How to File Taxes for Newly Registered Businesses

Starting a business in the Philippines comes with many responsibilities, and one of the most crucial is tax compliance. Filing taxes for a newly registered business can be daunting, especially for first-time entrepreneurs. However, understanding the tax filing process and requirements will help you stay compliant and avoid penalties.

This guide provides a step-by-step approach to filing taxes for your newly registered business in the Philippines.

Why Tax Compliance is Important

Tax compliance ensures:

  • Legal Operation: Filing and paying taxes is a legal obligation.
  • Avoidance of Penalties: Non-compliance leads to fines, surcharges, and interest penalties.
  • Business Credibility: A compliant business attracts more investors and customers.

Step 1: Register with the Bureau of Internal Revenue (BIR)

Before you can file taxes, your business must be registered with the BIR. Upon registration, you will receive a Certificate of Registration (Form 2303), which outlines your tax obligations, such as:

  • Value-Added Tax (VAT) or Percentage Tax
  • Income Tax
  • Withholding Tax

Step 2: Know Your Tax Obligations

Your tax obligations depend on your business type and structure:

1. Income Tax
  • For Sole Proprietors and Professionals: Taxes are filed under personal income tax rates (0% to 35%).
  • For Corporations and Partnerships:
    • 20% income tax rate for corporations with taxable income of ₱5,000,000 or less and total assets not exceeding ₱100,000,000.
    • 25% for all other corporations.
2. Business Tax
  • VAT: 12% of gross sales/receipts, applicable for businesses with annual gross sales exceeding ₱3,000,000.
  • Percentage Tax: 1% of gross sales/receipts for non-VAT businesses (under the CREATE Law, until 2025).
3. Withholding Tax
  • Withholding Tax on Compensation: Deducted from employees’ salaries.
  • Expanded Withholding Tax (EWT): Applied to payments for rent, professional fees, and other specified transactions.

Step 3: File Required Tax Forms

Monthly Tax Filings
  1. BIR Form 2551Q (Percentage Tax) or 2550M (Monthly VAT Return)

    • Deadline: 20th day of the following month (for Percentage Tax); 20th day of the following month (for VAT).
  2. BIR Form 1601-C (Withholding Tax on Compensation)

    • Deadline: 10th day of the following month.
Quarterly Tax Filings
  1. BIR Form 1701Q (Quarterly Income Tax for Sole Proprietors) or 1702Q (for Corporations and Partnerships)

    • Deadline: 60 days after the end of the quarter.
  2. BIR Form 2550Q (Quarterly VAT Return)

    • Deadline: 25th day after the end of the quarter.
Annual Tax Filings
  1. BIR Form 1701 (Annual Income Tax for Sole Proprietors) or 1702 (for Corporations and Partnerships)

    • Deadline: April 15 of the following year for sole proprietors and partnerships; on or before the 15th day of the fourth month following the fiscal year-end for corporations.
  2. BIR Form 2316 (Annual Return of Compensation for Employees)

    • Deadline: January 31 of the following year.

Step 4: Pay Your Taxes

Modes of Payment
  1. Authorized Agent Banks (AABs):
    • Pay over-the-counter at the bank accredited by your Revenue District Office (RDO).
  2. Online Payment Platforms:
    • BIR eFPS (Electronic Filing and Payment System)
    • GCash, PayMaya, or Landbank LinkBiz
  3. Revenue Collection Officers (RCOs):
    • For areas without AABs, you can pay directly at the RDO.

Step 5: Maintain Accurate Records

To ensure proper tax filing and compliance:

  • Register Your Books of Accounts:
    • Maintain updated and BIR-registered books such as the General Ledger and Cash Disbursement Book.
  • Keep Official Receipts and Invoices:
    • Use BIR-authorized receipts for all transactions.
  • Retain Supporting Documents:
    • Secure copies of tax returns, proof of payments, and financial records for at least 10 years.

Step 6: Monitor Deadlines

Use a tax compliance calendar to track filing deadlines and avoid penalties. Missing deadlines can result in:

  • Late Filing Penalties:
    • 25% surcharge on the tax due.
    • 12% annual interest on unpaid amounts.
  • Compromise Penalties:
    • Amounts vary based on the type and extent of non-compliance.

Tips for Filing Taxes

  1. Start Early:
    • Avoid last-minute filings to reduce errors and penalties.
  2. Understand Your Tax Classification:
    • Confirm whether your business is VAT or Non-VAT registered.
  3. Seek Professional Assistance:
    • Consult an accountant or tax professional for accurate filing and reporting.

Penalties for Non-Compliance

Non-compliance with tax obligations can lead to:

  • Fines and surcharges for late payments.
  • Suspension of business operations by the BIR.
  • Legal action for repeated violations.

Final Thoughts

Filing taxes for newly registered businesses in the Philippines may seem overwhelming, but understanding the process and staying organized can make compliance easier. By registering correctly, maintaining accurate records, and filing taxes on time, you can avoid penalties and focus on growing your business.

If you’re unsure about your tax obligations or need assistance, consult a tax professional or lawyer to ensure full compliance.

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.


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