How to Start a Business in the Philippines

The Philippine economy has greatly improved in the past years. More and more Filipinos are more creative in finding ways to earn, save and invest more. Whether working abroad or employed locally, it is always the ultimate dream of every Filipino to be financially independent. Starting a business is the most logical path to take towards financial independence.

There are also many foreign individuals and companies who find starting a business in the Philippines as one of the best investing options available to them. With English being the secondary language of the country and the people known for their hospitality, foreigners find it more convenient to invest here. Aside from India, the Philippines is also known in Asia with one of the lowest cost for high quality workforce. Hence, Filipinos and foreigners are now busy looking for ways on how to start a business here.

Starting a business in the Philippines may take weeks or at least a month in terms of registration depending on the completeness of the applicant's requirements and the procedures and timetable followed by various government agencies. Normally, the complications and delay arise when you want to start a specialized business that may require various requirements from different government agencies.

Generally, the following steps are to be followed in starting a business in the Philippines for Sole Proprietors, Partnerships and Corporations (excluding Professionals) not to mention that you should already have your place of business and lease contract or affidavit of free occupancy prior to doing the following:

Step 1  Secure a Business Name

Sole proprietors or individuals may secure a business name from DTI or Department of Trade of Industry while Corporations may go to SEC or Securities and Exchange Commission. You may check the website for requirements. 

DTI registration fee is between Two Hundred to Two Thousand Pesos (PhP200-2,000) depending on the scope whether barangay, city, regional or national. You need to bring the original ID and the photocopy of the applicant's ID upon registration. You can get the certificate of registration the same day if they have no technical issues.

SEC registration depends on the amount of Capital. You may download the forms online or you may also purchase the forms from SEC for the Articles of Incorporation, By-Laws and Stock Transfer Book and complete the forms, have it notarized and submitted for approval. Pay the required fees. Once done registering a corporate name make sure to register the Stock Transfer Book as well.

Step 2  Secure a Barangay Clearance

Go to the barangay hall where your place of business is located. Bring government IDs - at least 2 with signature, picture and birthday. Some would require you to bring an ID while others would take your picture when you apply. Bring your lease contract or affidavit of free occupancy. Of course, bring photocopies of your DTI Certificate or SEC Certificate of Registration, Articles of Incorporation and By-Laws. Fees can be as low as Six Hundred to Two Thousand Pesos (PhP600-2000). You can get your barangay clearance the same day especially if you arrive early.

Step 3  Secure a Mayor's or Business Permit

Head to your Municipal Hall or Mayor's Office and look for the BPLO or Business Processing and Licensing Office. Bring the original and photocopies of your lease contract or affidavit of free occupancy, DTI Certificate or SEC Certificate of Registration, Articles of Incorporation and By-Laws and Barangay Clearance.

Get the Application form, sign, have it notarized and pay for the related fees. Most municipalities or cities would require additional requirements such as locational clearance and insurance. Fees vary depending on the amount of your initial capital, number of employees, and others. Fees may be paid periodically - quarterly or annually. Some may release the permit on the same day once paid and others would require an inspection of the place of business before approval and release of the permit.

The Mayor's or Business Permit has to be renewed annually together with the Barangay Clearance on or before January 20. Upon renewal the basis of your fees would be your Gross Receipts instead of your initial capitalization.

Step 4  Register with the Bureau of Internal Revenue or BIR

After registering your business in the LGU or Local Government Unit, it's time to register it with the Bureau of Internal Revenue or BIR. Bring all the original and photocopies of documents from Step 1 to 3. You may request for the Application Form from the guards or the lobby. Advise them if you are registering as Individual or Sole Proprietor (Form 1901), Partnership or Corporation (Form 1903). Bring also your birth certificate, marriage contract and birth certificate of dependents if you are applying as a Sole Proprietor. Check the website for additional requirements.

Once submitted you have to wait for the release of your BIR COR or Certificate of Registration within the week, normally 3 days. Then you have to register the Books of Accounts using Form 1905. You need to bring at least a Ledger, General Journal, Sales Journal, and Purchase Journal. You might also need an Senior Citizen's Journal, Cash Receipts and Disbursements Journal. Check with the Registration Officer or the Officer of the Day for these requirements.

Then you may apply for ATP or Authority to Print Receipts with Form 1906 so you can get your primary and secondary receipts including your Official Receipts, Sales Invoice, Delivery Receipt, Collection Receipt or whatever your business may require. You need to have an accredited BIR Printer prior to applying for ATP so you have the complete requirements before going to BIR. Some RDO's or Regional District Offices can process the COR, Books and ATP at once while other process it one at a time.

BIR Registration is Five Hundred Pesos (PhP500) only plus Fifteen Pesos (PhP15) documentary stamp fee. This has to be renewed annually before January 31.

Step 5  Register with SSS, PHIC and HDMF

Corporations normally get their TIN or Tax Identification Number, SSS or Social Security System, PHIC or Philippine Health Insurance Corporation and HDMF or Home Development Mutual Fund or PagIbig ID even before they register with BIR and other government agencies. However, check the website for downloadable forms and submit to the agencies for proper registration.

You have to register for SSS first before PHIC or HDMF. If you already have employees, they need to apply for their own SSS number but you may apply for them for PHIC and HDMF ID. As employers, you are required to get their TIN if they have none yet. Bring your Step 1-4 documents when applying.

Individual Professionals need not apply for DTI, Barangay Clearance and Business Permit but instead may present their PTR (Professional Tax Receipt) or OTR (Occupational Tax Receipt) instead. Check with your Mayor's Office and BIR for this requirement. This could lessen the taxes you need to pay annually but would mean having your own name on the receipt.

Now the above steps may not be as easy for some especially those who are new in starting a business in the Philippines. Firms like ours offer services to assist individuals and corporations in business registration to start a business in the Philippines with ease. You may email us at maecpaph@gmail.com for questions or request for proposal.