Comparative Analysis of the Steps to Register a Business in the Philippines

Student: YANG, MIGUEL
AR5101_3093_Assessment 1_M1-U1_TLO1
Comparative Analysis of the Attributes of Architecture Firms
Page 1
Table 1. Steps to Register the Business (Philippines)

Categories Sole Proprietorship Partnership Regular One-person
Corporation Corporation
1. Submission of 1. Register a 1. Register your 1. Reserve and 1. Submit your

proposed Business business name business in the Register Your proposed company
Name/s via Official with DTI to acquire Business Name in name to SEC
Securities and
Government a DTI Certificate of Securities and
Business Agencies Registration Exchange Exchange
like DTI(for Sole Commission (SEC) Commission (SEC),
Proprietorship)/ as follows:
SEC(for The first thing you
Partnership & need to do is register Check if your
Corporation) your business in the desired business
SEC. They are name is available via
SEC online website
responsible for
or at SEC Office in
regulating Mandaluyong
partnerships and
corporations in the If available,
Philippines. Here, register/reserve your
you’ll need to submit business name via
the following: SEC online website
or at SEC Name
Verification Unit –
Name Verification
SEC Office in
Slip, Articles of Mandaluyong
Partnership and
Joint Affidavit (Not Prepare, sign and
required if already notarize the
stated in Articles of following: Articles of
Partnership) Incorporation, By
Laws, Treasurer’s
Affidavit; and Joint
Optional:
affidavit of two
Endorsement of incorporators
Clearance (From undertaking to
other government change corporate
agencies) and FIA name immediately
Form 105 (If you upon receipt of
notice or directive
have a foreigner
from the Securities
partner) and Exchange
Commission that
another
corporation,
partnership, or
person has
acquired a prior
right to the use of
that name or that
name has been
declared
misleading,
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deceptive,
confusingly similar
to a registered
name, or contrary
to public morals,
good customs or
public policy. (Not
required if the
Articles of
Incorporation have
a provision on this
commitment).
Submit notarized
documents to SEC
Office in
Mandaluyong City
Claim your SEC

Certificate of
Registration
Processing Time:
At least one (1)
week upon
submission of
complete documents
2. Obtaining 2. Register with the 2. Get a Barangay 2. Acquire 2. Submit your

Barangay Barangay Office Clearance Barangay documents to SEC
Clearance or where the business Clearance for pre-processing
Certificate of is going to be
Business located to acquire This is required as
you will be setting up Once the corporation
Registration a Barangay
a business in the is registered with
Certificate of
SEC the next step is
Business barangay’s area. to get a barangay
Registration Thus, your business clearance in the
should conform to barangay where
the standards of the your business is
barangay. Fees and located.
other requirements
might be needed
Go to the barangay
depending on your where your business
barangay. is located to secure
and fill-up
application form
Submit your
completed
application form
together with the
Page 3
following: Certificate
of Business
Registration from
SEC, two (2) valid
IDs and Proof of
Address such as
Contract of Lease
(if rented) or
Certificate of Land
Title (if owned)
Processing Time: 1
day upon
submission of
complete
documents.
3. Registration and 3. Register with the 3. Register your 3. Acquire 3. Pay any
payment phase for Mayor’s Office to business and Business Permit applicable filing
getting an Official acquire a Mayor’s from the Mayor’s fees
employees in
Business Permit Permit Office
via Mayor’s Office Social Security
System (SSS)
a. Once you have a
Barangay Clearance
Registering your Certificate, the next
employees (whether step is to acquire a
temporary or Business Permit in
permanent) in the the municipality
SSS is mandated by where your business
law. This ensures is located.
that you are lawfully
remitting your b. Go to the
employee’s monthly municipal office
contributions so they where your business
can reap the is located to secure
rewards later. You and fill-up
will need the application form and
submit your
following: SS Forms
completed
R-1 and R-1A, application form
Photocopy of together with the
Articles of following: Certificate
Partnership, of Business
Business location Registration from
sketch or map and SEC, Barangay
Clearance
Validated Certificate, two (2)
Miscellaneous valid IDs and Proof
Payment Return also of Address such as
known as SS Form Contract of Lease
R-6 or SS Form R-6 (if rented) or
with Special Bank Certificate of Land
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Receipt (proof of Title (if owned)

