found out the hard way that my RDO (RDO 40 – Cubao) will not accept payments and filing at their office (except for senior citizens or those without access to computers or internet). Instead, they will now only accept them on their eBIRForms Package software.

Late fees

The late fee or penalty for not paying or filing on time is at least P1,000, and depends on the tax you owe and how long you don’t file. You can see the BIR’s penalty page here.

Reach out to the BIR for the most updated and accurate information

Videos about taxes on YouTube

There are some great videos YouTube about filing your taxes with the BIR. This is also a great way to do your research before you register.

Tax webinars by Indierectory & Taxumo

Obviously, you’ll want to do more research to ensure you get the correct and updated advice for your unique situation. One of the ways are through these webinars published in May of 2021 by the Indierectory. If you haven’t already, simply sign up to be part of the directory here, and gain access to the Facebook group where resources like these can be found.

Once you register and join the Facebook group, you should be able to access the two webinars below:

Speaking of Taxumo… you can pay someone to file and pay taxes for you

As you can see, paying taxes can be confusing. So another option is to hire an account or pay for a service or software to handle your taxes. Taxumo is an example of online software tax payers can use. Plans start at P400 a month.

Footnotes:

  1. Though I had brought my latest invoice with me, the officers and staff at my RDO did not request it. However bring yours anyway! (Thanks again to Ena for noting this when she inquired with her own RDO).

Last updated February 3, 2022

Filed Under: Diary