Business Registration in the Philippines - The Bailiwick Academy

Business Registration in the Philippines

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You now have the opportunity to monetize your skills. You have been practicing your craft for awhile now and your products are perfect to be sold to the public.

What you do you need to do next?

Register your business!

 

Why do I need to register my business?

Well this is the first step in legitimizing your brand.

Get all the legal issues sorted out. Any business that is operating without the necessary permits can be closed down or charged with fine. Along with the punishment is the tarnished reputation that you might have.

You are free to market your business. You have nothing to hide if you are a legal business. You have no fear of providing products or services to other business. People usually associate this with able to provide a receipt, for reimbursement or for tax purposes but it is more than that. This means that you are free to do business with other businesses and mutually grow.

People would likely buy from a legitimate source. A large driving for of the purchase would be the quality of your products but for those uncertain, a legitimate business provides assurance that they are protected.

Assurance for your employees. If you wish to hire employees, a legal business will give them a peace of mind knowing that the business they are working for is legitimate.

Your protection. You have the right on the brand that you carry and the law offers protection for you.

What kind of business will you be setting up? This is crucial in the set up as well as cost considerations, risks and operation.

 

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I will be the only one who will be setting the business.

This is known as Single Proprietorship. You will be the sole owner of the company. All activities  and responsibility of the business will be on you.

Here are the benefits to this set up:

  1. This is much easier to set up. Since you will get to decide on everything, this makes it much easier for you to process everything.
  2. Enjoy the profits by yourself.
  3. Simpler process of registration.
  4. Your can register the business and then run it on your own.
  5. This requires minimal capital.
  6. Government fees and costs are usually lower.
  7. Minimal regulations and monitoring requirements.

You have to consider also the cons.

  1. All liabilities will be shouldered by you.
  2. All risk and its losses will go to you.
  3. The responsibility of running the business will primarily fall on you.
  4. Should there be issues creditors (money you borrowed from if any) and government agencies may come after your own personal assets since you are the business.

 

I have a partner or group of people who will set up the business with me. 

There are instances that you are just talking with a group of your friends and an idea led to another and eventually agreeing on setting up a business together. The people involved share with the idea and the ownership of the business. This may be called a partnership or a company. The people involved in the process of shelling out money and ideas to contribute to the business are called shareholders or stock holders.  These are people who owns the business or company that has been put up. They may or may not be actively involved in the operations of the business.

Here are the benefits of having a partnership.

  1. Expenses will be shouldered by more than one person. Expenses may be shared equally or by an agreed amount for each member.
  2. Risks and losses will be divided among the member of the partnership.
  3. You have more than one individual who can share the responsibility of running the business.
  4. Should there be issues creditors (money you borrowed from if any) and government agencies may come after the assets of the partnership that you have put up. The entity (your partnership) that was created has only assets gained only through the partnership. Individual assets are irrelevant.

You have to consider the cons.

  1. Since you have more than one individual, this is more complicated. All decision and direction would be based on all shareholders.
  2. The profits will be divided based on an agreed amount by every shareholder.
  3. There are additional steps and requirements when setting up the business.
  4. You have to consider every shareholder in managing the operations.
  5. This requires higher cost.
  6. There are additional fees in the process of setting up a partnership.
  7. There will be regulations and monitoring for partnerships.

Where should I start?

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Single Proprietorship

DTI

The idea is there, location and everything you need to run the business. Where should I start registering my business? Think of a name.

A name is important in setting up a business. It is how you will be known. I will not touch on the subject on how to pick a catchy name or a name that will evoke a certain feeling. Just on how you should name your business within the context of registering your business.

You register business with single proprietorship with the Department of Trade (DTI) and Industry. They will have satellite branches all over the city for your convenience. The Quezon City hall has a branch which makes it easy to register since you can work on the Mayor’s permit right after you have registered your name. I would recommend these branches to save time instead of going to the government centers in malls. In the mall, the clerk would usually refer to a DTI officer and would often times go back and fourth if there is an issue with the name. The website is not much help either because the list of names where you can check if the business name is taken or not is not updated.

Bear in mind that registration of your business name does not mean you can operate. This ensures that the name for your business is yours and valid.

DTI would require you a certain format for the business name: [Name you selected] + [the nature of business]. The name you selected which they call “prefix” must be unique and not a generic term not related to your business.

For example I am to set up my bakery I can name it Hubs Bakery. Hubs is the name I selected and bakery is the nature of my business.

Partnerships

SEC

Business which are owned by more than one person needs to be registered at the Security and Exchange Commission. All partnerships shall be treated as a single entity and so will be the processes after this. Similar to single proprietorship, you have to think of a unique name for your partnership.