payment for the
Employer
Processing Time:
Registration Plate)
At least one week
upon submission of
complete
documents. But It
can take longer
depending on the
permit requirements
based on the
industry.
4. Obtaining the 4. Obtain a 4. Submit hard

original copy of a Business Permit or copies of signed
Business Permit and notarized
Mayor’s Permit
and Start of Official
documents with
Registration of
signed and sealed After obtaining the proof of payment
legal documents certificate of of applicable filing
via BIR/SEC registration from fees
SEC, you can now
apply for a Business
Permit or Mayor’s
Permit. This is
required since your
business location is
under the LGU’s
area of governance.
Just like in barangay,
your business
should conform to
the LGU’s standards.
Here’s our in-depth

guide on how to get
a business or
mayor’s permit in the
Philippines.
5. Claiming of 4. Register with the 5. Register your 4. Register with the 5. Claim Certificate
official Certificate Bureau of Internal business in BIR Bureau of Internal of Registration
of Registration Revenue (BIR) to Revenue (BIR) from SEC
from BIR/SEC acquire a
Certificate of Now that you have a
mayor’s permit, you Once you have the If your company
Registration.
can now register Mayor’s Business name is rejected (i.e.
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your business in Permit, you can now it is already in use, it

BIR. Registering with register with the BIR. is deemed
the Bureau of inappropriate, etc.),
Internal Revenue will you may submit a
Go to the Regional
give you permission Letter of Appeal to
District Office (RDO)
to issue official the SEC. As
where your business
receipts, register mentioned earlier,
is located
books of accounts, you must appoint a
and (for partnerships treasurer, corporate
Fill-up registration
and corporations) to secretary, and other
form as follows: BIR
obtain a separate officers within 15
Form 1903 –
Tax Identification days of the issuance
Application for
Number. of your Certificate of
Registration (For
Registration.
Partnership/Corpor
ation)
Submit completed
registration form
together with the
following: Certificate
of Registration
form SEC,
Barangay
Clearance,
Business Permit
from the Mayor’s
Office, Proof of
Address such as
Contract of Lease
(if rented) or
Certificate of Land
Title (if owned) and
Valid IDs, if
applicable.
Pay the
Registration Form
(BIR Form 0605)
and Documentary
Stamp Tax (BIR
Form 2000), if
applicable.
Register your book

of accounts and
receipts/invoices.
Claim your
Certificate of
Registration (BIR
Page 6
Form 2303)
Table 2. Characteristics of the Legal Forms of Business

Characteristics Sole Proprietorship Partnership Regular One-person
Advantages
Requires a Two heads (or Owners have Limited liability.
minimum amount more) are better limited Liability. Only the legal entity
of capital. than one. A corporation is of the company is
considered by law as liable for its debts,
a separate and rather than the
distinct legal entity. director as a person.
Minimal Your business is It can exist with Perpetual

regulations and easy to establish continuity. existence.
compliance and start-up costs The power of Despite bankruptcy,
requirements from
are low. succession gives a transfer of shares,
government
agencies. corporation change of director,
continuous etc.
existence.
Easy to register. More capital is Shares of Complete control

available for the ownership are of the business.
business. transferable. More like a sole
The shares of stock proprietorship rather
or interest of a than a traditional
publicly traded corporation with a
corporation can be board of directors.
traded easily though
a stockbroker.
Sole proprietor has Greater borrowing It attracts more No minimum

complete control of capacity. investors. capital
the business. Corporations attract requirements.
investors because of Unless stated by
its stock structure, law.
perpetual existence,
ownership
transferability, and
limited liability.
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Easy to manage, High-caliber You can be an An existing

