Freelancing 101: How To Get A Certificate Of Registration From The BIR
Did you know that self-employed individuals have to pay their taxes too?
It is difficult to predict until when this pandemic will last, which leaves everything – our jobs, most importantly – hanging on the balance. According to the Philippine Statistics Authority, there are approximately 4.2 million unemployed Filipinos in February 2021. Many are still struggling to find ways to earn in the midst of the pandemic.
As such, freelancing has become even more popular now. As long as you have the technology and the tools (e.g., computer, a reliable internet connection, headphones and a camera), you can take on projects remotely. However, before you begin your freelancing journey, keep in mind that this will require you to file and pay your taxes, and you may need to register your business and apply for a Certificate of Registration (COR), since most companies require it too before getting the services of a freelancer.
While employed individuals’ income taxes are automatically deducted from their salary, those who are self-employed and doing freelance work need to take care of this process themselves. It’s a lengthy process, but neglecting to file and pay your taxes has corresponding consequences!
In accordance with Section 253 of Republic Act No. 7642, “Any person who willfully attempts in any manner to evade or defeat any tax imposed under this Code or the payment thereof shall, in addition to other penalties provided by law, upon conviction thereof, be fined not less than Thirty thousand pesos but not more than One hundred thousand pesos and suffer imprisonment of not less than two years but not more than four years.”
So, if you’ve made up your mind about doing freelance work, let’s get you started! The first step is to obtain a Certificate of Registration. Here’s a simple guide for first timers.
Step 1: Obtain a Tax Identification Number (TIN)
Do you have your own TIN? If you have been employed before, there is a possibility that you already have one. If that is the case, you can skip this process and proceed to Step 2.
On the other hand, if you are a new taxpayer, you need to have your own unique TIN. Apply for one as a self-employed individual at the nearest Bureau of Internal Revenue (BIR) office and bring the following:
- Accomplished BIR Form 1901
- Valid ID that shows your name, address and birthday (original and photocopy)
- Php 500 registration fee, plus payment for the documentary stamp and certification fee.
Step 2: Check your Regional District Office (RDO)
Have your TIN registered at the RDO where your home address is located (which, as a freelancer, now becomes your office address). To check which RDO you should go to, you can call the BIR at (02) 8981-7000 or send an email to email@example.com.
If your previous job and your home location have different addresses, you need to ask for an RDO transfer by submitting a filled-out BIR Form 1905 to your current RDO. The process may take three to five working days.
Step 3: Get an Occupational Tax Receipt (OTR)
Head over to the City Hall in the town where you live and get an OTR at the Treasurer’s Office.
Bring a valid ID, a filled-out BIR Form 1901, and a client contract or certificate of employment (may be required in some cities). Bring extra cash to pay for your OTR.
Step 4: Apply for a COR
Go to your new RDO and apply for your Certificate of Registration or BIR Form 2303. Be sure to bring the following documents:
- 2 copies of filled-out BIR Form 1901
- 3 copies of filled-out BIR Form 0605
- Official Tax Receipt from the City Hall
- 2 valid IDs - bring the original and prepare photocopies (some BIR offices prefer IDs that have your home address on it, like a Philhealth ID, UMID, Driver’s License, or Postal ID)
- Client Contract, if applicable
- DTI certificate, for those with business names
- Php 500 for the annual registration fee. Prepare extra cash as well because you will need to pay for the certification fee and documentary stamps.
After processing, you will get a copy of your BIR Form 1901 and your OTR with a receipt. You can also get your COR within the same day of your application.
Step 5: Apply for Invoices/Receipts
As a self-employed individual, you will also be required to have your own Official Receipt (OR), to be printed only by an accredited BIR supplier.
Choose from the BIR’s accredited printers and present your BIR Form 1901. Have them fill out the ‘Authority to Print’ section of your document. You will also need to pay for the printing of your OR (usually starts at Php 1,200 for 10 booklets).
You will be given a Provisional Receipt that you can use in the meantime, since the printing process may take from one to two weeks.
You can download all the BIR forms mentioned in this article by clicking here.