A 5-Minute Simple Guide to Starting a Business in the Philippines

NDVLAW Article A 5 Minute Simple Guide to Starting a Business in the Philippines

How do you start a business in the Philippines? Check out our 5-minute simple guide below!

Start your business by first choosing your business vehicle

You cannot start your business without some form of registration. Thus, you need to choose if you wish to be a sole proprietorship, partnership or corporation. A sole proprietorship is registered with the Department of Trade & Industry (DTI) and such registration is good for 5 years and renewable thereafter. Note that as a sole proprietor, you, as a person, are liable to your customers and creditors.

Partnerships and corporations are more sophisticated forms of doing business. Both are registered with the Securities & Exchange Commission (SEC).  A partnership is done when two or more persons bind themselves to contribute money, property, or industry to a common fund, with the intention of dividing the profits among themselves. This is usually chosen for joint ventures or for the practice of a profession.  Note that the partners are liable to third persons. Also, a partnership’s existence is based on the agreement of the partners. However, a partnership may be dissolved due to the insolvency, civil interdiction, death, insanity or retirement of any of the partners.

On the other hand, a corporation has a separate juridical personality from its stockholders. This means that any liability will fall upon the corporation and not the stockholders, in the absence of fraud, etc. At most, the liability is only to the extent of the stocks held by the stockholder. Thus, creditors cannot run after your personal property.

You can form a corporation even if you are the only stockholder. That is called a One Person Corporation (OPC). In the alternative, you can have several stockholders in the corporation.

Note that there are certain business activities which will require special licenses and permits from other government agencies.

Secure a Business Permit (Mayor’s permit) from the City where your Business is located

Once you have registered your business with the SEC or DTI, the next step is to secure a barangay clearance in the barangay where your business is located. 

Thereafter, you must get a business permit or Mayor’s Permit from the city where your business is situated .  This process includes the procurement of clearances from the City’s Engineering and Electrical Departments, Health and Sanitary Office, City Environment and Natural Resources Office and the Bureau of Fire Protection.

Please remember that business permits expire every 31st of December and must be renewed on January of the next year.

Registration with the BIR is needed when Starting a Business

Simultaneous with your application for business permit or after such permit has been secured, you must register your business with the Bureau of Internal Revenue (BIR) for tax purposes. You must find the Revenue District Office (RDO) which has jurisdiction over the locality where you are doing business.  It is mandatory to get a Certificate of Registration (COR) and Authority to Print (ATP) in order to have your official receipts printed.  It bears great emphasis that only BIR accredited printers can make official receipts.  Furthermore, your books of account must be duly stamped by the BIR.

Business Startups – Register Your Business and Your Employees with the SSS, Philhealth and Pag-Ibig!

You must also register your business, along with your employees with the Social Security System (SSS), Philippine Health Insurance Corporation (Philhealth) and Home Development Mutual Fund (Pag-ibig). These government agencies have regional offices located in key cities.  Hence, it is necessary to register with the regional office in the city where your business is located.

Do not forget that there are certain monthly, quarterly and annual reports required by the SEC, BIR, SSS, Philhealth and Pag-Ibig.  Moreover, whenever you hire any employee, you must register him/her with the aforesaid government agencies.

That, in a nutshell, is a simple guide on how to start a business in the Philippines.

About Nicolas and De Vega Law Offices

If you need assistance in labor-related issues, compliance with DOLE issuances, and company employment policies,  or business-related concerns, we can help you find solutions. Nicolas and de Vega Law Offices is a full-service law firm in the Philippines.  You may visit us at the 16th Flr., Suite 1607 AIC Burgundy Empire Tower, ADB Ave., Ortigas Center, 1605 Pasig City, Metro Manila, Philippines.  You may also call us at +632 84706126, +632 84706130, +632 84016392 or e-mail us at [email protected]. Visit our website www.ndvlaw.com.