Streamlining Performance Reviews with HRIS
Streamlining performance reviews with HRIS is vital for organizations that want to improve organizational effectiveness. Read to know how!
Are you planning to put up a business, or have started running one recently? Basically, you must understand that the law puts a huge responsibility on you as a Withholding Agent for taxes due to the Bureau of Internal Revenue (BIR). Thus, you must understand how BIR withholding taxes compensation works.
After all, the compensation that you pay to your employees is generally subject to withholding taxes that must be remitted to the BIR. Consequently, costly fines and penalties — even imprisonment in extreme cases — await if you are negligent in your role as a Withholding Agent.
How should you prevent this potential headache? First, understand and have a clear overview of how withholding taxes on compensation are processed.
A Withholding Agent is any person or entity who has control of the payment that is subject to withholding tax.
As a business, you have the responsibility to collect taxes on behalf of BIR. But how do you do this? Hence, you automatically withhold (subtract and temporarily keep) the taxes due when your business makes certain payments. Afterwards, you remit those collections to the BIR.
Businesses are required to collect three types of withholding taxes.
First, the business sets aside remuneration for the services rendered by its employees. Consequently, it deducts and withholds the applicable taxes even before the employees receive their pay.
Then, the next tax is the Expanded Withholding Tax. These are taxes you withhold for specific income payments. Examples are:
Thus, the business, as a payee, can credit the taxes withheld here against its income tax due for that period.
Last is the Final Withholding Tax, which applies to certain income payments. However, the taxes withheld are not creditable against the income tax due to the receiver of the income. Additionally, this includes, but is not limited to, dividends, royalties, and prizes.
Here’s a general overview of what you need to do as an employer when it comes to your role in filing BIR withholding taxes compensation.
In Hurey’s previous blog, we discussed in detail what BIR Form 2316 is. Additionally, we discussed the steps involved in its preparation and submission.
To remind you, this is just an overview. In fact, we have not touched on the nitty-gritty of the subject, like how to actually remit the withheld taxes. Additionally, this includes the year-end adjustments and refunds if too much or too little taxes were withheld. Most of all, we have not discussed the legal technicalities, as well as the remedies and penalties involved when firms commit errors in their role as a Withholding Agent.
Why build everything from scratch when there’s a ready-made solution available for you? Save yourself from all these troubles and consider getting Hurey, the Philippines’ most scalable HR and Payroll app.
With Hurey, Filipino firms can fulfill their role as a Withholding Agent without breaking a sweat. Simply input all employee data and complete the initial setup required, and payroll runs become automatic!
Moreover, the cloud-based app then generates filled-out BIR Forms 2316, 1601-C, 1604-C, as well as the attached Alphalists — all with just a few clicks on a button. Just imagine the precious work hours that this will save you!
What’s more, Hurey’s dedicated team works diligently in the background, keeping tab on the latest developments that concern its cloud-based app. As a result, BIR forms, tax computations, and such are automatically updated as needed.
Don’t waste your time and get your new business running ASAP! Book a free Hurey demo now!
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