Registering business in the Philippines is a crucial step in ensuring its legality and smooth operations. Failure to do so can lead to legal issues down the line. In this guide, we’ll walk you through the best practices for registering a business in the Philippines, covering all the necessary steps and requirements.
Why should you register your business in the Philippines?
Registering your business in the Philippines holds significant importance on several fronts. First and foremost, it ensures legal compliance, safeguarding your operations from potential fines or closures due to non-compliance with Philippine laws and regulations. By registering, you establish a clear distinction between personal and business assets, thereby shielding your personal finances from liabilities incurred by the business. This separation is crucial for protecting your interests in case of legal disputes or financial obligations.
Moreover, registration opens doors to various opportunities, including access to funding from banks, investors, and government initiatives. Financial institutions and investors often prefer dealing with registered entities due to the perceived stability and credibility they offer. Additionally, obtaining necessary permits and licenses becomes streamlined, facilitating smoother operations and avoiding legal complications. Compliance with tax laws is also simplified through registration, enabling you to acquire a Tax Identification Number (TIN) and fulfill your tax obligations promptly and accurately.
Furthermore, a registered business garners trust and credibility among customers, suppliers, and partners, enhancing its reputation in the market. This credibility can be instrumental in securing contracts, partnerships, and business opportunities. Additionally, registration allows you to hire employees legally, providing them with the benefits and protections mandated by Philippine labor laws. It also opens up avenues for government contracts and procurement opportunities that are exclusively available to registered businesses.
Moreover, registering your business name and logo provides essential intellectual property protection, safeguarding your brand identity from infringement. With a registered business, expansion and growth become more feasible, as it facilitates branching out, entering partnerships, and exploring franchise opportunities both locally and internationally. In essence, registering your business in the Philippines establishes a solid foundation for legal compliance, financial stability, credibility, and growth, ensuring its long-term success and sustainability in the dynamic business landscape.
Your Business’ Legal Structure
Before you go further to any government offices for your business registration, you should consider what type of business proprietorship would best fit your business.
- Sole proprietorship
A sole proprietorship is a business structure where one individual runs the entire operation, making all decisions and taking full responsibility for the business’s success or failure. It’s the simplest and most common form of business ownership, requiring minimal formalities to establish. This setup allows the owner to have direct control over the business and enjoy all the profits generated. However, it also means that the owner is personally liable for any debts, losses, or legal liabilities incurred by the business, which can pose a risk to personal assets. Despite this, sole proprietorships offer flexibility, autonomy, and straightforward tax reporting.
- One-person Corporation
A one-person corporation is a type of business with only one shareholder who is also the sole director and officer of the corporation. The shareholder is not personally liable for the corporation’s debts and obligations.
- Domestic corporation
A domestic corporation is a business that is registered and operates within the same state or country where it was incorporated. The business is subjected to the laws and regulations of that state or country.
- Foreign Corporation
Opposite of domestic corporation, a foreign corporation is a business that is registered and operates in a state or country other than where it was incorporated. The business is subjected to the laws and regulations of both its home state/country and the state/country where it is doing business.
- Licensed Professional
A licensed professional person who holds a professional license to provide services in a specific field, such as medicine, law, accounting, or engineering.
- General Partnership
A general partnership is a business structure where two or more people share ownership and responsibilities. All partners contribute to decision-making and share profits, but they are also jointly liable for debts and legal obligations. It’s a simple and flexible business arrangement often based on a partnership agreement.
- Freelancer
A freelancer is a self-employed person who offers services to clients on a project basis, working independently and managing their own business affairs.
Requirements you need to prepare for Business Registration in the Philippines
Before heading to government offices to register your business, ensure you have these business registration requirements ready. Below are some of the documents and prerequisites you’ll need:
Barangay Business Clearance
- Two valid IDs (Postal ID, PWD ID, Driver’s License, Passport)
- Proof of Address: Contract of Lease (rented home address) or Certificate of Land Title (owned home address)
- Certificate of registration from DTI
Mayor’s Permit / Business Permit
- Two valid IDs
- Proof of Address. (if the home address is rented) or Certificate of Land Title (if owned)
- Certificate of registration from DTI
- Barangay Business Clearance
Bureau of Internal Revenue (BIR)
- DTI Certificate of Registration
- Barangay Business Clearance
- Mayor’s Permit
- Certificate of Lease (if the home address is rented) or Certificate of Land Title (if owned)
- Government-issued identification (Passport, Driver’s License, Birth Certificate, etc.
