Minding your business’s tax obligations is as important as your day-to-day operations. In fact, if you fail to pay your taxes on the specified deadline, the Bureau of Internal Revenue (BIR) will require you to pay a surcharge plus interest and other penalties on top of the actual tax amount due. Even if you have zero income to declare, failing to declare it on time results in a penalty of P1,000.
For your business, that can mean losing tens of thousands of pesos, if not more.
According to EJ Arboleda, co-founder and chief executive officer of Taxumo, these penalties are applied as soon as April 16, or the day immediately following the annual income tax deadline of April 15.
Your upcoming quarterly income tax deadline is on August 15. That date is just around the corner.
If your business is registered as a sole proprietorship, or if you are self-employed, a freelancer, or an independent professional, you’ll need to pay your quarterly income tax on this date. On the otherhand, the annual income tax payment you make on April 15 covers the period from January to December of the previous year.
But August 15 and April 15 aren’t the only dates you need to remember. You are also required to file your income tax quarterly on other months, following these BIR deadlines with the corresponding coverage period:
*October to December is covered in the April 15 filing.
If your business is not VAT-registered (meaning, you have an annual gross income of less than P3 million), then you are required to pay a percentage tax. BIR defines percentage tax as a business tax imposed on persons, entities, or transactions specified under the Tax Code. There is no option to pay for percentage annually, so the tax deadlines are spread out quarterly, or every 25th of the following months:
If your business earns more than P3 million, then it needs to be VAT-registered. This means that on top of the BIR form and the tax payment, you will also be required to provide an audited annual financial statement. The list of VAT deadlines runs longer, as these are set monthly:
Take note that requirements vary according to the type of tax you are paying. Check the BIR website for the list of accompanying documents which may be required in addition to the BIR forms specified above.
You may expect no more delays and the same dates above to be followed come 2021. However, for BIR Form 1709 or the Related Party Transaction Form, the government extended the deadlines as follows:
BIR also encourages taxpayers to use the AFS e-submission or eAFS and their authorized agent banks, along with keeping Revenue Collection Officers (RCOs) open, for ease of submitting requirements and payment.
“In the Philippines, tax is a huge cost for businesses,” says Arboleda, who established Taxumo as a tax filing platform for freelancers, small business owners, and self-employed professionals.
This is why aside from remembering BIR deadlines, it’s also important for business owners to have a basic understanding of how taxes work. Adds Arboleda, “Applying or opting for certain tax options—that could save you a lot of money. Taxumo has an active educational aspect. We offer free seminars and talks, and engage clients in our Facebook groups.”
While you may rely on your accountant to maintain your accounting books and make sure that tax filing deadlines are met, Arboleda reminds that at the end of the day, you are ultimately accountable for your tax obligations as a business owner. In other words, being a responsible taxpayer is key to smoothly operating a legitimate business.
Don’t want to miss a tax obligation? Turn to Taxumo, an online platform that lets you file your taxes remotely. They have different subscription plans to fit your needs. Check their Cheat Sheet out, too!
If you’re looking for other diskarte to make sure your business stands out during this pandemic, check out this handy Diskarte Kit. And if you’re looking for ways to reduce your taxes legally, visit this link.
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