As you all know I just opened my print shop last year (if you read my previous post). I’m glad to inform you that it’s still up and running and doing pretty well.
But that’s not what this post is about, I’ll tell you more about how my small business changed my life later.
Let’s talk about tax. Many of us are confused as to how to file because most of the time, it’s not taught in school, or you need to pay an arm and a leg for a seminar.
When I registered to Bureau of Internal Revenue, I was imposed three different taxes- one of them is Percentage Tax.
Before, it was 2551M, but after the TRAIN law, it’s now 2551Q. Follow me in filling out this form step by step. But before that, access the form here 2551Q Jan 2018 ENCS final rev 3_copy. Or you can access them offline, just download the eBIR offline app from BIR website to easily validate and submit so long as you have internet connection (based on my experience).
Above is the snippet of the form. Make sure the release date is January 2018 because that’s the latest. Filing old forms will not be accepted, so be aware.
Okay, let’s start…
1. Calendar vs Fiscal?
On the first part, it’s asking you about what “tax year” you’re filing for. Tax year is the annual accounting period for keeping records and reporting income and expenses.
The difference between Calendar Year and Fiscal Year is that the Calendar Year begins from January 1 through December 31. A Fiscal Year is any consecutive 12- month period that ends on the final day of any month except December. It is normally 52 to 53 weeks long.
The answer depends on the tax year your business is using. Usually small businesses use Calendar. So let’s choose Calendar.
2. Year Ending
Since we chose Calendar on number 1, let’s put in 12-2019 on number 2. That’s because Calendar year ends in December and we’re filing it this year which is 2019.
If you chose Fiscal, however, don’t use 12-2019.
As I’ve mentioned, it was 2551M just because it’s being filed every month. After the TRAIN law, we now file quarterly, thus 2551Q.
Take note of the dates when you need to file to avoid penalty:
Q1 begins from January to March- April 25
Q2 from April to June- July 25
Q3 from July to September- October 25
Q4 from October to December- January 25
Since it’s July, let’s choose 2nd Quarter.
4. Amended Return?
“An amended return is a return filed to make corrections to a tax return from a previous year. It can be used to correct errors and claim a more advantageous tax filing. For example, one might choose to file an amended return in instances of misreported earnings or tax credits.”—- Investopedia.com
If you’re not filing for corrections, choose “No”.
5. No. of Attached Sheets
Put in 00.
Part I – Background Information
On 6-11, just put in your information, make sure you write them in CAPITAL LETTERS using black ink.
12. Tax Relief on Special Laws or International Tax Treaty
“The Philippines has existing tax treaties with various countries including the United States, UK, Canada and Singapore which provide for tax relief on income derived by foreign or local residents of the Philippines and the foreign country from sources within their respective territories.”— Sas-ph.com
Meaning to say, you can file for tax exemptions if you fall under those Special Laws mentioned on the reference. If not, then choose “No”
13. Tax Code
This part determines what percentage will be taxed on you based on your gross income. If you choose “Graduated Income Tax Rate on Net Income”, that means you’ll be taxed according to the Tax Schedule located at the second page of this form. If you choose “8% Income Tax Rate on gross sales/receipts/others”, you’ll be taxed plain 8%, nothing more, nothing less. Let’s pick Graduated Income Tax Rate.
Let’s leave the Part II – Total Tax Payable for now. Let’s jump to the second page of the form.
This is the snippet of the second page. Make sure you write your TIN and your name legibly using black ink and in CAPITAL LETTERS.
Schedule 1 – Computation of Tax
If you chose earlier on number 13, “Graduated Income Tax Rate on Net Income”, this is where you need to go next. There is an alphanumeric tax code or ATC that suits you. If you chose 8%, you don’t need ATC, just put in the taxable amount, the tax rate and compute the tax due.
Below is the list of ATC applicable to you.
In my case, I have Percentage Tax because I’m exempted from VAT meaning to say I’m a NON-VAT taxpayer. So my ATC will always be PT 010 Persons exempt from VAT under Sec. 109(BB) (Sec. 116) which is 3%.
Other taxpayers pay more than one ATC depending on what business they’re engaged in. In other words, they pay 3%, then another 4%, then another 5% and the list goes on.
Let’s just choose PT 010 for example. Under taxable amount, put in your gross income/receipts for 3 months. Let’s say on April, I had a sales of Php 15, 000. Then on May, Php 20, 000, and on June Php 17, 000. Add them up. We’ll get Php 52, 000.
Under Tax Rate, write 3%, then multipy 52 000 by 3%, you’ll have 1560. So under Tax Due, put 1560.00 just like the example above but in black ink not red.
Part II – Total Tax Payable
Now we have the Tax Due amount, let’s go back to page 1 and look for Part II – Total Tax Payable.
On 14, 19 and 24 write 1560.00. On 15, if you have Creditable Tax Withheld you can include it. Same as 16 and 17. They will diminish your tax due. And then don’t forget to sign it using black ink.
Once done, you can bring this form to your RDO. Or if you’re using eBIR forms offline, just click on “Validate” button, then “Submit” after that, you can print the forms in 4 copies, then you can pay them at the nearest Authorized Agent Bank (AAB) in your area.
For the list of AABs refer to BIR List of AABs.
Disclaimer: I’m not an expert, I’m just sharing what I know based on my own experience.
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