Step-by-Step Guide to Tax Preparation in the Philippines

• Proper tax preparation helps businesses avoid penalties, overpayments, and unnecessary stress by keeping records accurate and up to date.
• Key documents like official receipts, financial statements, and payroll records are essential for smooth and accurate tax filing.
• From computing tax dues to filling out BIR forms and filing via eBIRForms or eFPS, each step ensures compliance with Philippine tax regulations.
• Focus on growing your business and get help from tax professionals, like Manila Bookkeepers, for your tax preparation needs.

Whether you’re a small business owner, freelancer, or part of a growing enterprise, tax preparation is one of the most important tasks you’ll face throughout the year. Done right, it keeps you compliant, financially organized, and helps you avoid unnecessary stress when tax deadlines roll around.

Proper tax preparation helps businesses:

• Avoid Penalties and Overpayments – Late filings, incorrect tax classifications, and missing documents can lead to hefty fines or paying more than what you actually owe. With a structured approach, you minimize risks and ensure your payments are accurate.
• Enhance Financial Planning – Well-prepared tax records provide a clear view of your company’s financial health. This helps with budgeting, forecasting, and making informed decisions for growth and investment.

Let’s break down what you need and how to navigate the tax preparation process in the Philippines.

Essential Documents for Tax Preparation

Before anything else, gather all necessary documents. This step ensures smoother computation, accurate filings, and a higher chance of avoiding errors or BIR issues later on.

1. Official Receipts and Invoices
   Keep copies of all sales invoices (for income) and official receipts (for purchases and expenses). These are the backbone of your tax computation and help determine your VAT or percentage tax dues.
2. Financial Statements and Ledgers
   These include your income statement, balance sheet, and general ledger. They’re used to calculate your taxable income and support the figures reported in your BIR forms.
3. Payroll Records
   If your business has employees, you’ll need detailed payroll reports. These are essential for computing and remitting withholding taxes via BIR Form 1601-E or 1601-C.

How to File Your Tax Properly: A Step-by Step Guide for Businesses

Now that your documents are in order, here’s how to proceed with tax preparation in the Philippines:

Step 1: Know Your Tax Obligations

The first step is to understand the types of taxes applicable to your business. Common tax types include:

• Income Tax – Annual tax based on net income
• Value-Added Tax (VAT) or Percentage Tax – Based on gross sales or receipts
• Withholding Taxes – Tax withheld from employees, suppliers, or landlords
• Excise Tax – For manufacturers or importers of specific goods
• Local Business Tax – Required by the local government unit (LGU)

Determine your tax obligations based on your business structure, industry, and registration type.

Step 2: Register with the BIR

If you haven’t already, register your business with the Bureau of Internal Revenue and secure a:

• BIR Certificate of Registration (Form 2303)
• Authority to Print (ATP) for official receipts or sales invoices
• Books of Accounts (manual or computerized)
• Tax Identification Number (TIN)

Your Certificate of Registration will specify your tax obligations and filing frequencies.

Step 3: Keep Proper Books of Accounts and Records

Maintain organized and updated records, such as:

• Sales invoices and official receipts
• Purchase records and supplier invoices
• Payroll records and employee contributions
• Financial statements

These documents are essential during tax computations, audits, or when claiming deductions.

Step 4: File Your Tax Returns on Time

Below are the common tax forms and deadlines:

Tax Type	Form	Deadline
Income Tax (Quarterly)	1701Q / 1702Q	May 15, August 15, November 15
Income Tax (Annual)	1701 / 1702	April 15 of the following year
VAT (Monthly/Quarterly)	2550M / 2550Q	20th of the following month (monthly), 25th of the month after the quarter (quarterly)
Percentage Tax	2551Q	25th of the following quarter
Withholding Tax (Expanded)	0619E / 1601-EQ	10th of the following month (monthly), last day of the following quarter
Withholding Tax (Compensation)	0619E / 1601-C	10th of the following month
Annual Information Return (Alpha List)	1604-E / 1604-C	March 1 (Expanded), January 31 (Compensation)

Always check the BIR website or consult your accountant for updated schedules and rules.

Step 5: Pay Your Taxes

You can pay your taxes via:

• BIR-accredited banks (Authorized Agent Banks)
• BIR ePayment Channels:
  • Landbank Link.BizPortal
  • GCash
  • PayMaya
  • DBP Pay Tax Online
  • UnionBank Online

Make sure to get your payment confirmation and attach it to your tax return.

Step 6: File Your Returns Online

Use eBIRForms or Electronic Filing and Payment System (eFPS):

• eBIRForms: Ideal for non-eFPS taxpayers. Fill up the forms offline and submit online.
• eFPS: Required for large taxpayers, government agencies, and corporations mandated by the BIR.

Step 7: Secure Your BIR Confirmation and Keep Records

Once submitted and paid, keep digital and physical copies of:

• Filed tax returns
• Official receipts
• BIR confirmation email
• Payment slips or e-receipts

Retain your records for at least 10 years in compliance with Philippine tax laws.

Related Article: How Digitalization Improves Tax Compliance

Step 8: Monitor Compliance and Prepare for Audits

The BIR may conduct a Letter of Authority (LOA) audit or Tax Mapping. Stay audit-ready by:

• Regularly reconciling your records
• Keeping supporting documents for all transactions
• Engaging a licensed bookkeeper or accountant
  

Mistakes to Avoid When Preparing Taxes

Even with the best intentions, businesses can make costly tax mistakes. Here are the most common errors and how to avoid them:

1. Incomplete Records

Missing receipts, unrecorded income, and undocumented expenses can distort your tax calculation. Practice regular bookkeeping and store your documents securely—whether in digital or physical form.

2. Filing Late and Missing Deadlines

The BIR imposes strict penalties for late filings. Mark your calendar with key tax deadlines (monthly, quarterly, and annual) to stay compliant. Consider setting reminders or working with tax professionals to ensure timely submissions.

3. Incorrect Tax Classifications

Registering under the wrong tax type or applying incorrect rates (e.g., VAT instead of Percentage Tax) can lead to incorrect filings and penalties. When in doubt, consult with an expert to verify your tax profile and obligations.

Get Professional Tax Preparation Services with Manila Bookkeepers!

Tax preparation doesn’t have to be overwhelming. If you’d rather focus on running your business while staying compliant, Manila Bookkeepers is here to help. We provide professional tax preparation services tailored to your business needs—from organizing financial records and computing taxes to filing your returns accurately and on time.

With our experienced team handling your taxes, you can:

• Avoid penalties and tax issues
• Ensure accurate and timely filing
• Focus on business growth, not paperwork

Let’s make tax season stress-free.

Contact Manila Bookkeepers today and get expert support for all your tax preparation needs!