Having your very own business venture is a profitable move that one can make. As they say, no one has become rich from being an employee. The rich people or the big time players in most countries are mostly business people. When you already have the capital and the business idea that you want then you can start with your very own business. Having your very own business also takes some responsibilities to shoulder and one of this is to pay some taxes. Taxes come in different categories and if you want to be informed and educated of the different kinds of taxes then you need to check out the detailed description of each categories below for your reference.
Withholding Taxes
Every business enterprise whether small, medium or large scale have the main skeleton or frame of the company which is no other than the workforce or the manpower. Employees pay their taxes through their employers and this tax that is paid by them is called withholding tax. Withholding tax comes in three kinds and they are as follows: compensation, expanded and final. The BIR form needed in order to pay the withholding tax is the form 1601 C or the monthly return of income taxes while on the other hand, the form used to pay monthly remittance return of income taxes is the BIR form 1601 E. Withholding tax should be paid every 10th of the month after the withholding tax was made.
Annual Income Tax Return
Every employee is required to file an annual income tax return which is due to be paid every April 15 of each year. The annual income tax return is based on the whole year accumulated income/ earnings of the preceding year where in it was filed.
Percentage Tax
Percentage Tax is applicable for those business entities which sells goods, properties or even services but does not apply value added tax. The percentage tax can be paid in two ways, the first one is by monthly and the other one is quarterly.
- Monthly Percentage Tax. Monthly percentage tax is equivalent to 3% of the gross monthly sales of a company or business. The BIR form needed to be accomplished when paying the monthly percentage tax is the BIR Form 2551M. You would be needing some supporting documents such as the duly approved tax debit memo, duly issued certificate of creditable tax withheld at source or BIR Form 2307. The monthly percentage tax should be paid within twenty days of the following month.
- Quarterly Percentage Tax. Quarterly percentage tax is the summary of the earnings accumulated within three months or one quarter. The quarterly percentage tax is paid within twenty days after each taxable quarter. You would be needing some supporting documents such as the duly approved tax debit memo, duly issued certificate of creditable tax withheld at source or BIR Form 2307. The needed BIR form to pay your quarterly percentage tax is BIR Form 2551Q.
As mentioned earlier, there are deadlines that are needed to be met in order for you to prevent being charged with penalties or fines. Penalties are automatically charged as long as you were not able to pay on time! Please see the different charges that you would incur when you forget to file your appropriate taxes on time:
25% surcharge fee for late payments
50% surcharge fee for fraudulent returns filed
20% interest rate for the unpaid income tax is charged until it is paid fully
Compromised penalty charges
If you want to have a good flow of money in your business then you need to give back to our government and pay your taxes on time. This would be beneficial for you when you pay promptly and honestly because it will save you from paying additional surcharge fees that is definitely a big waste of your hard earned money.