with no necessary employees can be employee of your corporation can
formalities or made partners. own corporation. restructure as an
regulations about
Since the OPC.
having a board of
directors, corporation is a if a single
committee, or distinct entity from its stockholder acquires
meeting minutes. owners or all shares of the
shareholders, they company.
can become the
corporation’s
employees or
officers.
Sole proprietor There is The corporation

acquires all assets opportunity for pays its own tax.
and profits of the income splitting, As a separate legal
business and can
an advantage of entity, a corporation
freely mix business
and personal particular is also a separate
assets. importance due to taxpayer from its
resultant tax owners.
savings.
Partners’ business
affairs are private
There is limited
external regulation
It’s easy to change

your legal structure
later if
circumstances
change.
Disadvantages Sole Proprietorship Partnership Regular One-person

Sole proprietor is The liability of the Incorporation is More complex than

subject to partners for the costly. Incorporating a sole
unlimited personal debts of the a business needs to proprietorship
liability for the file with the
business is Due to more
debts, losses, and Securities and
liabilities of the Exchange administration
Page 8
business unlimited Commission (SEC) requirements.

and may involve a
lot of formal and
legal papers, such
as by laws, articles
of incorporation,
affidavit and board
resolutions.
Sole proprietor Each partner is Corporations are Some limitations

cannot raise capital ‘jointly and highly regulated. on foreign
by selling an severally’ liable for Ordinary ownership
interest in the corporations are
the partnership’s A foreigner cannot
business or obtain regulated by the
capital funding debts; that is, each SEC. incorporate an OPC
through partner is liable for in an industry
established their share of the included on the
channels partnership debts Foreign Investments
as well as being Negative List.
liable for all the
debts
No clear-cut There is a risk of Limited liability Tax obligations are

definition between disagreements and may discourage subjective on a
personal and friction among creditors. The case-to-case basis.
business income limited liability
partners and Most sole
because the sole feature of the
proprietor is management corporation can be proprietorships only
personally liable an advantage for pay 8% income tax,
for the income tax stockholders. while the corporate
of the business income tax rate is
30% — however,
there are many more
tax benefits that
Sole Each partner is an It may result in
proprietorships double taxation. come with a
agent of the
rarely survive the Since the corporation.
partnership and is
death or incapacity corporation is
liable for actions
of their owners and already taxed on its
hence do not retain by other partners income, distributing
value this income to
shareholders in the
form of dividends
may result in double
taxation.
It is not easy to
dissolve.
Business Corporations are
bankruptcy affects difficult to dissolve
the owner as it is also difficult
Page 9
personally to form.
If partners join or
leave, you will
Personal lawsuits
against the sole probably have to
proprietor can value all the
potentially partnership assets
consume all their and this can be
personal assets costly.
and negatively
affect the financial
aspects of the
business
Lawsuits filed
against the
business are also
deemed as
lawsuits filed
against the owner;
creditors of the
owner or of the
business itself can
reach both the
business and the
owner’s personal
assets, and if such
lawsuits are
successful, the
owner is obligated
to pay the damages
with his or her own
money
Page 10
Table 3. Comparison of the Tax Profile of Business Forms

Categories Sole Proprietorship Partnership/Corporation
1. INCOME TAX
GRADUATED INCOME TAX RATE Annual Income Tax for
and 8% INCOME TAX Corporations and
Partnerships:
Quarterly: BIR Form 1701Q
BIR Form 1702 - Annual
Yearly: BIR Form 1701A
Income Tax Return (For
Corporations and
Copies of Tax Credit Certificates
such as BIR Form 2307
Partnerships)
Esubmission of SAWT – Summary Deadline:

Alphalist of Withholding Taxes
Final Adjustment Return or
Annual Income Tax Return - On or
Quarterly: May 15 for the first
before the 15th day of the fourth
quarter of the current year,
month following the close of the
August 15 for the second quarter
taxpayer’s taxable year
of the current year, and November
15 for the third quarter of the
current year
Yearly: April 15 of the following

year
Quarterly Income Tax for
Corporations and
Partnerships
BIR Form 1702Q - Quarterly

