Being an independent contractor comes with plenty of benefits. You get to help companies reach their goals using your skills while being in charge of your own time and freedom.
That said, you can’t just offer your services as an independent contractor. Since you will be providing clients with a specialized service, the income you earn is considered taxable. Therefore, you must be registered with the Bureau of Internal Revenue (BIR) as a self-employed individual. Single proprietorship entrepreneurs, licensed professionals, and unlicensed professionals all fall this category.
Here are the government agencies that you need to register with:
One of the documents you’ll need is the Mayor’s Permit. Non-licensed professionals need to get an Occupational Tax Receipt (OTR) while licensed professionals like accountants, lawyers, and engineers need a Professional Tax Receipt (PTR).
Some cities do not issue an OTR while some may require a health permit before issuing an OTR or PTR. To get your Mayor’s Permit, head to the local Treasurer’s Office at your city hall.
A Tax Identification Number (TIN) is one of the most important things you’ll need in order to pay taxes. It also proves that you are registered with the BIR. Whether you’re a Filipino citizen or a foreign national, you’re required to register if you’re earning income in the Philippines.
A fully-accomplished BIR Form 1901 is another important document. This form is for those applying as Self-Employed and Mixed Income Individuals. You’ll see the different tax types and tax rates in the form. Your RDO will issue your TIN (if you don’t already have one) and your Certificate of Registration.
If you were previously employed, your TIN is already registered in the RDO of your past employer or company. In this case, you need to fill up BIR Form 1905, or the Application for Registration Information Update for Updating. This form allows you to transfer your RDO from your previous employer’s to a different one. Since you’re an independent contractor, your new RDO can be the one assigned to your place of residence.
As an independent contractor, you also need your own official receipts. Fill out BIR Form 1906, or the Authority to Print (ATP) form and wait for your RDO to release it. An accredited BIR printer will then print your receipts.
Other requirements include:
Employers are required to register their employees with the SSS as part of the Employee Benefits and Contributions law. They usually pay a portion of your contributions for you.
If you previously worked in a company that was already paying your SSS, you can update your personal record. You’ll be considered a voluntary paying member.
For business registration and tax compliance services, get in touch with FilePino today! Give us a call +63.917.892.2337 or contact us here to learn more on how to set up a consultancy business in the Philippines.