Below are the steps in registering your partnership.

STEP

DURATION

APPLICANT/ CLIENT

SERVICE PROVIDER

GUIDELINES

FEES

1
10 mins.
Verify or reserve proposed name
If proposed name is allowed by the system, the reservation and confirmation notice is printed and given to the applicant;
P100.00 /reservation for 30 days;
2
10-15 mins.
Present Articles of Incorporation and By-Laws at Green Lane Unit Ground Floor, Secretariat Bldg., PICC Complex, Roxas Boulevard Pasay City
Check the document presented. If complete, advise the registrant to pay the filing fee. If not, advise applicant to comply with requirements
Requirements of the Civil Code of the Philippines and other existing laws
M.C. No. 21 s. of 2013 on Omnibus Guidelines and Procedures on the use of Corporate and Partnership names
M.C. No, 8 s. of 2013 on Filipino-foreign ownership on nationalized and partly nationalized activities
M.C. No. 3 s of 2006 on principal office and SEC MC No. 6 s. of 2014 on amendment of the principal office address
E.O. 98 dated April 28, 1999 on Tax Identification Number (TIN)
MC No. 1 s. of 2013 on mandatory TIN of foreign investors
Filing fee: 1/5 of 1% of the Partnership`s capital but not less than P2,000.00 plus 1% of the amount as legal research fee
3
1 min
Pay filing fee at the Cashier located at the Ground Floor, Secretariat Bldg., PICC Complex, Roxas Boulevard Pasay City and file application with the Receiving Unit, CRMD located at the Ground Floor, Secretariat Bldg., PICC Complex, Roxas Boulevard Pasay City
After receipt of the application, CPRD staff generates the Certificate of Recording of the Articles of Partnership bearing applicant`s SEC registration no. and Unified Registration Report (URR)
None
4
5 mins.
Present Official Receipt to Releasing Unit, Ground Floor, Secretariat Bldg., PICC Complex, Roxas Boulevard Pasay City to get the Certificate of Recording of the Articles of Partnership
The Asst. Director reviews the application and forward it for approval of the CRMD Director.
None

Baranggay Clearance.

After getting your business name registered you need to get your first permit which is your Baranggay Clearance. The clearance should be filled at the baranggay where the business will be operating.

They would be checking if there are pending concerns such as the nature of business in the area and records of the owner. As of 2017 this costs 500 pesos and may get it the same day or the next working day. This certificate is required to get your Mayor’s Permit.

Mayor’s Permit

The Mayor’s Permit is what you need to operate your business in the city where you wanted to set up your business. You can sell you products outside the city but where your base of operation is, that is where you need your permit. This is valid

The Mayor’s Permit has the following items accomplished. During renewals, these are the same items that needs to be accomplished. Once done submit these documents to continue the process of acquiring your Mayor’s Permit.

  1. Barangay Clearance – this is a prerequisite in your permit.
  2. Community Tax – also known as “sedula”. You need to pay the fee which is based on your income for the year. There is a minimum amount which is for unemployed in case you do not have any source of income on the year you are filing your permit.
  3. Locational Clearance. This is where they will validate if you can operate at your current location. Usually this is where zoning comes in. They will conduct inspections. My experience with Quezon City Hall is that they will call up the number that you will provide and confirm the details you have put in.  Funny thing being the applicant is that I was the one to answer their queries. Below are some of the items they would require.
    • Directional Map – where the place of business is, street address in case someone needs to visit.
    • Letter of authorization from the landlord– this is required if the building where your business is located is not yours.
    •  Letter from the homeowner’s president – if your business is located in a residential area.
    • Pictures – pictures of the front of the building and the space where you will conduct your actual business.
    • Fee – the payment for the locational clearance might be filed separately like in Quezon City before claiming your Locational Clearance. This varies per city,
    • Folder – I found this odd but the Quezon City government requires that all the requirements be put in an folder which the applicant must bring.
  4. Fire Clearance – A separate fee may also be asked from you like again in the case of Quezon City Hall. they will inspect the location, make a report on the place and advise of any fire hazard. They will require fire extinguishers accessible in your place of business and needs to be refreshed for every renewal. The fire clearance is valid for one year from the time of application.
  5. Other Clearance – depending and your business, the local city government may require additional permits such as  health, sanitation and police clearance.
  6. Work Permits – depending on the nature of your business the city government may require your employees to have work permits or just Health Certificates.