Income Tax Return (For
Corporations and
Partnerships)
Deadline:
Corporate Quarterly Declaration

or Quarterly Income Tax Return -
On or before the 60th day
following the close of each of the
quarters of the taxable year
2. PERCENTAGE TAX
NON VAT or Percentage Tax Quarterly Percentage Tax under
Sections 116 to 126 of the Tax
Code, as amended
It is a type of tax applicable to
individuals with yearly gross Persons, who are not
sales or receipts of less than
VAT-registered, who sell goods,
P3,000,000.00 and pays regular
properties or services, whose annual
Graduated Income Tax from 0 to
gross sales and/or receipts do not
Page 11
35%. exceed three million pesos

(Php3,000,000.00) and are exempt
from value-added tax (VAT) under
BIR FORM: Section 109 (BB) of the National
Internal Revenue Code, as amended
Quarterly: BIR Form 2551Q by Republic Act (RA) No. 10963.
Documentary Requirements
DEADLINE FOR FILING AND BIR Form 2551Q - Quarterly

PAYMENT: In general following Percentage Tax Return Form
calendar year:
Duly issued Certificate of
Quarterly: Creditable Tax Withheld at Source
(BIR Form 2307), if applicable
April 25 of the current year – for
the first quarter Duly approved Tax Debit Memo, if
applicable
July 25 of the current year -for
the second quarter For amended return, proof of
payment and the return
October 25 of the current year for previously filed
the third quarter
Authorization letter, if filed by an
January 25 of the following year authorized representative
for the fourth quarter
Copy of Certificate of Registration
issued by Cooperative
Development Authority for
cooperatives, and from the
VAT or Value-Added Tax National Electrification
Administration for electric
It is a type of tax applicable to cooperatives
individuals with yearly gross
sales or receipts of more than
P3,000,000 or chooses to be VAT
registered regardless of the
amount of sales.
There are two taxes to be

considered:
Output VAT – is computed as

follows: Sales x 12%. It is a VAT
imposed on sales.
Input VAT – is computed as follows:

Purchases x 12%. It is a VAT
imposed on purchases or expenses.
Page 12
BIR FORM:
Monthly: BIR Form 2550M
Quarterly: BIR Form 2550Q
REQUIRED ATTACHMENT, in
general and if applicable:
Quarterly: Esubmission of
Summary List of Sales and
Purchases (VAT RELIEF)
DEADLINE FOR FILING AND

PAYMENT: In general following
calendar year:
Monthly: 20th day of the following

month
Quarterly:
April 25 of the current year – for

the first quarter ending March 31

the second quarter ending June
30
October 25 of the current year for

the third quarter ending
September 30
January 25 of the following year

for the fourth quarter ending
December 31
3. WITHHOLDING TAX WITHHOLDING TAX –

COMPENSATION RESPONSIBILITIES OF THE
EMPLOYER
Monthly: BIR Form 1601C Submit the duly accomplished

BIR Form Nos. 1902 and/or 1905
Yearly: BIR Form 1604-C to the RDO within thirty (30) days
from receipt;
Page 13
Yearly:
Withhold the tax due from the
Esubmission of Alphalist of employees following the
Employees prescribed manner;
Distribution of BIR Form 2316 to Remit the amount of tax withheld

employees from the employee within the
prescribed due dates;
Substituted Filing of BIR Form
2316 to BIR, if applicable Do the year-end adjustment;
Submit Annual Information return

