Reasons for DTI and BIR Registrations
When the pandemic started, many lost their jobs, and many saw opportunities in creating an online business. Since a multitude of people is into that, the BIR released a mandate on the need to register online businesses and freelancers. This guideline will help business owners and freelancers with their DTI and BIR Registrations.
Reasons for DTI and BIR registrations are:
- The regulatory bodies mandate the need for registration
- Provides legitimacy to your business
- Provides you document as proof of financial capacity needed in processing loans, VISA, and other government processes
- Allows you to transact with bigger clients requiring receipts for your services
- Makes you a good law-abiding citizen
Two Ways for DTI and BIR Registrations
Register as a business (Sole Proprietor)
If you have an online business, the first requirement is to register your business name with DTI. Another reason is, if you have plans for expansion, hiring employees, and establishing an office or actual store in the future.
Register as a freelancer (Self-Employed)
If you’re doing everything on your own, you don’t need to register in DTI because securing a business name is unnecessary. You will only do the BIR registration.
DTI Registration: Two Ways to Register your Business Name
There are two ways to register your business name in the DTI. First is the over-the-counter registration. Second is the online registration where all you need to do is to go to the DTI registration online portal, fill out the online registration form, pay online and then receive the Certificate of Registration through an email.
While filling out the form, you can check the availability of your business name. However, if you are doing over-the-counter registration, you need to prepare at least three business names.
BIR Registration: How to Register as a Business Owner and Freelancer
If BIR Registration is for a Business, prepare an original and a copy of:
- Valid ID/s
- Certificate of Registration from DTI
- Barangay Certificate
- Proof of Address
If BIR Registration is for a Freelancer, prepare an original and a copy of:
- Professional Tax Receipt/ Occupational Tax Receipt from the Local Municipality (PTR- Licensed (PRC) and OTR- Other than Licensed)
- Valid ID/s
- Copy of client contract or any agreement from your freelancing online client
1. Update RDO (Change of Address)
The last step of registration will be the BIR Registration. In registering in the BIR, it does not differentiate a business from a freelancer registration. Both business owner and freelancer falls in one category. First, you need to have three copies of BIR Form 1905. This form is for taxpayers who need to update/ change any data or information.
Since many freelancers are working previously, you need to update RDO (change in address). If your previous employer’s address is not the same as your residential address, if you are a freelancer, you need to check the RDO that covers your new area. In the future, your updated address will show in your BIR forms and future tax filings.
2. Register as Self-Employed/ Mixed-Income Individual
Second is you need to fill out and submit three copies of BIR Form 1901 in the New Business Registrant Counter. Together with the form, you need to include any original and copies of any proof of your identification issued by the Government. It should show your name, address, and birthday such as Birth Certificate, passport, Government issued IDs, DTI Certificate if you are a business, Mayor’s Business Permit if you are a business, or PTR/OTR if you are a freelancer.
You will pay P500 for the registration fee and P30 for loose DST using BIR Form 0605. The BIR will update you when you can claim your Certificate of Registration and also “Notice to Issue a Receipt/Invoice.” This is the recent version of receipt that business establishments present and use for customers.
3. Register your Books of Account
In registering your books of accounts, you need to fill out and submit BIR Form 1905. You will also submit books for stamping, which includes Ledger Books, General Journal, Cash Receipts Journal (Columnar Books), and Cash Disbursements (Columnar Book). You can purchase these books in any bookstore. Furthermore, you will use these books for facilitating the recording of your business transactions.
4. Apply for Authority to Print
In the application for authority to print, you will submit three copies of BIR Form 1906 together with a sample format of receipts. Likewise, you also need to determine an accredited printing press which you can check on the BIR website. And when they approve your ATP, you can have your receipts printed. If you are selling goods, they will require an invoice but, if you are selling services, they will require a receipt. The cost of printing may differ depending on the printing press that you are engaging.
5. Inquire for Free BIR seminars
For new BIR registrants, you can inquire to join free seminars. There, you will learn taxpayers’ rights and responsibilities, sample computation of taxes, guidelines, and schedules of filing, and payment of different taxes. Also, the seminar can be an opportunity for you to raise questions.
Transacting with the wrong RDO means penalty, that is why it is essential to transact with the correct one. You must bring original and extra copies of relevant documents and extra money to avoid the hassle.
To learn more, watch the full video here: https://bit.ly/3qzgLTy
OTHER HELPFUL LINKS:
Guide: Freelancers Paying Taxes
How To Turn Your Freelancing Into A Business
The DREAMS Method into Your Freelancing Business