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Registering a Business in the Philippines

For expats living in the Philippines, employment is not the only option. In fact, another lucrative option is set up your own business. Of course, not everyone knows how to do this. That’s where things become a bit tricky. To register a business, you’ll need to go through a meticulous process of preparing the necessary documentation and paying the required fees. While the ability to register a company may take a lot from you, if it’s done right, it can be a very rewarding both professionally and financially. Here are the steps you need to remember.

Check the Availability of your Company Name 

The first step to registering a business in the Philippines is to check the availability of the company name you’re interested in using and have it reserved. This can be done through the Securities and Exchange Commission (SEC) and will take one day to complete. Verification and reservation of a company name can be done online, free of charge. Once you’ve confirmed that your business name is still available, you’ll need to pay Php40 a month for the first 30 days. The maximum number of days a company name can be reserved is 120 days. It can be automatically renewed once the period expires.

Get a Bank Certificate of Deposit by Remitting Payment to an Authorized Agent Bank (AAB)

Once you’ve worked on obtaining your company name, you will need to deposit a paid-up capital to an Authorized Agent Bank or AAB. The total amount must not go below Php5,000. The process of settling this paid-up capital will take a maximum of one day. Additionally, there are other banks that charge a total of Php105 for every certificate of deposit you have. So before making a commitment, be sure to check the guidelines of the bank you plan on dealing with.

Prepare Treasurer’s Affidavit and Articles of Incorporation for Notarization

For people wondering how to register a business, another crucial step is to prepare the treasurer’s affidavit along with the necessary articles of incorporation. Once they’ve been collected, they need to be notarized and filed with the SEC. The normal charge to have these documents notarized is Php500. It’s important to go through this step because failure to do so will go against the rules written in Section 14 and 15 of the Corporation Code and could result to penalties.

Obtain Pre-Registered Taxpayer Identification Number (TIN) by Registering the Company with the SEC

To receive the pre-registered TIN, the company must be registered through the SEC’s i-Register online feature. Only approved registrations will be given a pre-registered TIN. Before the registration can be processed, the following documents need to be made available:

  • Company name verification slip
  • Notarized articles of incorporation and by-laws
  • Notarized treasurer’s affidavit
  • Statement of assets and liabilities
  • Bank certificate of deposit that paid-in capital was settled
  • Authorization to verify the bank account
  • Registration data sheet
  • A notarized and written document indicating the willingness to comply with SEC reporting requirements
  • A notarized and written document expressing intent to change the corporate name

Additionally, the business owner must register with the Bureau of Internal Revenue (BIR) to determine the company’s tax types. An annual registration fee needs to be settled to acquire stamped sales invoice, books of accounts, and receipts.

Get a CTC or Community Tax Certificate

The community tax certificate or CTC can be obtained from the City Treasurer’s Office or CTO. Whenever you set up a business, the company will be required to pay a basic and additional community tax. The rate of the basic CTC is dependent on whether the business will be a partnership, association, or corporation. This will normally cost an average of Php500. The additional CTC on the other hand depends on the assessed value of the company’s properties. The expected rate for this CTC is Php2.00 for every Php5,000 on gross receipts.

Acquire a Barangay Clearance

Once you’ve obtained your CTC, the next document you have to work on is getting a barangay clearance. The clearance can be obtained from the barangay where the business will be set up. The fees vary depending on the barangay and are based on the Local Government Code and city ordinances. However, the standard rate you can expect would be a minimum of Php500 plus Php300 for the clearance plate.

Get a Business Permit From BPLO

The fees imposed for acquiring a business permit once again depends on the licensing office where your company plans on setting up shop. On the average though, expect to pay a business tax averaging Php2,000 or 25% of the 1% of your paid capital. Other permits that need to be acquired along with the business permit are:

  • Mayor’s Permit – Php200
  • Signboard Fee – Php50
  • Sanitary Permit – Php150
  • Business Plate – Php250
  • Garbage Fee – Php1,300
  • Zoning Clearance – Php545

Invest In Special Books Of Accounts

Special books of accounts are considered important because these are what you’ll need to keep track of your accounts. There are a total of four books in one journal: cash receipts account, ledger, disbursement account, and a general journal. The journal will cost a total of Php400.

Should your company have a Computerized Accounting System (CAS), you have the option to have it registered under the BIR. A BIR Computerized System Evaluation Team will be required to check your system to determine whether it meets the set standards or not.

Acquire Certification of Registration (COR) and TIN at the BIR

The application for a Certification of Registration (COR) and TIN will require you to fill out a BIR Form 1903 and submit it along with the documents required by the Revenue District Office. Be sure to indicate the type of taxes you expect your business to be liable for, including VAT. For the TIN, a payment of Php500 must be made to any accredited government bank to cover for the annual registration fee.

Settle Documentary Stamp Taxes

Documentary stamp taxes can be paid at any Authorized Agent Bank. The rate of the stamp tax on original issuance of shares of stocks is Php1.00 for every Php200 or the fractional par values of the shares.

Get Authority to Print Receipts and Invoices from the BIR

The authority to print receipts and invoices must first be acquired before a business can be allowed to print and issue these documents. Any printing company can print out the receipts once the BIR has granted the authority to do so. For the authority to be given, you need to furnish the following documents to the Revenue District Office or RDO.

  • BIR Form No. 1906 or duly completed authority to print receipts application form
  • Job Order
  • Clear samples of your receipts and invoices
  • BIR Form No. 1903 or Application of Registration
  • BIR Form No. 0605 or Proof of Payment for Annual Registration Fee

Have the Receipts and Invoices Printed and Stamped by the BIR

Once the authority to issue receipts has been given, the next step is to have the actual receipts printed. This needs to be done prior to the setting up of your business since the printer responsible for the printing of your receipts will furnish you with a Printer’s Certificate of Delivery of Receipts and Invoices (PCD). This document, along with the other documents listed below, must then be submitted to the RDO for registration and stamping.

  • Required books of accounts
  • VAT registration certificate
  • SEC registration
  • BIR Form W-5
  • Certified Photocopy of the ATP
  • Notarized taxpayer’s sworn statement indicating the responsibilities and commitments of the taxpayer

This should be done 30 days from the issuance of the PCD.

Register your Business with the Social Security System (SSS)

Registering your business with the SSS takes a total of 7 working days. Aside from providing the necessary documents, you will also be required to attend training seminars to familiarize yourself with the rules and regulations, along with the rights of each member. Registration with the SSS requires the submission of the following documents:

  • Form R-1 (Employer Registration Form)
  • Form R-1A (Employment Report)
  • List of Employees, including their birthdates, positions, monthly salary, and date of employment
  • Articles of incorporation, by-laws, and SEC Registration

Register your Company with the Philippine Health Insurance Company (PhilHealth)

Unlike registering with the SSS, registration with PhilHealth will only take one day. The following original documents listed below must be submitted and the receiving copies will serve as proof of membership until the release of the official employer and employee numbers:

  • Form ER1 (Employer Data Record)
  • Form ER2 (Report of Employee-Members)
  • SEC Registration
  • BIR Registration
  • Copy of Business Permit

Expats living in the Philippines don’t have to necessarily stick it out with employment. As long as you know how to register a business here, you will always have the option of being your own boss instead of working for one.