A practical legal guide to DTI, BIR, and Mayor’s/Business Permits

Short answer

If you earn from tutoring with regularity (even part-time or online), Philippine law generally treats it as a business. That usually means:

DTI business name registration (for sole proprietors using a trade name);
BIR registration as a self-employed individual (issue receipts/invoices, keep books, file and pay taxes); and
LGU permits (Barangay Clearance and Mayor’s/Business Permit) where your business is located or based.

There are nuances, exceptions, and strategic choices that can save you money and hassle. This guide explains them.

I. What counts as a “business” for a tutor?

Under Philippine tax and local government rules, you’re “doing business” if you regularly offer services for profit, whether:

in person or online;
at home, in students’ homes, in a center, or via platforms;
part-time, seasonal, or “side hustle.”

One-off, isolated sessions (e.g., helping a cousin once for gas money) typically won’t trigger full registration. But once you advertise, set rates, or receive recurring fees, you should register.

Tip: Even if you start small, it’s easiest to register early. You avoid penalties and you can issue official receipts or invoices to schools or corporate clients who often require them.

II. Choosing your legal set-up

Most tutors start as sole proprietors (self-employed individuals). Other options exist but bring extra complexity.

Option	Who it’s for	Where to register	Notes
Sole Proprietor	One person, low risk, quick start	DTI (name), BIR, LGU	Cheapest and simplest. Personal liability.
Partnership	Two or more tutors pooling brand and cost	SEC, BIR, LGU	Shared control, shared liability (general partnership).
One Person Corporation (OPC)	Solo tutor wanting separate legal personality	SEC, BIR, LGU	Limited liability; higher compliance.
Non-stock	Rare for tutoring unless charitable/NGO	SEC, BIR, LGU	Special rules; no profit distribution.

For a side business, sole proprietorship is usually optimal at the start.

III. Do I need a DTI Business Name?

Yes, if you use a trade name. Register with the Department of Trade and Industry (DTI) if you will operate as, say, “BrightSteps Tutoring” or “Alpha Math Review.”

No, if you use your exact real name only. If you hold out as “Juan Dela Cruz” (and nothing else), a DTI business name is generally not required. But adding descriptors like “Tutorial Services,” “Tutoring,” or any word that makes it a business name typically does require DTI registration.

DTI essentials

Scope & fees: Barangay, City/Municipality, Regional, or National (fee depends on scope).
Validity: 5 years, renewable.
What you get: Business Name Registration Certificate—you’ll need it for LGU permits and bank accounts under the business name.
Common mistake: Trying to register words identical or confusingly similar to existing names—prepare several alternatives.

IV. LGU permits: Barangay & Mayor’s/Business Permit

Most tutoring operations need local permits before starting.

Barangay Clearance (where you operate):
- Bring DTI certificate (if any), valid ID, and proof of address/authorization to use the space.
- Home-based? Some barangays ask for homeowner/landlord consent and may restrict visible signage or foot traffic.
Mayor’s/Business Permit (City/Municipality):
- Submit application plus Barangay Clearance, DTI/SEC papers, and BIR TIN (if available).
- Expect ancillary clearances (vary by LGU): Fire (BFP), Sanitary/Health, Occupancy, and sometimes Zoning.
- Renewal: annually (often within January; exact deadlines and penalties vary by LGU).

Note on “professionals”: LGUs may treat PRC-licensed professionals differently (professional tax, distinct permits). Tutoring isn’t a PRC-licensed profession per se, so most tutors fall under business rules, not the professional-only exemption.

V. BIR registration for tutors (taxpayer basics)

As a tutor you’re a self-employed individual. Register with the Bureau of Internal Revenue at the Revenue District Office (RDO) of your principal place of business (or residence if home-based).

Core steps

TIN & Form 1901 (self-employed/sole prop).
Pay registration fees (if applicable) and obtain your BIR Certificate of Registration (COR / Form 2303) listing your tax types.
Books of accounts: manual, loose-leaf, or computerized—register/declare them.
Invoicing/receipting:
- For services, you must issue an official receipt/invoice for every payment (paper or e-invoicing as allowed).
- Apply for authority to print (ATP) or subscribe to an accredited e-receipting solution as permitted.
Register your business venue (and additional venues, if any).
Display the COR and “Ask for a Receipt” signage at your place of business or on your website/page.

Online tutoring counts. Digital or platform-based sessions are taxable Philippine-sourced services when performed by a resident; registration rules still apply.

