Knowing when to apply for tax is vital for freelancers. Choosing incorrectly can cost you penalties, lost deductions, or delays. Should you apply before or after signing your contract? In this blog, I’ll show you exactly how to time your tax registration so you stay compliant—and stress-free.
What Does “Apply for Tax” Mean for Freelancers
To “apply for tax” means registering with tax authorities (e.g. BIR in the Philippines), securing your Tax Identification Number (TIN), and complying with required filings (income tax, withholding, etc.). For many freelancers, this also includes registering as a “/self-employed/,” issuing official receipts or invoices, and filing returns in due time.
Why Timing Matters for Freelancers
- Legality: Some contracts require you to already have tax registration to sign or be paid.
- Deductions & Credits: Registering early ensures your income is captured properly and you can claim legitimate expenses.
- Avoiding Penalties: Late registration or late filings often incur fines or interest charges.
- Professional Credibility: Clients prefer working with freelancers who are tax-compliant and legitimate.
Steps to Apply for Tax at the Right Time
- Check the client’s requirement
- Some clients demand proof of registration (TIN, business permit, etc.) upfront.
- Ask in the contract negotiation stage.
- Visit your tax office or use e-registration systems
- In the Philippines, freelancers register with BIR’s eRegistration system.
- You may need to submit forms (e.g. BIR Form 1901 for self-employed individuals).
- Choose your tax regime
- For example, under simplified or graduated income taxation schemes, or under special EO rules if applicable.
- Decide whether you’ll be subject to withholding or required to issue official receipts/invoices.
- Get books and official receipts ready
- Acquire the required sets of books and receipts (or register for e-invoicing) after registration.
- Ensure your documentation begins on the correct date.
- File your first returns
- Timely file quarterly (if applicable) and annual returns as required by law.
When and Who Should Sign Contract?
- Best practice: Apply before signing
If possible, register for tax before you sign your contract. That allows you to show proof to the client, avoid delays in payment, and ensure your earnings from that contract are compliant from the start. - If you already signed
Register as soon as possible—even if after contract signing. In many jurisdictions, you can date your registration to cover the period when you started working. - Who this applies to
- Freelancers or independent professionals entering new contracts
- Contractors needing to issue invoices or be withheld tax
- New entrants who haven’t previously registered with tax authority
Unique & Practical Advice
- Negotiate a grace clause: Include in your contract a term that allows a few days for registration before work or payment begins.
- Document all expenses early: Keep receipts from Day 1 so you can include them once registered.
- Register as soon as possible: Even if your income is low initially, registration early avoids retroactive issues.
- Use software or reminders: Let tools remind you of deadlines (quarterly, annual) so you don’t miss a return.
- Consult a tax advisor early: For freelancing, local rules vary. A quick chat with a pro can save you big mistakes.
Timing your tax application is more than a bureaucratic detail—it defines your legal standing, professionalism, and financial health. Whenever possible, apply for tax before signing your contract so you start work cleanly and confidently. And if you’ve already signed, don’t delay—register immediately to protect yourself.
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