(BIR Form 1604-C, 1604-F and
DEADLINE FOR FILING AND
1604-E), including the required
PAYMENT: In general following
alphabetical list of
calendar year: employees/payees on or before
January 31 following the close of
Monthly: Every 10th of the the calendar year;
following month
Issue the Certificate of
Quarterly: Compensation Payment/Tax
Withheld (BIR Form No. 2316) to
April 30 of the current year – for the employees; and
the first quarter ending March 31
Refund excess tax withheld.
the second quarter ending June
30
October 31 of the current year for

the third quarter ending
September 30
January 31 of the following year

for the fourth quarter ending
December 31
Annual:
FOR COMPENSATION: BIR FORM

1604C – January 31 of the
following year
WITHHOLDING TAX –
EXPANDED
Monthly: BIR Form 0619E
Quarterly: BIR Form 1601EQ

Page 14
Yearly: BIR Form 1604-E
Quarterly:
Distribution of BIR Form 2307 to

payees/vendors/suppliers
Esubmission of QAP – Quarterly

Alphalist of Payees
Yearly:
Esubmission of Alphalist of
Payees
4. ACCOUNT INFORMATION
FORMS A revised BIR form designed in line BIR Form 1702 AIF - Account
with the BIR Integrated Tax System Information Form (For
(ITS) to be used as attachment to Corporations and Partnerships)
BIR Form No. 1701 and to be
accomplished by self-employed NOTE: Pursuant to Sec. 71 of RA
10963, otherwise known as Tax
individuals, estates and trusts
Reform Acceleration and
engaged in trade and business,
Inclusion Act, amending Sec. 232
which shall contain the taxpayer's
of the Tax Code, as amended, in
business profile information and relation to Revenue Memorandum
other relevant data to be lifted Circular No. 6 – 2001,
from the Audited Financial corporations, companies or
Statements. BIR Form 1701 AIF is persons whose gross annual
not, however, required for individual sales, earnings, receipts or output
taxpayers who opted for Optional exceed P3,000,000 may not
Standard Deduction (OSD). accomplish this form. In lieu
thereof, they may file their annual
income tax returns accompanied
by balance sheets, profit and loss
statement, schedules listing
income-producing properties and
the corresponding income
therefrom, and other relevant
statements duly certified by an
independent CPA.
Documentary Requirements
None
References:
1. Abrugar, V. (2011, June 4). Advantages and Disadvantages of Forming a Corporation. Business
Tips Philippines. Retrieved August 26, 2022, from
https://businesstips.ph/advantages-and-disadvantages-of-forming-a-corporation/
Page 15
2. Forms Philippines. (n.d.). 1701-AIF account information form (AIF) for self-employed individuals,
estates and trusts (engaged in trade and business). 1701-AIF Account Information Form (AIF).
Retrieved August 27, 2022, from
https://formsphilippines.com/viewform/215/account-information-form-aif-for-self-employed-individual
s-estates-and-trusts-engaged-in-trade-and-business-
3. In.Corp Global Pte Ltd. (2022, June 22). How to set up a one person corporation in the Philippines
for foreign entrepreneurs. InCorp Global. Retrieved August 26, 2022, from
https://www.incorp.asia/philippines/learn/how-to-set-up-one-person-corporation/
4. Philippine Business . (2022, April 8). How to register a sole proprietorship in the Philippines.
Philippines Business Registration. Retrieved August 26, 2022, from
https://philippinesbusinessregistration.com/company-registration/sole-proprietorship/#:~:text=Regist
er%20with%20the%20Barangay%20Office,acquire%20a%20Certificate%20of%20Registration.
5. Republic of the Philippines - Bureau of Internal Revenues. (n.d.). Income tax - bureau of internal
revenue. Income Tax. Retrieved August 27, 2022, from
https://www.bir.gov.ph/index.php/tax-information/income-tax.html
6. Republic of the Philippines - Bureau of Internal Revenues. (n.d.). Percentage tax - bureau of internal
revenue. Percentage Tax. Retrieved August 27, 2022, from
https://www.bir.gov.ph/index.php/tax-information/percentage-tax.html
7. Republic of the Philippines - Bureau of Internal Revenues. (n.d.). Withholding tax - bureau of
internal revenue. Percentage Tax. Retrieved August 27, 2022, from
https://www.bir.gov.ph/index.php/tax-information/withholding-tax.html
8. Security Bank Corporation. (2021, May 12). How to register a partnership business in the
Philippines. Financial Blog. Retrieved August 26, 2022, from
https://www.securitybank.com/blog/how-to-register-a-partnership-business-in-the-philippines/
9. Tan, D. R., Services, M. P. M. C., Arces, G. E., Gyn, R., Yanuaria, M. L. M., Advance, B. C., Allan,
Mac-mac, Evelyn, Liao, R., Merlyn, Bobby, L, T., Mia, Smith, R., Rachel, Calicdan, R., Cerio, V.,
Arshad, M., … Shirlz. (2021, June 24). How to register a corporation in the Philippines? MPM
Consulting Services Inc. Retrieved August 26, 2022, from
https://mpm.ph/how-to-register-a-corporation/
10. Tasmanian Government. (n.d.). Partnership – advantages and disadvantages. Partnership –
advantages and disadvantages | Business Tasmania. Retrieved August 26, 2022, from
https://www.business.tas.gov.au/manage_a_business/tax/choosing_a_business_structure/partnersh
ip_advantages_and_disadvantages
11. Yanuaria, M. L. M. (2021, May 26). Taxes applicable to sole-proprietors, freelancers, self-employed
and professionals. mpm.ph. Retrieved August 26, 2022, from
https://mpm.ph/taxes-sole-proprietors-freelancers-self-employed-professionals/
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Comparative Analysis of the Steps to Register a Business in the Philippines

