How Do I Start Freelancing in the Philippines (2025 Guide)

Introduction

If you’ve ever asked how do I start freelancing in the Philippines, you’re not alone. In 2025 the local gig economy continues to grow rapidly; estimates suggest there are about 1.5 million registered freelancers in the country. Freelancing offers the freedom to choose projects and work from anywhere, but it also means taking on responsibilities that employees usually don’t handle – particularly registration and taxes. This guide explains what freelancing is, why you must register with the Bureau of Internal Revenue (BIR), how to choose the right tax rate and meet filing deadlines, and how to manage your finances to succeed as a self-employed professional.

What is Freelancing?

Freelancing refers to working independently, often on a per-project or per-hour basis, instead of being employed by a single company. It encompasses a wide range of services, including writing, design, software development, tutoring, coaching, and even virtual assistance.

Unlike employees, freelancers are not covered by traditional employer benefits such as SSS, Pag-IBIG, or PhilHealth contributions unless they voluntarily enroll. That said, many freelancers choose to contribute independently to government benefits and invest in private insurance to safeguard their finances.

Freelancing can be done through local projects or international gigs via platforms such as Upwork, Fiverr, or OnlineJobs.ph. It's also becoming more common for freelancers to offer specialized skills like SEO, email marketing, data analysis, or UI/UX design. As long as your income is self-earned and consistent, the BIR considers you a self-employed professional who needs to register and pay taxes.

Who Counts as a Freelancer?

In the Philippines, the BIR views freelancers as self-employed individuals earning an income from a professional activity or a small business. These include:

• Independent service providers like photographers, fitness trainers, and tutors.

• Remote contractors such as graphic designers, software engineers, or copywriters working for clients locally or abroad.

• Licensed professionals running their own practice (e.g., lawyers, doctors).

• Small business operators, including online sellers and home-based caterers.

Whether you're a Filipino citizen, a resident foreigner, or earning from clients in the Philippines, you are required to file and pay taxes for your income.

A freelancer is someone who is essentially running a one-person business. This means you are responsible for tracking your own income, expenses, and financial records — unlike traditional employees whose taxes are withheld and filed for them by HR departments.

Why You Need to Register and Pay Taxes

Aside from being a legal obligation, tax registration benefits freelancers in several ways:

• Avoid penalties: Fines for non-compliance can reach up to ₱500,000 to ₱10 million with possible imprisonment.

• Client trust: Many companies will only work with registered freelancers.

• Loan approval: You need a tax record to apply for credit cards or business loans (BSP – consumer loans).

• Eligibility for aid: Registered freelancers can access DTI Negosyo Center services and financial assistance programs.

• Proof of income: You'll need this when applying for housing loans, visas, or travel documents.

Being registered shows you're serious about your profession. Many freelancers eventually scale into small agencies, hire subcontractors, and expand their client base — and this process is smoother when you're legally compliant from the beginning.

How to Register as a Freelancer

The steps below apply to most freelancers, whether you're registering as a professional or a sole proprietor:

1. Choose a Business Structure

• Professional: For freelancers using their name (e.g., writers, coaches).

• Sole Proprietor: For businesses that require a trade name (e.g., "Juan's Virtual Solutions"). Register with the DTI.

2. Prepare Documents

• Valid IDs (2 copies)

• Proof of billing/residency

• Barangay Clearance, Occupational or Professional Tax Receipt

• Portfolio or contract

• BIR Forms 1901 (new) or 1905 (existing TIN)

• Form 0605 for the ₱500 annual registration fee

• Books of accounts (journal, ledger, etc.)

3. Get or Update Your TIN

• Use Form 1901 if new, or Form 1905 to update your employment TIN.

• Pay fees and documentary stamps.

• Secure your Certificate of Registration (COR).

4. Register Books and Receipts

• Have your books of accounts stamped by the RDO.

• Apply for Authority to Print and official receipts.

5. Attend BIR Seminar

This mandatory session helps you understand your tax obligations as a freelancer.

For a deeper breakdown, Taxumo's guide provides a comprehensive walkthrough.

Choosing Between 8% Flat Tax and Graduated Rates

When earning under ₱3 million annually, freelancers can choose:

8% Flat Tax

• Deduct ₱250,000 exemption from gross income

• Pay 8% on the remaining amount

• Simpler, no deductions tracking

Graduated Income Tax (if not eligible for 8%)

According to a popular Reddit discussion, many new freelancers find the 8% easier and cheaper if they have minimal deductions.

To elect the 8% rate, you must indicate this on your first quarterly return. If you miss this, you’ll automatically be enrolled in the graduated tax schedule for the rest of the year.

Other Tax Considerations

Percentage Tax

If you opt out of the 8% rate and earn below ₱3 million, you must pay 3% percentage tax on gross receipts. This is filed monthly or quarterly.

VAT (Value-Added Tax)

Freelancers earning over ₱3 million must register as VAT taxpayers and charge 12% VAT on invoices. This requires monthly VAT filing and input-output tracking.

Filing Deadlines

Stay up to date with the BIR Tax Calendar.

Tools to Simplify Your Freelance Taxes

• Taxumo – automatic tax filing and payment

• JuanTax – BIR-accredited software

• GCash / eFPS / bank apps for payments

• Wise for receiving international payments

• Edge Tutor's tax guide for global freelancer tips

You can also explore hiring a freelance accountant to guide you for the first year. This can save you from filing errors or missed deadlines.

Common Mistakes to Avoid

• Accepting gigs before registration

• Missing filing deadlines (even with no income)

• Failing to issue official receipts

• Assuming you're "too small" for the BIR to notice

• Not separating business and personal finances

For more on this, BPI AIA's guide is a helpful read.

Another common mistake is failing to declare foreign income. Even if your clients are abroad, income received in the Philippines is still taxable.

Managing Your Finances

Financial discipline is crucial for freelancers:

• Open separate bank accounts for business and personal use

• Track expenses like subscriptions, internet, electricity

• Set aside tax money every month (10-15%)

• Create an emergency fund (3-6 months of living costs)

• Invest in insurance and retirement (e.g., MP2, health insurance)

• Use digital payments for easy tracking (BSP’s digital push)

You should also consider:

• Automating savings monthly

• Getting bookkeeping software like QuickBooks or Wave

• Joining freelancer communities to stay updated

Final Tips for New Freelancers

• Start small: Get your first client, then refine your workflow.

• Document everything: Contracts, invoices, receipts.

• Read your tax notices: Don’t ignore BIR letters or e-mails.

• Review your tax options yearly: Income levels change.

• Outsource when needed: A good accountant can be worth every peso.

Conclusion

Freelancing offers flexibility and autonomy, but also demands accountability. By understanding the legal requirements, registering with the BIR, choosing the right tax strategy, and using available tools, you can build a sustainable freelance business. If you're serious about freelancing in the Philippines, don't just focus on getting clients—focus on building a professional, compliant, and financially smart career.

With the right start, your freelancing journey in 2025 can be both fulfilling and future-proof.

Need help registering or filing your freelance taxes? Explore platforms like Taxumo or consult with licensed accountants to ensure you're on track from Day 1.