VI. Taxes: VAT vs. Non-VAT, 8% vs. Graduated—how tutors choose

1) VAT vs. Non-VAT

VAT-registered: You add 12% VAT to fees and claim input VAT on purchases.
Non-VAT (percentage tax): You don’t add VAT. Instead, you may be subject to percentage tax (service business, non-VAT).

VAT threshold: If your gross receipts exceed the VAT threshold (commonly ₱3,000,000 in recent years) in any 12-month period, you must register as VAT. Below the threshold, you may stay non-VAT or opt in to VAT if it benefits you (e.g., many VAT-registered corporate clients or high input VAT).

Practical tip: Many side-hustle tutors stay non-VAT at the start and monitor growth against the threshold.

2) Income tax options for individuals with purely self-employment income

Graduated income tax rates (with allowable deductions and, if non-VAT, percentage tax).
8% income tax on gross (in lieu of percentage tax and graduated rates) for non-VAT individuals up to the VAT threshold—subject to prevailing rules. The first ₱250,000 of gross sales/receipts is generally not taxed under this regime, with the 8% applied to the excess.

Election mechanics matter. You typically elect the 8% option upon initial registration or on your first quarterly return; if you miss that, you’re generally locked into the graduated regime for the year. Rules and forms change over time—confirm the current election procedure at your RDO.

3) Filing cadence (high-level)

Percentage tax (if non-VAT and not using 8%): quarterly.
VAT (if VAT-registered): quarterly.
Income tax: quarterly and annual.
Withholding (if you have employees or if required on certain payments): monthly/quarterly and annual alphalists.

Rates and forms change. Always check the current BIR forms, e-filing channels (eFPS/eBIRForms), and deadlines.

VII. Withholding tax from your fees (BIR Form 2307)

If your client is a company, school, tutorial center, or other withholding agent, it may withhold a percentage of your fees under expanded withholding tax (EWT) and remit that to BIR. You’ll receive BIR Form 2307 as creditable proof; you claim it as a tax credit in your income tax return.

Typical withholding applies to professional/service fees.
Agree on gross vs. net of withholding in your service contract to avoid surprises.

VIII. Employees, substitutes, and collaborators

If you hire other tutors, you become an employer: register with BIR for withholding on compensation and with SSS, PhilHealth, and Pag-IBIG as an employer; remit contributions and withholdings.
If you engage freelance tutors, you may have withholding obligations on their fees and must issue 2307.
Observe labor standards (minimum wage, hours, benefits) when applicable.

IX. Barangay Micro Business Enterprise (BMBE) option

The BMBE Act (RA 9178) grants incentives to micro-businesses with assets not more than the statutory ceiling (excluding land). Services like tutoring may qualify.

Benefits (subject to current rules):

Income tax exemption on the business income of the BMBE;
Priority access to credit and training;
Possible LGU incentives (varies by locality).

Process: Apply for a BMBE Certificate with your City/Municipal Treasurer (DTI issues the BMBE Certificate of Authority in some workflows), then present it to BIR/LGU for implementation of incentives. You still register normally (DTI/BIR/LGU)—BMBE is not a substitute for registration.

X. Operating from home or online

Zoning/home rules: Some LGUs limit foot traffic, signage, and in-person sessions at residences.
Condo/HOA/landlord consent: Often needed for permit processing.
Safety & fire compliance: Even for small spaces, expect basic safety requirements.
Purely online tutors: You still register; permits usually align with your residential address unless your LGU offers special handling.

XI. Data privacy, minors, and contracts

Data Privacy Act: You handle personal data of students (often minors). Keep only what’s necessary; secure devices; restrict sharing; provide a short privacy notice (purpose, retention, rights). Get parental consent for minors.
Child protection: Avoid collecting or sharing unnecessary photos/videos. If recording sessions, explicitly disclose and obtain consent.
Service contract essentials: scope (subjects, hours), deliverables (lesson notes), schedule, cancellation/rescheduling policy, fees and payment schedule, late/NSF policy, make-up classes, materials ownership, confidentiality, and tax treatment (whether fees are VAT/non-VAT, handling of withholding).
Consumer rules: Be clear and fair; avoid deceptive claims (“guaranteed grades”). Provide official receipts/invoices.

XII. Typical registration timeline (sole proprietor tutor)

Pick a name (or use your real name only).
DTI Business Name (if using a trade name).
Barangay Clearance (business location).
Mayor’s/Business Permit (city/municipality).
BIR: TIN, Form 1901, COR, books, invoicing/receipting authority.
Bank account (business name or your name), payment channels, and e-wallet merchant profiles aligned with registration.
Start issuing receipts/invoices from Day 1 of operations.

