Employed vs Self-Employed Individuals

What is the difference between Employed and Self-Employed Individuals?

Employed Individuals

• Employed individuals are bound by employer-employee relationship and agreement. 
• They received salaries and wages which is subject to withholding tax on compensation.
• The employer withhold a tax on compensation (wht) and complies with the applicable tax requirements.
• The employer deducts WHT from employee's salaries and wages (if applicable) and remit to BIR by filing BIR form 1601-C and paying it to accredited bank or RDO collection office, if no AAB. 

Self-Employed Individuals

• Self-Employed Professionals or Individuals who received income or fees from customers, clients or patients. They have no employer-employee relationship.
• The customers, clients or patients withhold a tax (ewt/cwt) from the income payment from the Self-Employed Professionals or Individuals. 
• The customers, clients or patients must be registered with the BIR before they can withhold a certain amount of income payment. 
• Customers, clients or patients are called the Income Payor or Withholding Agents (WA). While, the Self-Employed Professionals or Individuals are called Income Payee. 

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