Freelance and Official Receipts

**dcfrost** · 12-08-2008, 10:42 AM

Greetings!

Hello people. I'm Monty and I'm just jump starting my life into a graphic design career. I think I already got a hiccup with a first client.

I'm still studying in college so naturally I don't have any company to represent. I'm just a freelance... So, question is... what do I do if I don't have any Official Receipts to offer my client - an investment house.?

Will appreciate any help guys.

Many, many thanks in advance.!

**Sponsor** · 12-08-2008 10:42 AM

**quasar** · 12-08-2008, 10:58 AM

Did you sign a contract? If you did, are there provisions on the payment of taxes on your fees?

**dcfrost** · 12-08-2008, 11:14 AM

No Sir Quasar ~ Just a casual oral agreement between me and the marketing manager who commissioned me.

**paparazzi** · 12-08-2008, 12:00 PM

Have a formal contract or a statement of work (SOW). You can then ask them to deduct withholding taxes from your fee and then just present a valid ID which their accounting department will photocopy to attach to your check's papers together with the contract or SOW.

When ITR season kicks in you can ask them for copies of tax tax certificates withheld at source.

**quasar** · 12-08-2008, 12:42 PM

Just as I suspected. I think this will be an "off-the-books" type of deal; there's a fair chance your principal will not declare the fees they pay you as legitimate business expense. And that means there will be no paper trail that would indicate that you had received taxable income. You get your fee in full; there would be no basis for the investment house to deduct withholding taxes.

However, I agree with paparazzi's suggestion that you ask for a formal contract for protection. Be warned: As a person engaged in trade or business, you'll be forced to comply with the National Internal Revenue Code and relevant revenue regulations. Among others, you'll be required to comply with the following:

1. Secure a tax identification number (TIN);
2. Secure VAT registration;
3. Register your books of accounts; and
4. Cause the printing and registration of official receipts.

To avoid doing items 2, 3 and 4, I suggest you instead become a project employee of the investment house. Since you are a mere employee of the investment house (albeit a temporary one), all you have to do is get a TIN. Less paper work for you.

**brianmend** · 12-08-2008, 05:30 PM

May I ride with the thread:

Do I still need to pay something to BIR if I already gathered all the tax certificate copies then filed all these tax forms withheld at source? Or it only needs filing and submitting to BIR?

**rattrapante** · 12-08-2008, 05:33 PM

Originally Posted by brianmend

May I ride with the thread:

Do I still need to pay something to BIR if I already gathered all the tax certificate copies then filed all these tax forms withheld at source? Or it only needs filing and submitting to BIR?

You need to still pay your income taxes less withheld. In my case with larger companies, is they withheld 2%.

**brianmend** · 12-08-2008, 05:41 PM

Originally Posted by rattrapante

You need to still pay your income taxes less withheld. In my case with larger companies, is they withheld 2%.

Do you mean when the taxable income exceeds the quota/table, if it's equal or lesser I don't need to pay anything more di ba? please correct me. Why is it only 2%, they less me 10%.

**quasar** · 12-08-2008, 06:06 PM

@brianmend: You'll probably have to pay taxes come April. For those derive income in whole or in part from business or the exercise of a profession, the taxes withheld at the source usually do not equal the income tax due.

When you file your income tax return on April, you'll have to attach the withhold tax certificates to your return, and pay whatever amount that appears as net income tax payable (income tax less withhold taxes).

If the net income tax payable is considerable, you can defer the payment thereof to July 15. Just tell the BIR officer you'll pay the second installment on said date.

**rattrapante** · 12-08-2008, 06:49 PM

Originally Posted by brianmend

Do you mean when the taxable income exceeds the quota/table, if it's equal or lesser I don't need to pay anything more di ba? please correct me. Why is it only 2%, they less me 10%.

If the amount of taxes you need to pay is less than the withheld (which I doubt is the usual case) then to my understanding you don't need to pay for anyting, but you still need to file it together with the W2 form given by the client, and show proof of your business related expenses as deductible (the reason you have low taxes).

I forgot already why the difference in withholding, but in my situation even with witholding taxes I still issue the client an O.R.