(Sequences 3–5 can vary by locality; some LGUs let you proceed conditionally while BIR is in process, and vice-versa. Ask your LGU and RDO about their current workflow.)

XIII. Costs & budgeting (indicative, vary by place and time)

DTI: name registration fee depends on scope (plus minimal documentary fees).
Barangay: clearance fee (small), documentary stamps.
Mayor’s/Business Permit: assessment based on capitalization or gross receipts, plus ancillary fees (fire, sanitary, zoning).
BIR: registration items (books, receipts/e-receipts, documentary stamps).
Professional help: Optional fees if you engage a processor or bookkeeper.

Budget guidance: For a lean home-based tutor using a trade name, expect low thousands of pesos for initial permits outside of unusual LGU assessments, plus modest annual renewals.

XIV. Compliance calendar (high-level)

DTI: renew every 5 years.
Mayor’s/Business Permit: annual renewal (often in January; check your LGU).
BIR:
- Percentage tax/VAT: quarterly.
- Income tax: quarterly + annual.
- Withholding (if applicable): monthly/quarterly + annual summaries.
- Books: maintain contemporaneously; preserve for audit.
- Receipts/invoices: keep copies and logs (and e-archives if digital).

XV. Common pitfalls (and how to avoid them)

Under-the-radar operations: Leads to penalties when caught (unregistered, non-issuance of receipts, failure to file). Register early.
Wrong tax regime: Electing a sub-optimal option (e.g., skipping the 8% when you’re small and non-VAT). Run the math first.
No receipts/invoices: Corporate clients will withhold and need official documents; you lose credibility and tax credits without them.
Ignoring LGU renewals: January deadlines come fast; late penalties add up.
Poor record-keeping: Without clean books, you may overpay tax or fail an audit.
Privacy oversights: Tutoring minors demands extra care and consent language.
Using “real name” + descriptors without DTI: “Maria Santos Tutoring” needs DTI; “Maria Santos” alone generally doesn’t.

XVI. Decision tree (quick self-check)

Will you tutor regularly for pay? → Yes → Proceed to register.
Using a trade name? → Yes → DTI business name.
Where will you operate? → Home/Online/In-person → Barangay & Mayor’s Permit at that location.
Tax size expectation this year?
- Below VAT threshold → choose Non-VAT; consider 8% vs graduated.
- At/above VAT threshold → VAT registration.
Any employees or subcontractors? → Set up withholding and contributions as needed.
Serving corporate clients? → Expect withholding (2307); ensure you can issue receipts/invoices.

XVII. Frequently asked questions

Q: I tutor only on weekends. Do I still need to register? A: If it’s regular and for profit, yes—registration is expected.

Q: Can I start without DTI if I’ll use my real name? A: Yes, generally. But the moment you add business words (e.g., “Tutorials”), you need DTI.

Q: I tutor entirely online. Which LGU handles my permit? A: The LGU of your principal place of business (often your residence if home-based).

Q: Should I choose 8% or graduated income tax? A: If you’re non-VAT and have low expenses, 8% is often simpler. If you have significant deductible expenses (devices, software, training, rent), graduated + allowable deductions may yield lower tax. Run both computations.

Q: Do I need VAT? A: Only if you exceed the VAT threshold (or if you opt in for input VAT reasons).

Q: What if clients withhold on my fees? A: Get Form 2307 and credit it against your income tax due.

Q: Can I get tax breaks as a tiny tutor? A: Consider BMBE status for income-tax exemption on business income (subject to eligibility). It doesn’t replace registration.

XVIII. Action checklist (print-friendly)

Decide on real name vs trade name.
If trade name: DTI registration (5-year validity).
Barangay Clearance (business location).
Mayor’s/Business Permit (city/municipality) + ancillary clearances.
BIR: TIN, Form 1901, COR, books, receipts/invoices.
Choose Non-VAT/VAT; compute 8% vs graduated if non-VAT.
Set up record-keeping (simple ledger or bookkeeping app).
Draft service contract, privacy notice, and cancellation policy.
If hiring: register for withholding and SSS/PhilHealth/Pag-IBIG as employer.
Calendar quarterly and annual filings and renewals.

Final word

Registering a tutoring side business in the Philippines is doable and affordable. Start with the right structure, complete DTI–LGU–BIR steps, and choose a tax regime that fits your size and costs. Keep clean books, issue receipts, and respect privacy—then focus on what matters most: great teaching.