10 Tips for Filing Taxes and Managing Money If You’re Self-Employed

Being your own boss comes with freedom, but it also means taking full responsibility for your finances.
Unlike employees in the Philippines who have their taxes withheld automatically and enjoy employer-
provided benefits, you have to manage everything, from tracking income and expenses to meeting
Bureau of Internal Revenue (BIR) deadlines. Moreover, you need to plan for savings, retirement, and
insurance.

All these can feel overwhelming at first, but with the right habits, financial management as a self-
employed professional becomes less of a hassle. Here are some practical tips to help you.

1. Separate Business and Personal Money

When you’re self-employed, one of the most important steps you can take is to open a dedicated bank
account or e-wallet for your business transactions. This creates a clear line between what you earn from
work and what you spend personally. It helps you avoid confusion during tax filing season and makes it
easier to monitor your cash flow. When you keep things mixed, you risk overlooking deductible
expenses or underestimating your taxable income.

2. Keep Consistent Records of Income and Expenses

The BIR requires businesses to issue receipts and maintain proper books of accounts, but this level of
recordkeeping shouldn’t just be about compliance. When you track every peso that comes in and out,
you get a better understanding of where your money goes. You can use a simple spreadsheet for this
purpose, but there are also digital tools and accounting apps that are specifically designed for
freelancers and entrepreneurs. No matter your choice of recording tool, the most important part is
building the habit of documenting transactions consistently.

3. Set Aside Money for Taxes Ahead of Time

It’s tempting to treat all income as spending money, but doing so will make tax season much more
stressful. A good practice is to automatically allocate 20 to 30% of your income for taxes. You can move
this to a separate account right after receiving payment, as if you’re paying yourself second. That way,
when quarterly or annual deadlines arrive, you’re prepared instead of scrambling.

4. Be Smart About Digital Payments and Transaction Fees

As a self-employed individual, you probably get paid in different ways, like bank deposits, e-wallets, or
platforms like PayPal. Each method may come with transaction fees that eat into your earnings. If you
often receive payments through PayPal, you can save on fees by transferring funds through digital bank
and e-wallet Maya. Indeed, many freelancers can benefit if they opt to cash in PayPal to Maya, as it
allows them to move money conveniently and track everything in-app. Being mindful of these small
costs can add up to big savings over time.

5. Understand Deductible Expenses

You’re allowed to reduce your taxable income by claiming legitimate business expenses. This can include
internet bills, office equipment, as well as software subscriptions. If you’re going this route, make sure
to keep receipts and official documents to back these claims. Deducting expenses responsibly lowers
your tax due and also gives you a clearer picture of your actual profit.

6. Choose the Right Deduction Method

When filing taxes, you can either itemize your expenses or opt for the Optional Standard Deduction
(OSD), which lets you deduct 40% of your gross income without showing receipts. If you have detailed
records and higher expenses, itemizing may help you save more. But if you prefer simplicity and don’t
want to keep too many receipts, the OSD can be a practical choice. Understanding both methods helps
you decide which works best for your situation.

7. File and Pay Taxes Quarterly

Unlike employees who often only worry about annual income tax, self-employed individuals must file
quarterly returns. This includes income tax and either percentage tax or VAT, depending on your
registration. While it may feel like more work, quarterly filing spreads out your payments so you don’t
face one huge bill at the end of the year. It also keeps you compliant and avoids penalties.

8. Use e-Filing and e-Payment Systems

The BIR has made it easier to file and pay taxes online through platforms like eBIRForms, eFPS, and
authorized payment channels. You can also pay through banks or e-wallet apps, which saves time
compared to lining up at physical offices. Getting used to digital tax filing not only makes the process
more efficient but also helps you stay on top of deadlines.

9. Build an Emergency Fund and Plan for Benefits

Since you don’t have employer-provided security nets, you need to create your own. Start by building an emergency fund worth at least three to six months of expenses. On top of that, continue your voluntary contributions to SSS, Pag-IBIG, and PhilHealth to maintain coverage. You might also want to explore private insurance or investment options for long-term protection. These steps ensure you’re not just surviving tax season but also securing your financial future.

10. Seek Professional Support When Needed

Tax rules can be complex, and mistakes are costly. Hiring a bookkeeper or consulting a tax professional, even occasionally, can save you from penalties and help you maximize deductions. Think of it as an investment that offers peace of mind and more time to focus on your work instead of stressing over
compliance.

Handling money as a self-employed professional takes effort, but it doesn’t have to stay complicated
forever. With discipline and the right systems in place, you’ll find that financial management gets easier
over time. Soon enough, you’ll spend less energy worrying about taxes and more energy growing your
business and enjoying the independence of being your own boss.