Many gyms and studios pay commissions to people who are not employees: a freelance PT coach, a guest instructor, an agent who brings in members. Those payments are not salary. In the Philippines they are professional fees (or agents' commissions), paid with expanded withholding tax taken off, and the payee gets a BIR Form 2307 for the tax you withheld. This page pays them that way, completely outside payroll. Employees' commissions still go through payroll — see Staff Commissions.
Before you start
- Mark the person as a freelancer. Open them on Staff, click Edit, and set Employment type to Freelance. From that moment payroll stops picking up their commissions; only this page pays them. (A freelancer who also has a salary or hourly rate still receives that basic pay through payroll as usual.)
- Record the payee's tax details. On the Freelancers table, click the person and fill in their TIN, registered address and ZIP. The 2307 needs all three, and a payee without a TIN cannot be paid.
- Set up the Withholding Agent once. Your store's TIN, registered name and address print as the payor on every 2307. They are set on the BIR 1601-C page; the payouts page reminds you while they are missing.
- Agree the rate with your accountant. The ATC and rate depend on how each payee is registered and on their sworn declaration. The system offers the usual codes but cannot decide this for you.
Where to find it
Go to HR → Commissions and click Freelancer payouts. You need the Manage Commissions permission to set rates, prepare and discard payouts; recording or voiding a payment needs Approve Commissions. Owners can do everything. Nobody can pay, change or void their own payout, or edit their own payee details.
Setting the withholding rate
Default withholding for freelancers is the ATC and rate used for everyone unless they have their own. Pick one of the codes or choose Other and type a code and rate:
| ATC | Used for | Rate |
|---|---|---|
| WI010 | Professional fees — individual, gross income ₱3M or less | 5% |
| WI011 | Professional fees — individual, over ₱3M or VAT-registered | 10% |
| WI139 | Commissions of independent sales representatives / marketing agents — ₱3M or less | 5% |
| WI140 | Commissions of independent sales representatives / marketing agents — over ₱3M or VAT-registered | 10% |
A payee can have an Own withholding rate that overrides the default — for example one VAT-registered coach at 10% while the others are at 5%. Someone with neither a default nor an own rate is skipped when you prepare payouts, with a message telling you why.
Preparing payouts
Choose a date under Prepare payouts for commissions up to and click Prepare. For every freelancer who has approved, settled commissions not yet paid up to that date, the system makes one draft payout: the number of commissions, the gross, the tax withheld (gross × rate, split across the commissions to the centavo) and the net to pay. Preparing again later adds new commissions to the open draft.
On a draft you can change the ATC and rate (the totals are redone) or Discard it, which puts its commissions back to unpaid. A commission that is reversed or rejected while it sits in a draft drops out before payment.
Entering the tax withheld yourself
Usually the tax withheld is the gross times the rate. When your accountant gives you a different figure — the payee's rate changed mid-quarter, part of the amount was already withheld elsewhere — open the draft, choose Enter tax withheld, type the amount (zero up to the gross) and a reason. The page shows the effective rate and the net as you type.
- The ATC and rate stay on the QAP and the 2307; the tax withheld, the net, the journal entry and the quarter figures use the amount you entered. Payouts entered this way are marked adjusted with their effective rate.
- The amount is tied to the commissions the draft held when you entered it. If they change — the draft is topped up by a new Prepare, or a commission in it is reversed or rejected — the entered amount is cleared automatically, a note is added to the draft and the tax is computed from the rate again. Paying is refused if that happens at the moment of payment, so you always see the figure first.
- Choose Compute from rate to go back to the computed figure.
Commissions added by hand for a freelancer (see Staff Commissions) are prepared and paid here like any other.
Recording a payment
Click Pay on a draft. The dialog shows the payee’s bank account (bank, account name and number) as entered on their staff page under Bank Details, so you can send the transfer without leaving the page; when nothing is on file it links to the staff page to add it. Then enter the Payment date, the account it was Paid from (cash, bank or e-wallet), a reference and the payee's OR number. With Post journal entry ticked (the default) the system books:
- Debit 6050 Professional Fees for the gross;
- Credit 2071 Expanded Withholding Tax Payable for the tax withheld;
- Credit the cash or bank account for the net.
The two accounts are created the first time they are needed. They are kept apart from 2070 Withholding Tax Payable, which belongs to payroll and the 1601-C, so each return reconciles to its own account. If your chart already uses 6050 or 2071 for something else, the payment stops and asks you to renumber or to untick the journal entry. A payment dated in a closed accounting period is refused. Once paid, the commissions show as Paid as professional fee with their EWT and net in the commission ledger and on the freelancer's My Commissions page, and the payee is notified if your store sends payment notices.
Voiding a payment
Under Paid payouts, Void payout with a reason reverses the journal entry and returns the commissions to unpaid, so they can be prepared again. A payment whose date, or whose journal entry, falls in a closed period cannot be voided — reopen the period first.
Quarter view, CSV and the 2307
Pick a year and quarter and click Show. The table lists each payee with their fees and tax withheld for the first, second and third month of the quarter (by payment date), the quarter total and the rate. Use it as follows:
- Monthly remittance. The first two months' tax is remitted on BIR 0619-E; the month totals are at the foot of the table.
- Quarterly return. The quarter total goes on BIR 1601-EQ, and CSV (QAP) exports the Quarterly Alphalist of Payees columns (TIN, registered name, ATC, nature of payment, income, rate, tax withheld).
- Certificates. Click 2307 on a payee to print their Certificate of Creditable Tax Withheld at Source for the quarter: payee and payor details, the ATC rows with the three months, totals and signature blocks. Freelancers can also print their own from My Commissions.
The system does not yet file these returns or prepare the annual 1604-E; it gives you the figures and the certificates.
Good to know
- A commission is paid exactly once: either on a payslip or in a payout. The commission ledger says which (“In draft payroll”, “In draft payout”, “Paid as professional fee”).
- Changing a payee's rate after a payment does not change that payment. Void it and pay again if the rate was wrong.
- Commissions sitting in a draft payout are not touched by a commission-type recompute. Discard the draft and prepare again to pick up a new rule.
- If a freelancer appears on a payroll run (because they also have a rate), the 1601-C page warns you that their pay is reported there as compensation.
- Per-session commissions for trainers work the same way: a freelance trainer's sessions are paid here, an employee's through payroll.