Day: October 20, 2021

Written by: Maine Dela Cruz

On or before April 15 each year, the government mandates individuals and entrepreneurs who registered businesses in the Philippines to pay taxes. During tax season, freelancers and entrepreneurs become extremely busy as they prepare for the filing of tax. They file their own annual income tax returns (BIR Form 1701) and pay their own taxes. If you can afford to hire an accountant or tax agent, the job will be easier. However, what if you are unable to?

You need not worry. There are a lot of resources online for your reference. And some steps are now done online as well. Of course, you must have high-speed internet to do online activities like this. And getting a reliable internet service provider in the Philippines will significantly contribute to the smoothness of the whole process.

Indeed, tax preparation and filing in the Philippines may be extremely complex for beginners and even experienced taxpayers. If it’s any consolation, submitting ITRs is much easier today than it was previously. Twelve-page forms have been shortened to four pages. Additionally, the Internal Revenue Service (IRS) has implemented online ways for preparing and filing ITRs.

No prior experience as a self-employed individual submitting an income tax return? This thorough guide should provide you with a good starting point.

What is an Annual Income Tax Return?

An income tax return (ITR) is a document that taxpayers file with the Bureau of Internal Revenue (BIR) every year to record their income, spending, and other critical information such as tax due and any refund for overpayment of taxes. Individuals with a mixed income or who are self-employed must complete BIR Form 1701.

Why Do We Need to Pay Income Taxes?

Many people appear to believe that submitting tax returns is optional and so reject it as unneeded and onerous. This is not a particularly healthy view of tax filing. Here are the main reasons why filing an annual income tax return is important:

1. It is a sign of responsibility.

Filing annual income tax returns demonstrates that you are accountable. Not only that, but it also makes following transactions easier for individuals and enterprises, as their revenue is recorded by the Bureau of Internal Revenue (BIR) with any appropriate tax already paid.

2. It gives you peace of mind.

Being audited by the BIR may be extremely stressful, especially for taxpayers who reduce their tax payments intentionally or unlawfully. At times, it might even influence your personal life, causing restless nights and anxiety.

If you pay the correct amount of tax, you can avoid experiencing these feelings of worry and anxiety. You will have greater peace of mind and will be able to concentrate on expanding your business.

3. It is key to maintaining a good credit rating.

Paying the right amount of tax enables you to maintain a favorable credit rating in financial firms and rating agencies. The more income and taxes you disclose, the better your credit rating will be. You can utilize your favorable credit rating to obtain more money for business development or other objectives.

4. It is a social responsibility and contribution to the country.

Paying the correct amount of tax is a country’s civic duty. Our taxes will be utilized to expand and improve government infrastructures and the lives of Filipinos both inside and outside our nation.

If all income earners pay the correct amount of tax, the government may collect more money to support its objectives, such as road construction, school construction, and improved government wages and services. These variables can contribute to the Philippines attracting more investment and jobs. More people with employment equals more people with money to spend, which benefits your business directly or indirectly.

4 Types of Annual Income Tax Return

In this part, we will explore four common types of annual income tax returns. For a complete list of income tax returns, visit BIR’s official website.

1. Purely compensation income

This category includes salaries, wages, emoluments, and honoraria, as well as commissions, taxable bonuses, and fringe benefits. You will need to file BIR Form No. 1700.

2. Business income and professional

BIR Form No. 1701 shall be filed by individuals who are engaged in business. This includes trade income, fees from the practice of the profession, profits from the sale or exchange of assets, commissions, rental income, and other income not covered by compensation income are all examples of business and/or trade revenue.

3. Passive Income

Those who have passive income must file BIR Form No. 1701A. This also includes income from other sources such as interest on foreign or Philippine currency bank deposits, royalties, prizes and other wins, and dividends. Capital gains on the sale of stock, rental property, and informer’s commissions are also included.

4. Corporation, Partnership and Other Non-Individual Taxpayer Exempt

This type is under the Tax Code, as Amended, {Sec. 30 and those exempted in Sec. 27(C)} and Other Special Laws, with No Other Taxable Income.