BIR Certificate

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Once you have accomplished the permits, you would need to apply for a BIR Certificate. One of the requirement is a Tax Identification Number (TIN). If there is none yet then you would need to apply one at the Regional District Office (RDO) of your business.  This also allows you to enable to provide receipts. This very important most especially if dealing with another business and for legitimacy of your business. You will need to file this at the RDO where your business belongs to.

 

Below are the lists of RDOs as of June 2018.

Revenue District Office No. 1 – Laoag City, Ilocos Norte
Revenue District Office No. 2 – Vigan, Ilocos Sur
Revenue District Office No. 3 – San Fernando, La Union
Revenue District Office No. 4 – Calasiao, West Pangasinan
Revenue District Office No. 5 – Alaminos, West Pangasinan
Revenue District Office No. 6 – Urdaneta, East Pangasinan
Revenue District Office No. 7 – Bangued, Abra
Revenue District Office No. 8 – Baguio City
Revenue District Office No. 9 – La Trinidad, Benguet
Revenue District Office No. 10 – Bontoc, Mt. Province
Revenue District Office No. 11 – Tabuk City, Kalinga
Revenue District Office No. 12- Lagawe, Ifugao
Revenue District Office No. 13 – Tuguegarao, Cagayan
Revenue District Office No. 14 – Bayombong, Nueva Vizcaya
Revenue District Office No. 15 – Naguilan, Isabela
Revenue District Office No. 16 – Cabarroguis, Quirino
Revenue District Office No. 17A – Tarlac, Tarlac City
Revenue District Office No. 17B – Paniqui, Tarlac
Revenue District Office No. 18 – Olongapo City
Revenue District Office No. 19 – Subic Bay Freeport Zone
Revenue District Office No. 20 – Balanga, Bataan
Revenue District Office No. 21A – North Pampanga
Revenue District Office No. 21B – South Pampanga
Revenue District Office No. 22 – Baler, Aurora
Revenue District Office No. 23A – North Nueva Ecija
Revenue District Office No. 23B – South Nueva Ecija
Revenue District Office No. 24 – Valenzuela City
Revenue District Office No. 25A – Plaridel, Bulacan
Revenue District Office No. 25B – Sta. Maria, Bulacan
Revenue District Office No. 26 – Malabon-Navotas
Revenue District Office No. 27 – Caloocan City
Revenue District Office No. 28 – Novaliches
Revenue District Office No. 29 – Tondo – San Nicolas
Revenue District Office No. 30 – Binondo
Revenue District Office No. 31- Sta. Cruz
Revenue District Office No. 32 – Quiapo-Sampaloc-Sta. Mesa- San Miguel
Revenue District Office No. 33 – Intramuros-Ermita-Malate
Revenue District Office No. 34 – Paco-Pandacan-Sta. Ana-San Andres
Revenue District Office No. 35 – Romblon
Revenue District Office No. 36 – Puerto Princesa
Revenue District Office No. 37 – San Jose, Occidental Mindoro
Revenue District Office No. 38 – North, Quezon City
Revenue District Office No. 39-South Quezon City
Revenue District Office No. 40 – Cubao
Revenue District Office No. 41 – Mandaluyong City
Revenue District Office No. 42 – San Juan
Revenue District Office No. 43 – Pasig
Revenue District Office No. 44 – Taguig-Pateros
Revenue District Office No. 45 – Marikina
Revenue District Office No. 46 – Cainta/Taytay
Revenue District Office No. 47- East Makati
Revenue District Office No. 48 – West Makati
Revenue District Office No. 49 – North Makati
Revenue District Office No. 50 – South Makati
Revenue District Office No. 51 – Pasay City
Revenue District Office No. 52 – Parañaque
Revenue District Office No. 53A – Las Piñas City
Revenue District Office No. 53B – Muntinlupa City
Revenue District Office No. 54A – Trece Martirez City, South Cavite
Revenue District Office No. 54B – Bacoor, North Cavite
Revenue District Office No. 55 – San Pablo City
Revenue District Office No. 56 – Calamba, Laguna
Revenue District Office No. 57- Biñan, Laguna
Revenue District Office No. 58 – Batangas City
Revenue District Office No. 59 – Lipa City
Revenue District Office No. 60 – Lucena City
Revenue District Office No. 61 – Gumaca, Quezon
Revenue District Office No. 62 – Boac, Marinduque
Revenue District Office No. 63 – Calapan, Oriental Mindoro
Revenue District Office No. 64- Talisay, Camarines Norte
Revenue District Office No. 65 – Naga City
Revenue District Office No. 66 – Iriga City
Revenue District Office No. 67 – Legazpi City, Albay
Revenue District Office No. 68 – Sorsogon, Sorsogon
Revenue District Office No. 69 – Virac, Catanduanes
Revenue District Office No. 70 – Masbate, Masbate
Revenue District Office No. 71 – Kalibo, Aklan
Revenue District Office No. 72 – Roxas City
Revenue District Office No. 73 – San Jose, Antique
Revenue District Office No. 74 – Iloilo City
Revenue District Office No. 75 – Zarraga, Iloilo City
Revenue District Office No. 76 – Victorias City, Negros Occidental
Revenue District Office No. 77 – Bacolod City
Revenue District Office No. 78 – Binalbagan, Negros Occidental
Revenue District Office No. 79 – Dumaguete City
Revenue District Office No. 80 – Mandaue City
Revenue District Office No. 81 – Cebu City North
Revenue District Office No. 82 – Cebu City South
Revenue District Office No. 83 – Talisay, Cebu
Revenue District Office No. 84 – Tagbilaran City
Revenue District Office No. 85 – Catarman, Northern Samar
Revenue District Office No. 86 – Borongan, Eastern Samar
Revenue District Office No. 87 – Catbalogan, Western
Revenue District Office No. 88 – Tacloban City
Revenue District Office No. 89 – Ormoc City
Revenue District Office No. 90 – Maasin, Southern Leyte
Revenue District Office No. 91 – Dipolog City
Revenue District Office No. 92 – Pagadian City, Zamboanga del Sur
Revenue District Office No. 93A – Zamboanga City, Zamboanga del Sur
Revenue District Office No. 93B – Zamboanga Sibugay
Revenue District Office No. 94 – Isabela, Basilan
Revenue District Office No. 95 – Jolo, Sulu
Revenue District Office No. 96 – Bongao, Tawi-Tawi
Revenue District Office No. 97 – Gingoog City
Revenue District Office No. 98 – Cagayan de Oro City
Revenue District Office No. 99 – Malaybalay, Bukidnon
Revenue District Office No. 100 – Ozamis City
Revenue District Office No. 101 -Iligan City
Revenue District Office No. 102 – Marawi City
Revenue District Office No. 103 – Butuan City
Revenue District Office No. 104 – Bayugan, Agusan del Sur
Revenue District Office No. 105 – Surigao City
Revenue District Office No. 106 – Tandag, Surigao del Sur
Revenue District Office No. 107 – Cotabato City
Revenue District Office No. 108 – Kidapawan, North Cotabato
Revenue District Office No. 109 – Tacurong, Sultan Kudarat
Revenue District Office No. 110 – General Santos City
Revenue District Office No. 111 – Koronadal, South Cotabato
Revenue District Office No. 112 – Tagum, Davao del Norte
Revenue District Office No. 113A – West Davao City
Revenue District Office No. 113B – East Davao City
Revenue District Office No. 114 – Mati, Davao Oriental
Revenue District Office No. 115 – Digos, Davao del Sur

