Registering a business in the Philippines requires utmost dedication of time and effort for at least one month. Each task involved may require anywhere from a few days to a few weeks to complete. Every application entails a step-by-step procedure and each step requires specific documents, payment of fees, and waiting period.
Where to Register
The primary difference between registering a sole proprietorship and registering either a partnership or a corporation is where the registration should be done for each type of business.
A sole proprietorship is the easiest type of business to establish. A partnership and a corporation both require more legal and documentary procedures.
For a sole proprietorship, you must go to the local Department of Trade and Industry (DTI) office for the registration. Each municipality or city maintains a DTI office managing the jurisdiction for every business location. For a partnership or corporation, you must go to the Securities and Exchange Commission (SEC).
Foreigners Who Plan to Open a Business in the Philippines
Many foreigners are interested in opening businesses in the Philippines, mainly for call centers and information technology (IT)-related businesses for various American and European companies. Filipinos are known for their English speaking, customer service, and IT skills, making them good assets for the call center and IT industry. The cost of living in the Philippines also attracts both businesses and workers in this industry, as both parties greatly benefit from what each one has to offer to the other.
For foreigners intending to do business in the Philippines, according to Philippine law, they can’t fully own any business or properties in the Philippines. For real estate, they can only own a portion of a condominium unit and they can’t own any house and lot or townhouse in the Philippines. For businesses, they have to maintain the 60/40 rule with regards to business ownership. This means that 60 percent of the stock of a corporation must be owned by a Filipino national, and only up to 40 percent can be owned by a foreign national. It is also required that forming a corporation has at least five incorporators who are Filipino citizens.
How to Register a Business in the Philippines:
1. Prepare at least three business name options for your business. To confirm the availability of each one, go online and search at the DTI or SEC website.
2. Complete the initial requirements including the: barangay clearance (the barangay is the smallest administrative division in the local Philippine government) and the community certificate which are both requested at the barangay hall where the business will be located; the National Bureau of Investigation (NBI) clearance or Philippine National Police (PNP) police clearance; copy of your birth certificate to prove your Filipino citizenship; two identical color photos with size 2×2 inches, each signed at the back and less than a year old.
Additional documentary requirements may also be asked. For instance, for a sole proprietorship business to be opened by a practicing professional such as a doctor, dentist, lawyer, or accountant, opening a clinic or office requires the presentation of a valid professional license of the proprietor. This license from the Philippine Regulatory Commission (PRC) is issued to any professional who passed the board examination for their chosen profession.
For a company to be registered as a partnership or a corporation, reserve your intended company name prior to filing of the application at the SEC office. You can do this by going to the Securities and Exchange Commission (SEC) online verification site. The reservation fee is PHP40 (less than $1). Within the one-month period, the company should file the application at the SEC. If not, renew or extend the reservation by paying another PHP40 per month. An expired reserved name prevents the company from using the said name upon official filing of the application.
Primary documents required for partnerships and corporations include: Amended Articles of Partnership or Corporation; bank certificate of deposit for paid-up capital (from a Philippine bank); cover sheet; name verification slip; registration data sheet; treasurer’s affidavit; corporate by-laws; and endorsements or clearances from other government agencies. The complete list can be viewed at the SEC website.
It is highly recommendable to go online and download and fill up the required application forms prior to going to the DTI or SEC.
3. Go to the DTI or SEC and submit all the requirements. Pay the application fees. The said fees vary depending on the type of business being registered. The result of the application should arrive anytime within one to two weeks. Upon official registration, you will receive a certificate of registration from the DTI or the SEC.
Make several photocopies of the certificate of registration as you will need them on the next steps for the completion of the business registration requirements.
4. Go to the licensing office of the city hall or municipal hall where your business will be located to apply for a business license. Bring your DTI or SEC registration (including photocopies), birth certificate, land title or rental agreement on where the business will be located, and other supporting documents. Complete the forms and pay the fees. The fees involved in the process depend on the type of business being registered and the capital to be used for the business. The said capital is initially provided in the forms filled up during your DTI or SEC registration. The business license plate, the business license certificate, among other documents, will be released in about a week or two.
5. Go to the Bureau of Internal Revenue (BIR) for the tax registration. Bring your DTI or SEC registration (including photocopies) and the business license certificate. After paying the registration fees, wait for your tax registration certificate which should be available within a week or two.
For sole proprietorship, you will use the same tax identification number (TIN) as what you used as an employed individual. If you haven’t worked yet, you will be issued your new 9-digit TIN accordingly. Your TIN appears in your paper-thin TIN card with your photo and other basic information.
For a partnership or corporation, a new TIN will be issued accordingly.
6. Post all the permits, registration and tax documents, and business license at visible areas within the place of business, as required by Philippine law.
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