I resigned from my job in 2021 and this year, I decided to pursue freelance work a.k.a to be self-employed. Aside from continuing to pay premiums for the government mandatory benefits, (SSS, Philhealth, PAG-IBIG) one of the must-dos is to register as self-employed in BIR.
Why registering in BIR as a freelancer is important
The Bureau of Internal Revenue (BIR) collects our taxes. We know that our taxes help and enable the initiation and completion of government projects (roadworks, social care and health care, among many others) that will benefit us in the long term. Paying taxes and reporting them to BIR will also help freelancers legitimize their financial capacity all with proper documentation. If you often deal with banks and availing banking products (loans, credits, etc.), you’ll notice that documentary requirements often list an updated Income Tax Return form if you are earning through different means other than being an employee. Having this one document will help you tell banks that “yes I am earning, I am paying taxes properly, I am financially capable”.
Is it difficult to register in BIR as a freelancer?
If you are a novice in the freelancing world, you may need some guidance on how to register in BIR. Information is too complex about taxation but it also does not help that there is a lack of and/or unclear information available to guide self-employed and freelancers to enable them to self-register to BIR. Thankfully though, a lot of content creators and social media groups have covered this matter and shared details, whether general information or based from their personal experiences, about how they were able to register as freelancers and this will help you understand the process. I too will share mine in the latter part of this blog entry.
The most common way to register yourself in BIR as a freelancer is to visit your revenue district office (RDO) and submit the required documents. The RDO is the BIR office that covers the area where you will do business or where you will earn your money. For example, I used to work for a company that is located in BGC Taguig, thus my RDO is 044 (code for BIR Taguig) and now that I am a freelancer, I most likely do business in my home in Pasig, RDO 043.
The BIR is now transitioning gradually from manual processing to automation and online processing. Thus, there are transactions that you can just do without going to the RDO. I took advantage of this and I am lucky that my new RDO embraced online processing. Dealing with registrations and filing will be a lot easier and less time-consuming because of this. Fewer papers to print as well! It saved me money and time!
Where and how to start your BIR registration
First, determine your revenue district office or RDO. If you used to be a corporate employee and now transitioning to becoming a self-employed individual or a freelancer, you most likely need to request a transfer of RDO if your former job location and to-be business address are in different cities.
You may call or email BIR to confirm which RDO your TIN is currently registered or check the RDO code list from BIR.
If you need to transfer your RDO, you will need to fill out BIR Form 1905.
If you don’t need to do this, read on to know about the other requirements.
What are the requirements to register as a freelancer?
If you intend to register by going to your designated RDO, you must accomplish two copies of the following forms and prepare some cash for payment.
- ₱500.00 for the Registration fee
- ₱30.00 for the Documentary Stamp Tax (DST)
- BIR Form 1905 (Form for Application for Registration Information Update/Correction/Cancellation)
- BIR Form 1901 (Form for Application for Registration for Self-Employed (Single Proprietor/Professional), Mixed-Income Individuals, Non-Resident Alien Engaged in Trade/Business, Estate, and Trust)
- A scanned or photocopy of your government-issued ID
- Proof of Business Address
You may also need the following:
- Sample Receipts/Invoices Layout
- Proof of payment of Registration Fee (RF) and Documentary Stamp Tax (DST) – payment can be done through Gcash or Paymaya
- Extra cash to pay for official receipt/invoices booklets to be printed (may range from ₱1,000 to ₱4,000 for the minimum required number of booklets.
- DTI Business Registration – optional
- BIR Form 1906 – if you have a chosen/preferred BIR-accredited printer
- Books of Accounts
Check out the following links and downloadable forms to get you started in your BIR registration.
If you intend to register without going to the RDO, confirm if your RDO accepts online processing, and submit your requirements to the email address to be provided. Please note that each RDO may have a few nuances in the requirements asked, but generally, these are the required documents. Contact your RDO to clarify which forms are needed to be submitted. Make sure that your forms are filled out correctly and signed properly.
