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From Employee to Self-employed: BIR update

After almost 5 years of being an employee, I finally made a decision to be an entrepreneur. I know that’s going to be difficult but before I decided, it took me a while to think about it. And I should say, it’s the best decision I’ve ever made!

Transferring from being employed to self-employed entails adjustment, and one adjustment you need to make is to change your BIR status.

Here are the steps that I took in changing my BIR status.

1. Update your RDO (Revenue District Office)

In my case, my RDO when I was working for my previous company was different from my business address.

Take note: if your situation is otherwise, you can skip to step 2.

I went to RDO 046 Cainta/ Taytay which covers the jurisdiction of my business address that is in Angono, Rizal. I filled out the form 1905.

Below is the sample form. You can also download the form through this link bir 1905.

So on Part I, you need to fill out the Taxpayer Identification Number or TIN. On RDO Code, put in your previous RDO, in my case is 044 Taguig and then fill out Taxpayer’s Name.

bir photo
sample form 1905

On Part II, Reason for Registration Information Update, tick the change in Registered Address. And on Details of Registration Information Update section, look for 4E Change in Registered address.

Under that sub-section, choose whether you need to transfer your Home RDO or transfer within the same RDO, I chose Transfer from Home RDO.

4epard
Section 4E of BIR form 1905

After you have filled it out, you need to sign Section 5 Declaration. As you can see there is list of requirements.

In my RDO, they din’t ask me for any requirements other that the form 1905.

It’s better to call your RDO to see if you still need to submit those. It takes 3 business days to process the transfer.

last part
Section 5 of BIR form 1905

2. Register as Self-Employed, Mixed Income Individuals or Estates and Trusts

After you RDO is updated, you can now fill out the form 1901. You can download them by clicking the link, form 1901 first page 1901 2nd page.

1901
Sample form 1901

Fill out the necessary details.

Let’s now jump to Section 19 Primary/ Secondary Industries. That’s where you can put in your business name that’s registered to DTI ( Department of Trade and Industries). Also, fill out the Section 20 Contact Person/ Accredited Tax Agent.

Now on Section 22, you don’t need to write on that, only the BIR personnel will fill it for you. Section 23, I don’t know if that’s necessary, in my situation, the BIR person in charge didn’t ask me to fill it out.

1901 sample
BIR form 1901 Sec.19-22

On the 2nd page is the Part II Personal Exemptions, choose which is applicable to you, mine, I chose Single on Civil Status and left the rest of the boxes blank from Part II, I jumped to Part IV.35 Declaration.

Make sure to sign it and submit that completed form along the requirements such as photocopies of DTI permit, Mayor’s permit, Barangay business permit, Lease of Contract (for those who are renting), and government ID to the person in charge. Once submitted, BIR will analyze your tax.

3. Pay the Registration Fee

After that they will ask you to get form 0605 Payment Form and form 2000 Documentary Stamp Tax Declaration/ Return, I didn’t know why I need the last form until the BIR personnel told me it’s because I’m renting a venue.

So there. I paid Php 500.00 registration fee and Php 98.00 tax for renting venue, additional Php 25.00 for the stamps. And by the way I paid for the 2 forms I mentioned for Php 60.00.

 

I didn’t go to the bank to pay, they already have a sort of cashier in the office, which is very convenient because banks are a little bit far and it’s hot outside so this really helps.

I got my receipts and my stamps, the guard told me I have to photocopy the 2 forms and the receipts which I did and returned to the BIR personnel whom I submitted my form 1901 and requirements.

4. Apply for Authority to Print

If you will be issuing receipts to your customers, you will need to apply for Authority to print. My application for this was very easy. I told the person in charge that I need to issue receipts to my customers so she referred to another BIR employee and told me to fill out another form which is form 1906.

I only filled out sections 1-8 then signed the section 19 Declaration and gave it back to the lady.

1906
BIR form 1906 Authority to Print sample

Then she took my order, I paid Php 1200.00 for 10 booklets of receipts and Php 200.00 for the Books of Accounts. She told me I will get my receipts in 7 business days.

5. Register Books of Accounts

The BIR employee gave the 2 books with 14 columns, 1 journal and 1 ledger notebook with pretty much like a form stamp on it. She told me to write my name, TIN, business name and business address on the stamp which I did.

To register this, you need the form 1905 again, this time you will need to choose Letter I Update of Books of Accounts on Part II section. Next, look for section 4I at the back or on 2nd page, fill out the types of books to be registered and sign the declaration.

I submitted my form and books of accounts to the BIR personnel on another counter. She labeled the books as Ledger, Journal, Cash disbursement and Cash receipts, then she signed it.

BIR Books of Accounts
These are the books of accounts cost Php 50.00 each, you can probably get it for less at National Bookstore

6. Attend BIR Taxation Briefing

So after i had registered my books, I was told I can get my COR the next day. I asked also the BIR officer when the briefing would be.

It’s funny that BIR people won’t tell this to you proactively. I learned I needed to attend the briefing through reading blogs from the internet. So she told me there’s going to be one on Friday. I attended the briefing.

It was just a 2 hours seminar from 9am to 11am. We’re just informed of the forms we need to use upon paying the tax, how to compute tax, what are the books of accounts for, and deadline of paying tax, those stuff.

bir_ask_for_receipt_small

So now I got everything I need. And oh, don’t forget to ask for the Ask for Receipt Notice because you need that displayed with you Certificate of Registration or form 2303 and the Form 0605 Payment form on your store or else, you’ll be penalized.

 

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Author:

An art enthusiast and blogger. Writes about starting and managing small business or whatever she thinks she can write about.

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