Friday, January 25, 2013

The Business of Names and Taxes

In our meeting in UAP-Sugbu for this month, we had a speaker from DTI who talked about brand names. The topic was okay but the discussions that followed, even after the talk or the meeting, was very interesting. We discussed taxation, basically.

Someone advised that getting a TIN (Tax Identification Number) should be considered seriously because the moment you get one you are already expected to pay tax. Newly registered architects who are not planning to practice yet or are planning to work abroad can fall victim to this. Even if one does not earn income for the year, they still need to pay a mandatory tax of P500 a month if they already have the TIN.

Most architects start out as single proprietors. It's fine if they use their own name, but if they use another name as business name they should register with DTI. If the business is a partnership or a corporation, they should register their business AND their name to SEC. DTI no longer handles partnerships and corporations. The fees in DTI vary depending on where you establish your office. If you only have one office you pay only the fee assigned to barangay level. If you have a branch office outside of your barangay, you pay the corresponding fee depending on the location of the other offices, whether within city, region, or all over the Philippines. This registration is renewable every five years and the business name can be passed on to others as a legacy. One can also "upgrade" the fees anytime within the five year period if more branches are put up during that time. The great thing about this is that you can do the registration online. Just visit the website of DTI.

Regardless of the nature of business, the business name should also be registered with IPO (Intellectual Property Office) if you want exclusive use of it. Some names, although acceptable for business may not be acceptable for trademark because they are "generic". Archt. Buck Sia shared his experience with his firm "Zubu Designs". "Zubu" is the old name of Cebu and was not qualified for registration as trademark BUT the logo (the graphic representation of the company's name) can be registered.

One has to pay so many taxes for running a business, including an architectural firm. A client or a payee is expected to\withhold tax when paying you for services. This is alright, as long as he also gives you the BIR forms that shows he paid the withheld amount to BIR, and that you don't forget to show this forms when you're paying your taxes. I mentioned earlier that you are required to pay a mandatory tax of P500 if you don't have income to declare but if you do have income to declare the tax would be 3% of that income. Ideally this is processed every month.

There was also a discussion about VAT but it was quite complicated. Archt. Noel Avila told us that the issue of VAT is more significant for contractors. Businesses with income of 1.5 Million or more should include VAT. The input-output aspect of it makes it complicated so it's better to sit down with your accountant to learn more about it.

Those were probably the more significant discussions, at least for me, otherwise I would not forget. It's good that this issues are also tackled because we sometimes get preoccupied with issues relating to fees and unlawful or unethical practices we forget that he have some housekeeping to do also.

Next meeting of the chapter will have the pecha-kucha. I'm supposed to present. Let's see if I can digest my thesis into a 6-minute presentation =)

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