Where and How to Get Sample Receipts and Invoices
As a self-employed individual, you are required to issue official receipts (for services rendered) or issue invoice forms (for goods sold) as per BIR policy. I learned that BIR has a standard layout for receipts and invoices. You can get this from the RDO or if you have a preferred accredited printer to print your receipts or invoice, you may ask them to layout a sample for you. You may check BIR’s list of accredited printers.
I encountered a bit of confusion about this part as the information provided varies from one person to another. I was advised that I just have to ask an accredited printer to provide me a sample freelancer receipt and submit it to my BIR RDO; another said I can design and layout my own provided that the details contained follow the standard BIR layout (details of the accredited printer, business details, etc. are all supplied); but BIR also offers a sample layout that you can get in the RDO. I did the first two so that I have my receipts and invoices customized but the BIR staff suggested that I use their layout since I am a new applicant. So, I ended up paying for the sample layout from the RDO (₱100 each as I need both a receipt and an invoice).
You will have to wait for another two to three weeks for the printing of your booklets of receipts and/or invoices. The BIR or the accredited printer assigned to print your receipts/invoices will contact you if your booklets are ready for pickup.
**Other freelancers opt to get the “temporary” BIR receipt so they have a BIR-approved receipt they can issue to clients immediately while waiting for their official receipts and/or invoices.
You need to prepare extra money to pay for the printing of your receipts. BIR set a minimum of 10 booklets (whether you are applying for sales invoice or official receipts). Price may vary depending on the size of the receipts. It cost me Php3500 (on top of the Php200 for the “receipt layout” from the BIR)― Php1500 for the official receipts, Php2000 for the billing statement/invoice.
Do I need to register in DTI as a freelancer?
It is not required, as you can use your name as your trade or business name. But if you want to make freelancing your official business, you can register a business name through the Department of Trade and Industry’s business registration portal. This may cost you up to an additional ₱2,000, but if you have extra money, do so. I don’t have extra money to do this at this time, but if my freelancing efforts can consistently support my needs, I plan to register and operate under an official business/trade name by next year (wish me luck!)
Upon submitting these forms, a BIR representative will acknowledge and sign/stamp your forms as proof that they received the application. I submitted mine online, so my copies are not signed by the RDO, but the copies they printed on their end were.
Once these requirements are submitted and signed, you will be issued a two-page Certificate of Registration (CoR), a Receipt/Invoice Issuance card, and a copy of the Authority to Print (ATP) certificate. This may be issued within the day of your registration or the BIR may need to ask you to return some other day. You will also need to pay for the printing of your receipts/invoices.
Prepare your Books of Accounts
While waiting for your receipt/invoice booklets, you may want to prepare your books of accounts. This can be done after you receive your receipts/invoice booklets as well, but it would not hurt to do this early. I bought mine before I went to the RDO to claim my certificate of registration and have it stamped the same day.
As a freelancer, you are required to get the following: a ledger, a journal, and two columnar books.
Please note that there may be variations in the required books per RDO. Some content creators said they were only asked to present one of the books. Please confirm with your RDO. Don’t confuse the ledgers and journals. They may look the same on the cover but the insides and labels are different. Get the columnar books that have 6 or 8 columns.
I bought these books in National Bookstore for 30 to 40 pesos each. Have all these stamped and fill out all the fields. Present all these to the Books of Accounts counter together with two copies of your 1905.
Attend the Webinar for New Business Registrants
Next, it is time to learn how to file and pay your taxes. BIR offers a seminar for new business registrants. For my RDO, they have scheduled Zoom webinars every Friday at 10:00 am. You may check with your RDO if they offer the same but may differ in day and time of the week.
I hope this blog can help you to register as a freelancer. This way, you can have yourself be properly documented and become a bonafide self-employed individual and a law-abiding business owner.