To start, this return shall be filed by a corporation, partnership, and other non-individual taxpayers exempt under the Tax Code, as amended [Sec. 30 and those exempted in Sec. 27(C)] and other special laws with no other taxable income such as but not limited to foundations, cooperatives, charitable institutions, non-stock and non-profit educational institutions, general professional partnership (GPP), etc. This return is filed on or before the 15th day of the 4th month following the close of the taxpayer’s taxable year.

How Much is the Regular Income Tax Rate?

This part explains how much are the regular income tax rates individual citizens and resident aliens earning purely compensation income and individuals engaged in business and practice of their profession. For a complete list of the income tax rates, visit BIR’s official website.

Graduated Income Tax Rates

This is under Section 24(A)(2) of the Tax Code of 1997, as amended by Republic Act No. 10963. Under the Tax Code of 1997, as amended by Republic Act No. 10963, individuals earning PHP 250,000 or less annually do not have to pay their taxes. Meanwhile, if you are earning more than PHP 250,000, you will have to be subjected to a tax bracket set by BIR.

Self-employed with Gross Sales Not Exceeding P 3,000,000

This is for purely self-employed individuals and/or professionals whose gross sales/receipts and other non-operating income do not exceed the VAT threshold of p3,000,000.

Under this category, the tax shall be, at the taxpayer’s option: either 8% income tax on gross sales or gross receipts more than p250,000 in lieu of the graduated income tax rates and the percentage tax; or income tax based on the graduated income tax rates.

Income from Practice of Profession

These are individuals earning both compensation income and income from a business and/or practice of the profession. Under this category, the income taxes shall be for income from compensation based on graduated income tax rates; and for income from business and/or practice of the profession.

If the total gross sales/receipts do not exceed the VAT threshold of PHP 3,000,000, the individual taxpayer may opt to avail either 8% income tax on gross sales/receipts and other non-operating income in lieu of the graduated income tax rates and the percentage tax; or income tax based on graduated income tax rates

However, if the total gross sales/receipts exceed VAT threshold of PHP 3,000,000, the income tax will be based on graduated income tax rates.

Certain Passive Income of Individual Citizens and Resident Aliens

If you earn an income from other sources such as interest on Philippine or foreign currency bank royalties, deposits, dividends, and prizes, and other wins, your equivalent tax will be at least 6%, depending on the nature of your passive income.

Two Ways to File an Income Tax Return in the Philippines Online

Aside from the manual filing, which involves filing your ITR personally in the RDO where your current registration is, there are two more methods to file an income tax return in the Philippines: through the Electronic Filing and Payment System (eFPS), Electronic BIR Forms (eBIRForms), and manual filing.

Electronic Filing and Payment System (eFPS)

Paperless ITR filing and online tax payment have been made possible thanks to the BIR’s eFPS technology. Tax filing and payment have never been easier or more simple.

Large taxpayers were a primary focus of the BIR while developing this computerized tax filing and payment system. The eFPS is available to all taxpayers in the country required to file and pay their taxes as of today.

How to Use the eFPS

Here’s how you can file your annual income tax return using the eFPS:

Step 1: Register for an account. To enroll in eFPS, visit the eFPS website and click the “Enroll in eFPS” link. Complete the enrollment form and click the Submit button when finished. After three to ten days, you will get an email from the BIR informing you of the approval or rejection of your enrolment.

Step 2: After the system receives your information, it will assign you a file reference number (FRN). Each successful filing transaction will generate an FRN, which may be located in the upper right corner of your ITR.

Step 3: To make a payment, click the Proceed to Payment button located beneath the FRN. Enter the necessary information and payment method. After that, click “Submit.” When the payment is properly processed, you will receive a confirmation notification on the screen.

Step 4: To pay your tax, click the Proceed to Payment button under the FRN. Enter the required details and payment mode. Then, click “Submit.” You’ll see a confirmation notice on the screen upon successful completion of the payment.

