A Comprehensive Guide to BIR Registration for Freelancers and Solopreneurs

TAXES – a word a lot of folks dread, and sometimes would rather set aside. Many people would agree on that; if only it is not that important.

Kidding aside, all around social media, tax has been a hot topic.  As the registration process keeps on getting more confusing, freelancers and solopreneurs are keen on asking how to register and pay.   

I will not discuss the “why we should pay our taxes” but more on the “HOW”. Furthermore, I will walk you through a step-by-step guide and what to expect when registering. Moreover, I will tackle practical instructions when dealing with BIR officers as you register as a freelancer or a solopreneur.

Essentially, freelancers and solopreneurs have two options when registering. They can register as either professional self-employed or simply self-employed. And with the implementation of TRAIN law, self-employed professionals can now enjoy a considerably lower tax rate as stipulated in Section 5 under subsection (A)(2)(b) of RA 10963 (TRAIN law).  This section of TRAIN law states that self-employed and/or professionals can avail an 8% tax rate option in lieu of 3% percentage tax and the regular tax rate. But this is provided that the total annual gross income does not exceed 3 million pesos when you register as a Non-Vat taxpayer. 

So, how can a freelancer register as a self-employed professional?

First of all, you need to take note of the basic requirements below.

The basic requirements are:  

1.) TIN,

2.) NSO Birth Certificate,

3.) Occupational Tax Receipt (OTR) for non-licensed professionals (e.g., writers, graphic artists, web developers,  marketing consultants). For licensed professionals (e.g., accountants, lawyers, engineers, nurses, doctors etc.), what you need is a Professional Tax Receipt (PTR). 

4) At least 2 government-issued Valid IDs.

AND, just in case, also be ready for possible additional requirements that might be asked, such as:

1.) Copy of Contract with a client (to prove that you are a freelancer),

2.) Barangay Certification, and

3.) Special Power of Attorney (in case you will have someone else to do the registration on your behalf)

Now that you know the basic documentary requirements and possible additional requirements, let us proceed with the standard process. 

Standard Process on How to Register as a Freelancer

1. Secure an OTR, if you are non-licensed, and PTR if you are licensed at the City Treasurer’s Office in your City Hall.
2. Next, secure your Tax Identification Number (TIN)  if you still don’t have one. But if you are transitioning from employed to self-employed professional, you shall undergo a transfer of TIN from the RDO of your previous employer to your current location address RDO.
3. With all the requirements on hand, proceed to the BIR-RDO that covers your present address. Fill up BIR Form 1901 and Form 0605 for the payment of P500.00 registration fee. NOTE: You may pay the registration fee at a BIR-authorized agent bank. Do not forget to secure 2 photocopies of the proof of payment as you will need them later.

4. Go back to the BIR RDO. After the payment, you will be required to buy 2 or 4 (depending on the RDO and examiner) journal books (non-vat registration) and have your O.R/Invoice printed and submitted for registration. Both processes for journal books registration and ordering and applying for O.R/Invoice registration are not as difficult as it seems.

We are not done yet, as you must likewise take into consideration the instructions below, which are taken-f0r-granted by a lot of freelancers.

A lot of blogs and articles around the internet can be read about how to register as self-employed for freelancers.  Most are excerpts from BIR website with a bit of explanation, from workshops or seminars they attended (most of which also picked up from BIR website), or from personal experiences. They are basically correct and are easy to understand. But then…..

Here’s the thing, not all BIR Revenue District Offices (RDOs) implement the same rules and documentary requirements. Some cities do not issue Occupational Tax Receipts (OTR), while some do issue but for a specific field of work. As for others,  there are those who would ask for more requirements, while some are clueless…sadly.

So, fundamentally, BIR RDOs are quite different, but mostly on the requirement aspect. Along the registration process, some might tell you, “Freelancers don’t need to register.” To tell you this, they are not right. It is our obligation as a law-abiding Filipino citizen to declare our income and pay our taxes. Plus, you can reap a lot of benefits when you register your profession as a self-employed professional. 

Moving forward, let us proceed with our comprehensive guide for a more elaborate explanation of the registration process for freelancers.

A Comprehensive Guide to BIR Registration for Freelancers

Step # 1:

Start with securing an OTR or Occupational Tax Receipt from your local Treasurer’s Office. As I have mentioned, different cities may implement different policies and different ways of organizing the registration process. They will always follow what specifically their city ordinance states.  

The basic requirement to secure an OTR is a copy of a (any) contract from an existing client. This usually does the trick. Some cities like Muntinlupa will require you to secure a health permit, and some don’t issue an OTR at all like Makati. In case a city does not issue an OTR, go straight to the RDO, and they will usually tell you what to do.

Key takeaway: As much as possible, avoid using general terms to describe your work such as “Online Freelancer” or “Virtual Assistant”. This is if you do not want a blank stare followed by a string of questions, which more often than not will lead to more questions and confusion. Tell them specifically what you do or your primary task and skill (e.g, writer, copywriter, web developer, graphic artist, singer, dancer etc).

Now, with an OTR on hand, and with all the other requirements enumerated above, the next step is registering with BIR-RDO.

Step # 2:

If you are previously employed, chances are your TIN is registered in another RDO.  Go to the RDO where your TIN is registered, fill up form 1905, and request for a transfer of your TIN to the RDO where you will register. It might take 3 to 10 business days for it to take effect.

With all requirements – the 2 copies of 1901 application form and 3 copies of 0605 payment form – on hand, you will need to talk with the Officer of the day.  Tell them who you are, what you do (again, be specific), and present all the requirements.  The Officer of the day will assess your documents, tell you how much and where to pay, and the other things that you need to do.

Step # 3:

The next step is to make your payment to the bank using the BIR Form 0605 (registration fee is 500 pesos) and return to the RDO and submit all the documents. The RDO examiner will tell you what to do next (If they don’t, ASK).  If all requirements are complete, your Certificate of Registration will now be processed.

Step # 4:

Come back to claim your C.O.R. And they will tell you that you will need to secure Book of Journals (4 books for non-vat, but some will just require 2). You can buy them at the photocopy center around the RDO – the cost will around 50 bucks each – at the closest bookstore or the people inside the RDO that sells a Book of Journals).

Now, the last step is the printing of O.R. Only authorized BIR accredited printer can print O.R. Usually, the copy center around the RDO also prints O.R. It is better to ask the examiner for assistance, and you’ll be surprised that some are really helpful in assisting taxpayers.

Depending on the RDO, the whole process of registering to deliver O.R will take 2 weeks to 4 weeks. But basically, by the 3rd week, you should already have your C.O.R on hand.

The actual process is not that complicated, it is the waiting time from one step to the next. One really needs to invest time and effort. And, most of all, a lot of patience and understanding. 

Want to know more? Send an email at bizreg@taxumo.com. 

You may also contact Taxumo at customercare@taxumo.com or check out taxumo.com  if you need help filing your taxes.

File and Pay Your Taxes Online In Minutes

With Taxumo