To start a business, you need to be registered with various government agencies. Depending on the legal form of your business, the complexity of procedures will vary. For example, registering a single proprietorship is relatively easy, but more complex for corporations.
So how does one start a business in the Philippines? We’ve made a summary of the procedures and requirements to register a new firm in the country. The procedures below are based on a setup of launching a commercial or industrial firm with up to fifty employees.
- Secure the Company Name with the Securities and Exchange Commission (SEC)
Company names and their availability can be verified online through SEC-iRegister. Once approved by the SEC, reservation of the name costs Php 40 per month for the first 30 days.
- Deposit Paid-Up Capital in the Authorized Agent Bank and Get Bank Certificate of Deposit
The law requires companies to deposit paid-up capital of at least 6.25% of the authorized capital stock of the corporation. This amount must not be less than Php 5,000.
- Notarize Articles of Incorporation and Treasurer’s Affidavit
The Corporation Code requires that all articles of incorporation should be notarized before filing with the SEC.
- Register the Company with the SEC and Obtain Pre-Registered Taxpayer Identification Number (TIN).
Online registration can be done via the SEC website [link to: http://www.sec.gov.ph/] but payment must be done on-site at the SEC office. Once the SEC Head Office has approved the application for registration, your pre-registered TIN will be issued.
- Secure Barangay Clearance
You can obtain this from the Barangay where your business is located. Note that Barangay fees vary for each Barangay.
- Pay the Annual Community Tax and Get the Community Tax Certificate (CTC) from the City Treasurer’s Office (CTO)
Your company will be assessed a basic and an additional community tax. The basic community tax rate depends on your company’s legal form. The additional community tax depends on the assessed value of real property the company owns in the Philippines.
- Obtain the Business Permit to Operate from the Business Permits and Licensing Office (BPLO)
The rates of the fees depend on the nature of your business. Permits like fire safety and inspection certificate, sanitary permits and the like are also imposable.
- Purchase Special Books of Account
Certain books of accounts are required for registering with the Bureau of Internal Revenue. These can be purchased at bookstores nationwide. If your company has a computerized accounting system (CAS), it can choose to register its CAS as well.
- Apply for Certificate of Registration (COR) and TIN at the BIR
Once the TIN is obtained, your company must pay the annual registration fee (Php 500) at any duly accredited bank using payment form BIR Form 0605.
- Pay the Registration Fee and Documentary Stamp Taxes (DST) at the AAB
The documentary stamp tax return will be filed and the tax paid on or before the fifth day after the close of the month of approval of SEC registration.
- Secure the Authority to Print Receipts and Invoices from the BIR
To obtain the authority to print receipts and invoices, your company must submit certain requirements to the Revenue District Office (RDO). Then the company can print its own official forms, or ask any authorized printing company to print them out.
- Print Receipts and Invoices at Accredited Print Shops
- Have Books of Accounts and Printer’s Certificate of Delivery (PCD) Stamped by the BIR
Once the printer has issued a Printer’s Certificate of Delivery of Receipts and Invoices (PCD) to your company, submit this to the BIR RDO which has jurisdiction over your company’s place of business for registration.
- Register with the Social Security System (SSS)
Upon submission of required documents, your SSS employer and employee numbers will be released. The SSS recommends that members go through a training seminar after registration.
- Register with the Philippine Health Insurance Company (PhilHealth)
Upon submission of required documents, you’ll be getting receiving copies of all the forms as proof of membership. Expect employer and employee numbers to be released within three months.
- Register with Home Development Mutual Fund (Pag-Ibig)
Submit documents and make your first contribution to the fund. Upon submission, the Pag-IBIG will issue your HDMF number and the HDMF Certificate of Registrations.
Whatever type of business you have, it’s definitely a challenge to get it up and running. It’s going to take up time and resources, but a proper start will give you peace of mind and will save your company trouble in the long run.
Ease of doing business in the Philippines
How easy is it to do business in the Philippines, you may ask? The Philippines is continuously making efforts to make it easier for investors to conduct their business in the country, evident in the country’s improvement in the 2014 Doing Business global rankings. This report was released by the World Bank and its investment arm, International Finance Corp.
The 30-rung jump from last year’s 138th place to its current 108th place is credited to the key reforms in areas dealing with getting credit, paying taxes, and construction permits. The report also noted the local efforts made to allow creditor’s committees to have a say in insolvency proceeding decisions, as well as in providing a legal framework for resolving insolvency out-of-court.
While there are still crucial parameters that the country has to work on, Senator Paolo Benigno Aquino IV, Chair of the Senate Committee on Trade, Commerce and Entrepreneurship, believes the report is a good sign for small and medium enterprises (SME) in the Philippines.
“We still have a long way to go in our goal to be pro-negosyo and the most business-friendly country in the region, but this shows that we’re headed in the right direction,” he added.