Step 5: Print your ITR by utilizing the Tax Return Inquiry feature. Your RDO may certify your e-filed ITR.

Electronic BIR Forms

The eBIRForms is an alternate approach that makes ITR preparation and filing easier, more convenient, and more accurate. It consists of two packages that enable taxpayers to complete their ITRs offline and submit them to the BIR online: the offline and online packages.

1. Offline eBIRForms Package

This refers to the offline tax preparation software that taxpayers and Accredited Tax Agents use to fill up tax forms offline. Download the latest version of eBIRForms and start filling them out.

2. Online eBIRForms System

This refers to the infrastructure that accepts, processes, and stores tax returns submitted online. In other words, this system makes BIR’s online tax submission services possible.

Now, there’s no reason for confusion between the two. One is for tax preparation and tax return submission and the other is the system that makes online tax filing possible. It’s simple as that!

How to File Annual Income Tax Return through eBIRForms

To begin filing, taxpayers will need to download the offline software package. Additionally, keep in mind that eBIRForms is not presently compatible with Mac. Therefore, if you’re using an Apple computer, you’ll need to locate and install the offline software package on a Windows computer. Here’s how you can file your ITR through eBIRForms:

1. Visit the BIR website in step one. Select “eServices.”
2. Download the most recent eBIRForms Offline Package.
3. Open the package and choose the appropriate tax return. Complete critical information.
4. Once the needed form is completed, save a copy of the completed tax return.
5. Submit the completed form to the Online eBIRForms system via the Online eBIRForms system.
6. The BIR will acknowledge receipt of your ITR through email.
7. Pay your tax dues at the nearest AAB of your RDO.

Pay Your Income Taxes with Streamtech

Streamtech, the newest internet service provider in the Philippines, offers fiber, that is, a high-speed internet connection at a reasonable price. For as low as P1,499/month, you can get an internet speed of up to 25 Mbps that will help ease the filing of your income tax returns. You can also avail of the Extendifi WiFi Extender that allows you to enjoy the power of Streamtech’s connection no matter where you are.

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Written by: Mitch De Guzman

Having a good negotiating team can help you seal the deal. However, obtaining the client’s approval will be difficult if you don’t have a well-written business proposal. You lack context without it. Hence, it’s a must because it’s how you and your client get started working together. Furthermore, research shows that it’s the most effective strategy for closing business-to-business transactions. 

Don’t worry. There are a lot of business proposal examples available online. All you need to ensure is that you have a fast internet connection. And all will be smooth if you choose a reliable fiber internet in the Philippines.

EXACTLY, WHAT IS A BUSINESS PROPOSAL?

A business proposal is an official document that explains why your company would be an excellent partner to another organization.  It’s a way to show how working together on specific projects or initiatives would benefit them.

Additionally, a business proposal should convince your potential clients that you are the best solution for their problems. In short, a business proposal is a formal document that a company creates and sends to a potential client to secure a business agreement.

BUSINESS PROPOSALS versus BUSINESS PLANS

Most people mix up business proposals and business plans. While their goals may appear to be similar, they are not.

The primary purpose of the business proposal is to sell your product or service rather than your company. It’s a targeted sales document describing how a company will approach a project by clearly stating its value to solicit the client’s business. 

On the contrary, a business plan is a detailed description of a company’s operations and prospects. Its goal is to provide a quick but comprehensive understanding of what your company does and its potential for success. In a nutshell, it is a written synopsis of the company’s information.

Simply put, a business proposal is about your potential clients, while a business plan is all about your company.

You can also check out these related articles:

• What is a Feasibility Study and Why is it Important to Businesses?
• How to Conduct a Feasibility Study for Business in the Philippines
• What are the technical skills needed to earn big in this digital age?
• The Best E-Commerce Platforms for Filipino Businesses

OVERVIEW OF AN EFFECTIVE BUSINESS PROPOSAL

Business proposals provide an opportunity to highlight the following characteristics of your organization. 

