Basic tax and accounting for Entrepreneurs

 The Methods of

Accounting

Cash Basis Method. With this method an entrepreneur only calculates income when cash from invoices are received and expenses when

notices of payments are paid. This type of method of accounting is mainly used by more small to

medium scale enterprise entrepreneurs as it is easy to understand.

Accural Method. In this method you have to balance your expenses with your income whether cash is collected or not. For example, if you have sold a certain product and the customer pays you via credit card, you’ll need to put in the book as account receivables. When the account is fully paid only then you can record that as cash received.

Types of Business Tax

Value Added Tax (VAT). The 12% sales tax collected from the sale of services, products

or leases.

Percentage Taxes. The taxes paid by small to medium enterprises that has an annual gross sale of PHP 1Million. This type of tax is applicable only to

non-VAT establishments.

Income Tax. The type of tax paid quarterly based on the earnings of an individual or an

establishment. In the country, corporations are mandated to pay 2% tax on gross income and are paid after the fourth taxable year from the

moment the company started.

Withholding Tax. This type of tax is an advanced collection of income

taxes of an employer or proprietor to be remitted to the government.

Capital Gains Tax. A form of transaction tax that has to be paid even if there is no value gained from a transaction. These

taxes are usually applicable for real estate property classified as a capital asset.

REMEMBER TO:

Separate your personal account from your business

account

Register your books and journals

 Attend seminars conducted by the

BIR

 Pay your taxes on time