Some minor differences for Singe Proprietorship and Partneships

Single Proprietorship

If you already have a Tax Identification Number (TIN), either acquired from work or from a previous business, you may use that, however you may need to have to move your existing TIN to the regional district office that you are applying for for your business. Say for example you are working or previously at Cubao (RDO 40)and your business is at Novaliches (RDO 28), You would need to go to RDO 40 to request your TIN to be moved from RDO 40 to 28.

Partnerships

Partnerships are treated as a single entity. If this is the first time the partnership will go into business then your would need to apply for a TIN for the partnership on the RDO of your business. Process will then be similar to Single Proprietorship.

VAT or VAT Exempted

You also need to worry about is if your are with VAT or VAT exempted. BIR in some cases would assign you as VAT depending on the nature of your business however they would usually ask you if you are VAT or VAT exempted. If your gross income is projected at 3,000,000.00 Php and below then your business is VAT exempted. If in case you are below the threshold of 3,000,000.00 Php but exceeded it, you will have to file for VAT and will no longer be VAT exempted after.

Receipts

Once done with the application of the BIR certificate, you may now have your receipts printed. Take note that only the BIR certified can print your receipts. You would need to accomplish 1906 form.

Employees.

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If you have employees you would need to register with the following government agencies:

Social Security System

Phil Health

Pag-ibig

 

In summary, you need to visit the following government agencies in the Philippines whenever you want to register your business:

  1. DTI
  2. Baranggay
  3. City Hall
  4. BIR

 

All these steps for legitimizing your business will help you establish a more trustworthy relationship with your customers, business partners and employees. A trustworthy business will also open opportunities to expanding your business and collaborations.

Just do not forget to remember to keep an eye on your goals and work your way to it through hard work and legal means!

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