• Expertise – your potential role in resolving the problem
• Confidence – shows why you are the best fit for the job and that you can keep your promises
• Capabilities – your ability to complete the task at hand

Hence, it is critical to understand the type of proposal you are developing to highlight your characteristics. Before you start writing, you should be able to answer these critical questions.

• What information do you need to include in the proposal?

• Is this a win for the client? Why?

• What makes your company an excellent solution for this project?

A better idea is to have a list of questions that you’d like the client to answer to avoid surprises.

GUIDELINES IN WRITING A SUCCESSFUL BUSINESS PROPOSAL

1. Before you begin writing the business proposal, you must first understand the organization for which you are writing it. If it’s a response to an RFP (request for proposal), make sure to read the instructions thoroughly to understand the proposal process. It can also be beneficial to have an initial call or meeting with the new client to ensure you fully understand the prospect’s problem they’re attempting to solve and their goals.
2. Make your business proposal easier to understand for a business owner by avoiding confusing terms and industry jargon. After all, you want them to quickly get a sense of the type of product or service they will be receiving.
3. A business owner’s philosophy always aids in determining what type of business they want to start. Thus, your cover letter (also called the title page) should be clear, concise, and simple to understand for business owners to see how they can benefit from it. 
4. Always put the name of your potential client at the top of your letter. Doing this will help with clarity and understanding as well as prevent any confusion later on during reading. 
5. The target audience, philosophy, and proposition should always be listed first when writing a business proposal. This format clarifies the business’s purpose and goals. 
6. Include background information about your organization to make it easier for them to understand why they should choose you over someone else. 
7. Lastly, be sure that your tone is professional yet persuasive enough for them to want what you offer.

BUSINESS PROPOSAL TYPES

There are two kinds of business proposals, but the steps in creating them are the same. 

Unsolicited Proposal

As the name implies, you send unsolicited business proposals to prospective customers even if they haven’t requested one. You send them at random, much like cold calling, in the hopes of gaining the business of a potential client.

Solicited Proposal

In contrast, solicited business proposals are responses to your prospective client requests. Usually, when a company needs a problem solution, it sends invites for proposal submissions. Often, it goes through a bidding process; hence, you should follow the proposal process indicated in the request. 

Whether it’s a solicited or unsolicited business proposal, always make sure to contain these three main points: a problem statement, a proposed solution, and pricing information.

BUSINESS PROPOSAL TEMPLATE

There is no standard method for writing a well-written business proposal. However, it will be beneficial to use the free business proposal business templates available on the internet to get you started. In any case, you can constantly modify it to meet your needs.

Here are the key business proposal elements to include:

Title page

The title page sets the tone, so it must be both engaging and professional. Otherwise known as the cover page, it includes your company logo and name, contact information, the date of submission, and the client’s name or person to whom you submit the proposal.

Table of contents

One thing you shouldn’t forget is a concise and understandable outline to aid prospects in quickly grasping the offer. A table of contents will provide your prospective client with information about the topics covered in the business proposal. Create bullet points to keep things simple and accessible for those receiving them. In addition, if you’re submitting via email, make each bullet point clickable so that your customer can easily navigate to the various sections for reading and evaluating.

Executive summary

A good executive summary describes how your company’s products or services solve a specific problem for a target audience. It must convince your clients that you are the best solution for their problems. Even if it’s a short executive summary or they don’t read the rest of your proposal, the potential customer should have a clear understanding of how you can assist them. 

Problem statement

In essence, it is a summary of the prospect’s problem, including the project details. It should demonstrate your understanding of the potential client’s needs. 

Value Proposition

It’s the part where you propose a custom solution to the problem, including the project timeline, the deliverables, and how you’ll provide them.

Qualifications

This section explains why you are the best candidate for the project. Include social proof such as case studies of client success stories, client testimonials, and any relevant awards or accreditations to strengthen your authority.

Pricing alternatives

Here’s where you get down to business. The framework of this section, however, will vary depending on the project or service. You will have to consider any legal requirements, such as permits or licensing, in this section. Still, it should show the pricing table and payment schedule.

