11 Basic Requirements to Start a Small Business in the Philippines

2021-small-business-requirements-in-the-philippines

Starting up a business takes time. It also takes sweat, some tears, and a whole lot of elbow grease. For some, it’s a lot more liberating than being employed at someone else’s business. For other people, starting a business can be a way to earn money on the side. But, starting a business can certainly help with the circumstances we find ourselves in!

So whether you’re a sole proprietor, partner, or part of a corporation, read and learn how to start a business in the Philippines! Here you’ll also find the required documents to legally register your company.

Here are the essential business documents you need when putting up a small business in the Philippines:

  • a Barangay Clearance;
  • a Mayor’s Business Permit;
  • BIR registration documents;
  • registration from the SSS, as well as from PhilHealth and Pag-IBIG; and
  • special permits, if applicable.

A Business Structure for a Business Name!

First, you need to consider your business structure to find the appropriate government office to register the business name! The business structure depends on the owner, that is, you! Note that name registration fee are usually within the ₱40 to ₱120 range. So, here’s a quick and easy guide:

  • Sole proprietorships fall under the Department of Trade and Industry;
  • Corporations or Partnerships must submit to the Securities and Exchange Commission; and
  • Cooperatives go to the Cooperative Development Authority.

Capitalize your business!

In the next step, money — or, more specifically, capital — comes into play. As the owner, you need to deposit a minimum amount of capital at a given bank. The minimum amount is ₱5,000, as prescribed by the Philippines’ Corporation Code. However, do keep in mind that depending on the bank, you’ll need extra documentation. Identification documents and articles of incorporation are chief among these requirements. 

Report to the Department of Trade and Industry.*

Compared to these other steps, filing with the Department of Trade and Industry or DTI is easy. However, it is no less crucial, considering that filing with the Department will allow you to use the business name as a trading name. So, if you register with the DTI, you can own a trademark. 

The great thing about filing today is that you can do it online! As a sole proprietor especially, you have to check the database on the DTI site to find if the business name you want is still free. Once you find an available name, you can fill out the business name application form. Then, you submit the form to the government office. But, you’ll have to wait for the Certificate of Registration, or COR, before you move to the next step.

Head over to the Bureau of Internal Revenue.

Every business has to register with the Bureau of Internal Revenue or BIR. Once registered, you can pay taxes. Though it may be sad to see your hard-earned money go, your business (and if you’ve employed them, your staff) will enjoy some benefits in return. So you need to:

  • Fill out some forms. Sole proprietors should accomplish two original copies of BIR Form 1901. On the other hand, corporations, partnerships, and cooperatives should also accomplish two original copies of Form 1903.
  • Next, submit your forms (plus other BIR requirements) to the appropriate Revenue District Office. 
  • Then, pay the registration fee. It’s ₱500, but you need to add ₱30 for the documentary stamp tax.
  • Finally, get the Certificate of Registration, Authority to Print, and the “Ask for Receipt” Notice after approval.

Note: If you have the time, you may attend a free taxpayer’s initial briefing by the BIR!

Report to the Securities and Exchange Commission.*

The SEC or Securities and Exchange Commission regulates the registered businesses within the country. It’s one of the most critical business registration steps, especially if you’re a corporation, partnership, or cooperative! *So, sole proprietors, you can move on to the next step. In addition, the Corporation Code states that these documents have to be notarized before filing at the SEC.

Now, for those reporting to the SEC, here are the required documents:

  • The business’s approved company name;
  • Articles of incorporation;
  • A statement or statements concerning assets and liabilities;
  • A Treasurer’s affidavit; and
  • Company particulars (that is, the information of essential persons in your business).

Tell the Barangay you’re here to stay!

You need to visit the Barangay Hall associated with your business location. Then you should let them know you’re operating a business in the area. And you have to pay a fee as well! It’s usually around ₱300 to ₱1,000

Here are the required documents you have to present: 

  • An application form;
  • A DTI Certificate of Registration, especially for sole proprietors;
  • Two valid IDs, especially for sole proprietors;
  • A Proof of Residence, especially for sole proprietors;
  • A Certificate of Incorporation from the SEC, especially for partnerships and corporations;
  • Articles of Association; 
  • A lease contract; and
  • A business plan.

Once you’ve processed the documents, all you need to do is wait for your Barangay Certificate of Business Registration.

Don’t forget to let the Local Government know as well.

You’re going to need a Mayor’s permit or a business permit from your Local Government Unit or LGU. After all, a business is based in a town or city, so it will take up some space! So even if you’re running your business from your home, you still need to let the LGU know. So here’s how to get that Mayor’s business permit:

  • Prepare the documents that the local government prescribes, such as:
    • An application form;
    • The DTI Certificate of Registration, especially for sole proprietors;
    • A Barangay Clearance;
    • Two valid IDs and Proof of Residence, especially for sole proprietors.
  • Then get a certificate from the local fire department for fire safety and inspection;
  • Depending on the business, you may need other kinds of clearances or certificates. Some of these additional clearances are:
    • location clearance;
    • mechanical permit;
    • electrical inspection certificate; and 
    • sanitary permit.
  • Finally, collect the permit on the agreed date from the Business Permits and Licensing Office or BPLO.

Tender your Annual Community Tax.

Also, don’t forget that you’ve got to pay your Annual Community Tax at the City Treasurer’s Office or CTO. Now, you have two parts to the tax. The basic tax you have to pay will depend on your business. However, the amount for that won’t exceed ₱500. Additional taxation will depend on the “assessed value of the real property you own, along with dividends and earnings.”

Set up your staff with the Social Security System (SSS)

Now, this step mainly deals with businesses that have employees. After all, business owners have to take care of the cogs that keep your company running! So, sole proprietors can skip this step and move on! For businesses that employ staff, whether they number in the hundreds or just one, you have to tender these documents:

  • Employer Registration Form R-1;
  • Employment Report Form R-1A;
  • A list of employees with pertinent information of each; and
  • Articles of incorporation, SEC registration, and by-laws.

Additional government offices

Once done with the previous steps, you have to head to other government institutions. Registering at the following offices will make you an outstanding business owner. 

  • DOLE or the Department of Labor and Employment can help with occupational safety and health codes.
  • PhilHealth is a plus as well. You can avail of Medicare! 
  • PAG-IBIG fund is a requirement, especially if you have employees covered by the SSS.
  • The Department of Environment and Natural Resources or DENR can give you an Environmental Compliance Certificate.

Proprietors, rev up your businesses!

Not only does running a business take a lot, doing all the legal matters is a long process too! So many fees and permits and certificates, your head will surely spin. Hopefully, this list has answered your questions. New companies keep the local economy strong. So business owners, plan well and learn about procedures! Good luck with your business. – Alex/WhatALife.ph


Also Read: How to Register to My.SSS Online: Your Ultimate Guide 2021