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Comparative Analysis of the Steps to Register a Business in the Philippines

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Student: YANG, MIGUEL

Table 1. Steps to Register the Business (Philippines)

1. Submission of 1. Register a 1. Register your 1. Reserve and 1. Submit your

Claim your SEC

2. Obtaining 2. Register with the 2. Get a Barangay 2. Acquire 2. Submit your

Receipt (proof of Title (if owned)

4. Obtaining the 4. Obtain a 4. Submit hard

Here’s our in-depth

your business in Permit, you can now it is already in use, it

Register your book

Table 2. Characteristics of the Legal Forms of Business

Minimal Your business is It can exist with Perpetual

Easy to register. More capital is Shares of Complete control

Sole proprietor has Greater borrowing It attracts more No minimum

Easy to manage, High-caliber You can be an An existing

Sole proprietor There is The corporation

It’s easy to change

Disadvantages Sole Proprietorship Partnership Regular One-person

Sole proprietor is The liability of the Incorporation is More complex than

business unlimited Commission (SEC) requirements.

Sole proprietor Each partner is Corporations are Some limitations

No clear-cut There is a risk of Limited liability Tax obligations are

Table 3. Comparison of the Tax Profile of Business Forms

Esubmission of SAWT – Summary Deadline:

Yearly: April 15 of the following

BIR Form 1702Q - Quarterly

Corporate Quarterly Declaration

35%. exceed three million pesos

DEADLINE FOR FILING AND BIR Form 2551Q - Quarterly

There are two taxes to be

Output VAT – is computed as

Input VAT – is computed as follows:

Monthly: BIR Form 2550M

Quarterly: BIR Form 2550Q

DEADLINE FOR FILING AND

Monthly: 20th day of the following

April 25 of the current year – for

July 25 of the current year -for

October 25 of the current year for

January 25 of the following year

3. WITHHOLDING TAX WITHHOLDING TAX –

Monthly: BIR Form 1601C Submit the duly accomplished

Distribution of BIR Form 2316 to Remit the amount of tax withheld

Submit Annual Information return

October 31 of the current year for

January 31 of the following year

FOR COMPENSATION: BIR FORM

Monthly: BIR Form 0619E

Quarterly: BIR Form 1601EQ

Yearly: BIR Form 1604-E

Distribution of BIR Form 2307 to

Esubmission of QAP – Quarterly

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