Freelancing and online selling have become popular ways for many Cebuanos to earn income. Whether you are a content writer, graphic designer, virtual assistant, or an online seller on platforms like Shopee, Lazada, or Facebook Marketplace, one legal responsibility remains constant: paying taxes.
As lawyers often remind clients: “Income earned online is still income in the eyes of the law.” Filing your taxes correctly not only keeps you compliant with the Bureau of Internal Revenue (BIR), it also protects you from penalties and strengthens your financial credibility.
1. Why Freelancers and Online Sellers Must Pay Taxes
Under the National Internal Revenue Code (NIRC), all income, regardless of the source, is taxable unless specifically exempted. This means:
Freelance service fees
Commissions or project payments
Income from e-commerce and online selling
📌 Legal Insight: Failure to register and file taxes may lead to surcharges, interest, and even closure of business operations.
2. Step 1: Register with the BIR
Before filing taxes, you must first be a registered taxpayer. The process is as follows:
Secure a Tax Identification Number (TIN) if you don’t have one.
File BIR Form 1901 (for self-employed individuals and professionals).
Register your trade name with DTI (for sole proprietorship) or with the SEC (if corporation/partnership).
Pay the annual registration fee (₱500 using BIR Form 0605).
Register your books of accounts and have them stamped by the BIR.
Secure official receipts or sales invoices from an accredited printer.
3. Step 2: Know Your Tax Obligations
Depending on your income, you will fall under either:
Percentage Tax (3% of gross sales/receipts per quarter) – for non-VAT taxpayers with gross sales not exceeding ₱3,000,000 annually.
Value-Added Tax (VAT) (12% of gross sales/receipts) – if your annual sales exceed ₱3,000,000.
Income Tax – either graduated income tax rates or the 8% flat tax on gross sales/receipts in excess of ₱250,000 (if you choose this option).
📌 Lawyer’s Note: The CREATE Law introduced the 8% option, which may benefit freelancers and small online sellers who want simplified taxation.
4. Step 3: File Your Taxes on Time
Freelancers and online sellers in Cebu must comply with these common BIR deadlines:
Quarterly Percentage Tax – BIR Form 2551Q, due every 25th day after each quarter.
Quarterly Income Tax – BIR Form 1701Q, due on May 15, August 15, and November 15.
Annual Income Tax – BIR Form 1701, due on April 15 of the following year.
VAT Returns (if applicable) – BIR Form 2550M/2550Q, filed monthly and quarterly.
Late filing means a 25% surcharge, 12% annual interest, and compromise penalties.
5. Step 4: Keep Proper Records
As a freelancer or online seller, maintaining organized financial records is vital. Keep track of:
Invoices or receipts issued to clients/customers.
Proof of income (bank deposits, online payment platform records like PayPal, GCash, etc.).
Expenses related to your business (these may be deductible for income tax purposes).
📌 Legal Tip: The BIR may audit your books anytime within three to ten years. Proper bookkeeping is your best defense.
6. Step 5: File and Pay Through Convenient Channels
In Cebu, you may file taxes through:
eBIRForms (mandatory for many taxpayers).
eFPS (Electronic Filing and Payment System) – required for large taxpayers.
Authorized Agent Banks (AABs) or Revenue Collection Officers in case electronic filing is not required.
Online payment channels like GCash, PayMaya, or LandBank Link.Biz.
Benefits of Filing Taxes Properly
Beyond compliance, tax filing has clear advantages:
Loan Applications – Banks require tax returns as proof of income.
Business Expansion – Proper records support your credibility when applying for permits or investors.
Peace of Mind – Avoids stress, penalties, and legal issues.
Final Thoughts
For freelancers and online sellers in Cebu, tax compliance is not optional—it is the law. Registering with the BIR, filing on time, and keeping accurate records not only protect you legally but also pave the way for financial opportunities.
As we lawyers often advise: “Think of tax compliance as an investment in your business reputation.”
Navigating the business landscape in the Philippines can be both rewarding and intricate. Whether you’re embarking on a new venture or scaling up, ensuring that your corporate endeavors are in line with local regulations is paramount.
At CBOS Business Solutions Inc., we pride ourselves on simplifying these processes for our clients. As a seasoned professional services company, we offer comprehensive assistance with SEC Registration, Visa processing, and a myriad of other essential business requirements. Our team of experts is dedicated to ensuring that your business is compliant, well-established, and ready to thrive in the Philippine market.
Why venture into the complexities of business registration and compliance alone? Allow our team to guide you every step of the way. After all, your success is our commitment.
Get in touch today and let us be your partner in achieving your business goals in the Philippines.
Email Address: gerald.bernardo@cbos.com.ph
Mobile No.: +639270032851
You can also click this link to schedule a meeting.
Leave a Reply