Basic Taxes Every Proprietor and Professional Needs to Pay to the BIR (Bureau of Internal Revenue)

Many of us who start a business come from a regular employment setting.
So when we decide to register our business with the Bureau of Internal Revenue (BIR), we think, “Oh, now I’ll need to pay my own income taxes.”
But wait. There’s more.
It comes as a rude shock to many when they find out that, aside from income tax, there are other taxes that a business owner needs to pay–and that they need to file various tax forms many times a year.
Of course, we can’t spare you the payments, but we can at least spare you the shock.
Here, for your reading pleasure, are all the basic taxes and fees every professional or business owner needs to pay once they have registered with the BIR:
1. Monthly taxes. So you thought you’d need to file taxes only once a year, hey?
Nope.
You actually need to file taxes at least once a month. #truthbomb
Non-VAT businesses know this monthly tax as percentage tax, because it is computed very simply, usually as 3% of your gross monthly earnings. (Some industries like property rentals are taxed at a different rate, like 7%, but 3% is standard for most industries.)
VAT businesses know this as monthly VAT, and it is computed less simply: 12% of your gross monthly earnings minus 12% of your VAT-receipted expenses.
Now this bears repeating for non-VAT businesses: the monthly tax is based on your gross income. It does not take your expenses into consideration at all.
In other words, if you bought your product at P90 and sold it for P100, you’ll need to pay taxes on the P100 that your customer paid, not the P10 that is your net earning from that transaction.
So factor this tax in when you’re deciding how much you’re going to price your products. Otherwise, you might end up earning much less than you expect.
2. Quarterly taxes. This is tax you pay based on your total gross (yes, gross again) income from January to March, April to June, and July to September.
October to December is included in your annual income tax, so there is no quarterly tax filing for that one.
You may be wondering now: Are you being taxed a second time for the same set of income that you already paid taxes for in your monthly tax filing?
Yes, you are.
Quarterly taxes are computed based on the table below:

For VAT businesses, the process involves a more complex equation that requires a separate blog post. So maybe we’ll talk about that another time.
