Explains the Steps/Procedures in making the business legal

How to Start a Business?

The Philippines is no more just a place for leisure; starting a business in the Philippines for
foreigners has become simpler over the years. The government is offering incentives and
supporting a Build-Operate-Transfer (BOT) investment scheme to attract businessmen to
invest and start their business in the country. The Philippine government has simplified the
incorporation process for all kinds of businesses to encourage investors and entrepreneurs.
Here is the simple procedure for starting a business in the Philippines:
1. Choose a Business Structure

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.

2. Register a Business Name

The next step in starting a business in the Philippines is to get registered the proposed
business name with the following departments, according to the type of business:

 Sole proprietorship – The Department of Trade and Industry (DTI)

 Corporation/Partnership – Securities and Exchange Commission
 Cooperative – Cooperative Development Authority

3. Pay the Minimum 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
 Company particulars including information on directors, officers, and stockholders

5. Notarize the 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. Obtain the 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-laws
 Treasurer’s affidavit (notarized)
 Statement of assets and liabilities
 Registration data sheet with particulars on directors, officers, stockholders, and so forth
 Written undertaking to comply with SEC reporting requirements (notarized)
 Written undertaking to change corporate name (notarized).

Once you complete all these steps, SEC will automate your TIN. This step takes an average
of 2 days to complete.

7. Register with 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 lease
contract, and business plan. The fee for Barangay Clearance ranges between PHP 300- PHP
1,000.

9. Pay the 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. It must not be higher than PHP
500. 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; and
 Articles 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:
 Department of Labor and Employment (DOLE) – For occupational safety and Health
standards
 PhilHealth – For availing Medicare benefits
 PAG-IBIG fund – Mandatory for employees covered by the Social Security System (SSS)
 Department of Environment and Natural Resources (DENR) – For availing an
Environmental Compliance Certificate

Requirements for Doing Business in the Philippines

For Sole Proprietor Registration For Corporate Registration

 A copy of government issued ID  Verification slip form

 A duplicate proposed business
name registration form
 Payment of registration fees fixed
on territorial based with
documentary stamp tax
 Complete employee data form
 Copy of Municipality permission
letter
 Articles of incorporation
 Notarized bank certificate
 Treasurer’s affidavit
 Written undertaking to change the
name of the corporate by trustee
or Director
 Clearance certificate from other
government agencies
 Foreign investment application
  Community tax certificate
 Location and Barangay clearance
 Fire safety and electrical inspection
certificate
 Occupancy certificate and building
permit
 Contract of lease, if any
Activity 1
Write the steps in registering your business. Record them in the correct order. Do this in
one whole sheet of paper.
form (for foreign corporation
subsidiaries
 List of members and contributed
amount certified by the secretary
 Registration fee
 Complete employee data form
 Copy of Municipality permission
letter
 Community tax certificate
 Location and Barangay clearance
 Fire safety and electrical inspection
certificate
 Occupancy certificate and building
permit
 Contract of lease, if any
Page 24 of 33
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2
Write down the requirements needed to register the business.
Proprietor Registration Corporate Registration

Let us apply what you have learned

Answer the following questions.
1. Why do we need to register the business?
2. What are the connections/functions of the following offices or agencies
like SSS, BIR, DTI, BIR and DENR to the business? Explain your answer.
3. Give your reasons why business name is very important to startup your
business?

Criteria Score
Reasons 5
Spelling/Grammar 5
Organization 5
Relevance 5
Total 20