Terms and conditions 

Transparency in your parameters will help both parties understand what they are getting into before signing and agreeing. Hence, you must include a detailed summary of what you and the client agree to if your proposal is accepted – from the project’s timeline, pricing table, payment schedule, and responsibilities of both parties. Make sure to double-check the terms and conditions with your legal team before sending the proposal to the client. 

Conforme or signature area 

A signature box invites the final decision maker to contact you if they have any additional questions. It’s a call to action, so they’ll be more likely to respond to your idea instead of leaving it in the pending box.

BUSINESS PROPOSAL TIPS

Here are additional pointers to help you write a great business proposal.

Make it simple to read and understand

While customers expect to see all the details in your bid, they prefer that you get right to the point. Make your business proposal easier to read and understand. Use bullet points to emphasize crucial points. 

Re-read and review

Since business proposals are formal communications, anything that could lead to confusion or misunderstandings can derail them. Get someone to proofread your business proposal language to ensure that it is clear, concise, and precise.

Customize your business proposals

Business proposals are only as good as the business that you are applying them to. Using the proposed solution for past clients will be useless to new potential customers. Most significantly, if the entire proposal does not consider the new potential client’s problem and all of their business requirements. Create a different one for your next business proposal. It must be a tailored fit for each business.

Use infographics 

Supporting materials in visuals such as charts and graphs is an excellent way to demonstrate your expertise and capabilities. Find relevant and compelling statistics that highlight what you have to offer to establish authority and credibility.

Create a video

Videos are undeniably a powerful tool for spreading knowledge. They are preferred by most business owners and the general public, especially if you are presenting online.

Add a Clear Call to Action

Define and emphasize what they should do in response to the interest generated by your proposal. Thus, you must ensure that the reader knows what to do next. And the best way to get there is with a clear call to action.

Showcase your Brand 

It’s your moment to shine. So, don’t be afraid to flaunt your company’s personality and abilities in your proposal. Nonetheless, you should maintain your brand integrity and demonstrate what sets you apart from your competitors to the potential client. 

Include Client Testimonials

When you’re personally extolling the virtues of your company, you can only go so far. Elements such as customer quotes and testimonials can be highly beneficial because it shows your customer relationship management skills. Including social proof in your business proposal increases your credibility. 

KEY TAKEAWAY

To summarize, the key elements you should consider when writing a business proposal are research, purpose, and course of action. If you have sufficient information, you can develop a valuable solution to your prospective clients’ needs. Furthermore, you can be clear with your approach. Then, you can demonstrate why you are the most qualified candidate for the project. Don’t be afraid to show them what you’ve got. You need to prove to them that you can do it.

Finally, make your business proposal visually appealing while remaining precise, concise, and straightforward.

ON THE SAME PAGE IN BUSINESS 

Today, most business owners require constant speed and performance to help them compete with the big players in the industry. With the proliferation of e-commerce, online sales, and digital services, you can’t take your eye off the ball for one second, or you’ll run the risk of missing opportunities for growth.

Streamtech, the newest fiber internet in the Philippines, helps enterprises nationwide thrive in the changing economy by offering blazingly fast internet service. With high-speed and reliable fiber internet, you can keep abreast of business trends. In addition, it gives you easy access to numerous business resources such as business proposal templates. Additionally, if you are cutting on costs, you can always find a free business proposal template on the internet. It also allows you to download proposal software like Proposify and PandaDoc quickly.

With so many online options and your fast internet, you can undoubtedly find the most suitable business template to help you write winning business proposals. 

You should now have sufficient knowledge in writing an amazing business proposal. With this skill, you can directly follow up with your prospective customers. If you need additional information, please subscribe to our newsletter to receive the most recent news and updates about business and Streamtech.

Visit our official Facebook page to learn more about our products and services. You may also check out our local Facebook pages in your area. SAM – Support and Assistance Mate, is also available on our various customer care channels to assist and answer your questions. Just search for “SAM by Streamtech Internet” on Viber.