When it comes to business set-up, the Philippines might have a stigma to some since government applications in general in the country are considered to be very manual and less modernized compared to the developed world. However, with the bullish economy that has been attracting foreigners to set up their operations and invest in the country, believe it or not, it actually became easier for new business owners and entrepreneurs to start here. Here is a quick general guide we prepared for you.
1. CHOOSING YOUR TYPE OF BUSINESS
The first step while setting up your small business in the Philippines is choosing a corporate structure from the list mentioned above. Depending on the size and resources of your business, you’ll need to decide whether to set up as a sole-proprietorship, partnership, or corporation.
A. SOLE PROPEITORSHIP
A sole proprietor in the Philippines is someone who is personally responsible for any liabilities incurred in the business. However, they also get full benefit of any profit incurred by the company. In effect, the business and personal interests are considered as one single entity.
This type of business entity is a separate legal entity. One can choose a structure with limited or unlimited liabilities. For having a larger partnership in the Philippines, you must register your interests with Securities and Exchange Commission.
A corporation in the Philippines must have at least five shareholders who stake a minimum amount of capital. However, the liability of shareholders is then capped at the total amount of their invested capital. The investors have to register his corporation to the Securities and Exchange Commission.
D. BRANCH OFFICE
A branch in the Philippines can be called as an extension of a foreign company carrying the same activities as the parent company. Here, the only difference is, the business is carried out in a different country following the rules and regulations of that country.
E. REPRESENTATIVE OFFICE
A representative office in the Philippines can be only set up to promote their parent company. They can do market research, study the customers etc. but they cannot conduct buying and selling activities in the country.
2. REGISTER A BUSINESS NAME
The next step in starting a business in the Philippines is to get registered the proposed business name to ensure that you will be doing your trade or business with an original business name. You can do this via DTI's website here or SEC's website here.
3. PAY THE CAPITAL DEPOSIT Business owners who want to register their company in the Philippines need to deposit a minimum amount of capital in the bank account. The Philippines’ Corporation Code sets that minimum at PHP 5,000 but your bank will need additional materials, including articles of incorporation and identification documents.
4. REGISTER WITH THE SECURITIES AND EXCHANGE COMMISSION (SEC)
This is the most important step under the complete process. SEC that is the Securities and Exchange Commission of the Philippines, a national government regulatory agency, oversees every registered business entity in the Philippines. Applicant businesses must provide the SEC with a number of materials and documents, including:
Approved company name, Articles of incorporation, Treasurer’s affidavit, Statement of assets and liabilities, and other company particulars including information on directors, officers, and stockholders
5. NOTARIZE YOUR DOCUMENTS
Before completing the step 4, remember that, according to the section 14 and 15 of the Corporation Code, proper notarization of all the documents as well as the Treasurer’s Affidavit is necessary before proceeding to file with the SEC.
6. GET YOUR TAX IDENTIFICATION NUMBER (TIN)
Now that you have registered your company with the SEC, you must now complete the following process:
Company name verification slip, Articles of incorporation (notarized) and by-lawsTreasurer’s affidavit, (notarized), Statement of assets and liabilities, Registration data sheet with particulars on directors, officers, stockholders, written undertaking to comply with SEC reporting requirements (notarized) and written undertaking to change corporate name (notarized).
Once you complete all these steps, SEC will automate your TIN.
7. REGISTER WITH BUREAU OF INTERNAL REVENUE (BIR)
Register the company with the Bureau of Internal Revenue (BIR) District office for authority to print invoice and book of journal. This task is crucial in determining applicable taxes, paying your annual registration fee, and acquiring and stamping of sales invoices, receipts, and books of accounts.
8. GET A BARANGAY CLEARANCE You need to visit the Barangay hall where your business is located and bring in the documents including your application form, SEC Certificate of Incorporation, approved AoA, lease contract, and business plan.
9. PAY YOUR ANNUAL COMMUNITY TAX
The annual basic and additional community tax can be paid at the City Treasurer’s Office (CTO). The basic tax would depend on your business activity. The additional tax on the other hand is subject to the assessed value of the real property you own, along with dividends and earnings.
10. OBTAIN THE BUSINESS PERMIT
You can obtain a business permit in the Philippines from the Business Permits and Licensing Office (BPLO). Apart from this, there are a few companies who need to secure other clearances or certificates such as a location clearance, fire safety and inspection certificate, mechanical permit, certificate of electrical inspection, and sanitary permit.
11. REGISTER WITH THE SOCIAL SECURITY SYSTEM (SSS)
Businesses with any number of employees must register to the Philippines Social Security System. The following documents are required:
Employer registration form (Form R-1)Employment report (Form R-1A)List of employees, specifying their birth dates, positions, monthly salary and date of employment; andArticles of incorporation, by-laws and SEC registration.
12. OTHER CLEARANCES It is mandatory to register your business with the following offices to be in line with the government regulations:
A. Department of Labor and Employment (DOLE) – For occupational safety and Health standards
B. PhilHealth – For availing Medicare benefits
C. PAG-IBIG fund – Mandatory for employees
D. SSS - Mandatory for employees
E. Department of Environment and Natural Resources (DENR) – For availing an Environmental Compliance Certificate
These steps enumerated above have an estimate timeline of 3-6 months, highly depending on how fast you can produce the necessary requirements to the respective government agencies.
Most clients prefer to outsource the whole process so that they can simply focus on starting their operations while the outsourced consultant or service provider work in parallel time.
As part of Office Pro's General Consultancy services, we offer this whole service package or we can also be flexible if you only need a few of the steps to be done. Feel free to communicate with us for inquiries.
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