A Step by Step Guide to Business Registration in the Philippines
DTI Registration Steps
- Choose a business name
Your business name represents your brand identity. You have the freedom to craft your business name as you see fit. It can be witty, concise, or expressive – the choice is yours.
- Check your business name availability
Once you ensure that your selected business name is not already registered or claimed by another business, proceed to register your business name under DTI. You can verify the availability of your chosen business name on DTI’s website.
- Register your business name under DTI
Once you confirm that your business name is available for use, proceed by completing DTI’s online registration form via their Business Name Registration System (BNRS). Access the online form here. Upon completing the registration form, you will receive a reference number or code to use for your transaction.
- Pay the registration fee
Once you’ve filled out the online registration form, proceed to make the required payment for your business name registration. Ensure that you pay the registration fee within 7 calendar days after completing the online form. Payment can be made through GCash, PayMaya, or debit/credit card.
Get a Barangay Business Clearance
Requirements you need for Barangay Business Clearance:
- Two valid IDs (Postal ID, PWD ID, Driver’s License, Passport)
- Proof of Address: Contract of Lease (rented home address) or Certificate of Land Title (owned home address)
- Certificate of registration from DTI
After gathering all the necessary requirements and documents, proceed to the barangay where your business is situated. For instance, if your business operates in San Pedro, Morong, Rizal, head to the Barangay Hall of San Pedro, Morong, Rizal.
Upon arrival, complete the application form and submit it along with the required documents to obtain your barangay business clearance, which will be necessary for future use.
Get a Mayor’s Permit / Business Permit
Requirements you need for a Mayor’s Permit / Business Permit
- Two valid IDs
- Proof of Address. Contract of Lease (if the home address is rented) or Certificate of Land Title (if owned)
- Certificate of registration from DTI
- Barangay Business Clearance
Once you have gathered all the necessary requirements and documents, proceed to the barangay where your business is situated. For instance, if your business operates in Morong, Rizal, you must visit the Municipal Hall of Morong, Rizal.
Upon arrival, complete the application form and submit it along with the required documents to obtain your Mayor’s Permit / Business Permit, which will be essential for future use.
Register your business with the Bureau of Internal Revenue (BIR)
- Requirements needed before you go to the Bureau of Internal Revenue (BIR)
- DTI Certificate of Registration
- Barangay Business Clearance
- Mayor’s Permit
- Certificate of Lease (if the home address is rented) or Certificate of Land Title (if owned)
- Government-issued identification (Passport, Driver’s License, Birth Certificate, etc.
- Fill up and submit 3 copies of BIR Form 1901. You can download the file here.
- Go to your respective RDO (where your business is located and has jurisdiction over the business) Check out the list of RDO Codes in the Philippines here.
- Pay the registration fee of ₱500 and ₱30 for Proof of Payment of Annual Registration Fee (ARF) You can pay the registration fee through accredited banks and you’ll be provided with a BIR payment form. After that, submit your BIR forms and a photocopy of your payments to your nearest RDO.
- After completing the payment for the registration fee, you can claim your Certificate of Registration (COR). Some, but not all, Revenue District Offices (RDOs) may demand that you attend a seminar on tax filing and compliance before issuing your COR. Upon receiving your COR, ensure that you obtain the “Ask for Receipt” sign, which must be displayed on the walls of your business establishment.
- After you get your Certificate of Registration, you have to purchase and register your book of accounts. A book of accounts is where you keep all of the original receipts and transactions of your business. You can purchase your book of accounts at any bookstore, stationary shops, or office supplies stores. You can register your book of accounts by filling up and submitting the BIR Form 1095 together with your book of accounts at the nearest RDO of your business.
There are three types of book of accounts you can get: - Manual Books of Accounts (handwritten records of transactions)
- Journals
- Ledgers
- Column Ledger
- Loose-leaf Book of Accounts (printed records of transactions)
- Documents for Spreadsheets
- Documents for Microsoft Excel
- Etc.
- Computerized Books of Account: A program system for bookkeeping for businesses with complex operations.
- Acquire an Authority to Print (ATP). Obtain an Authority to Print (ATP), which authorizes your business to print receipts and invoices for customers. The Bureau of Internal Revenue (BIR) mandates businesses to possess ATP receipts. To secure an ATP, complete and submit three copies of BIR Form 1906, along with a finalized and legible sample of principal and supplementary receipts/invoices, and a copy of your Certificate of Registration (COR) at your business’ Revenue District Office (RDO). The process typically takes about a week to complete and receive your ATP.
Now that you all have the steps in registering your business in the Philippines, it would be easier for you to collect all the required documents, know the places where to go and you can finally take the next step in opening your business in the Philippines.
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