General Guide on the Registration Process in the Philippines
Registration of a business in the Philippines involves completing various processes with different government agencies. Here are some of the things you need to know when registering a business in the Philippines.
1. Securing an SEC or DTI Registration
The first step in the process is to secure your business registration with the Securities and Exchange Commission (SEC) or the Department of Trade and Industry (DTI) whichever is applicable. Registration with the SEC is required only for partnerships and corporations, while for sole proprietorships, registration with the DTI through the Business Name Registration System (BNRS) is required.
Your registration with the DTI or the SEC will provide your business with an identity that will be used throughout the business registration process. Here’s how a corporation is different from a sole proprietorship and from a partnership to help you decide on what form of business organization to choose:
Item |
Corporation |
Partnership |
Sole Proprietorship |
Where to register |
SEC |
SEC |
DTI |
Duration |
Perpetual except as otherwise stated in the Articles of Incorporation |
Upon the death of the partners or |
Upon the death of the sole proprietor |
As to liability |
Limited |
Limited |
Unlimited |
As to capital |
No required capital except that required by special laws |
No required capital except that required by special laws |
No required capital except that required by special laws |
Management Structure |
Board of Directors |
Partners or managing partner/s as the case may be. |
The sole proprietor manages the business. |
Best for |
Growing businesses, investors, start-ups, those seeking limited liability. |
Professional firms, multi-owner ventures |
Micro businesses, small shops, online sellers |
If one chooses a corporation as a form of business ownership, note that it can be set up by at least one (1) or a maximum of fifteen (15) persons.
2. Registration with the Bureau of Internal Revenue (BIR)
The Bureau of Internal Revenue is an agency under the Department of Finance and is tasked to collect internal revenue taxes, such as income tax and value-added tax, among others. Registration with the BIR is required before one can go into commercial operations. Generally, registration with the BIR is done online through the Philippine Business Hub, but one can submit the documentary requirements manually. As previously explained, when registering with other government agencies, the business must first be registered with the SEC or the DTI, as this is one of the required documents to be submitted.
3. Business Permit issued by the Local Government Unit (LGU)
In the Philippines, registration with DTI or SEC, whichever is applicable, is not enough to begin commercial operations. The newly registered business must obtain a business permit from the city or municipality where it intends to operate. This will ensure that local taxes and regulatory fees will have been paid. Once the business has paid the required fees and taxes, the city or municipality will issue a business permit, which, as with other permits, must be posted in a conspicuous place at the registrant's place of business.
4. Registration with Social Agencies (Social Security System, Pag-IBIG Fund, Philhealth)
Employers in the Philippines are required to remit contributions on behalf of their employees, as mandated by special laws for the Social Security System (SSS), the Pag-IBIG Fund, and PhilHealth. Failure to make such required remittances may subject the business to penalties, business closure, and worse, criminal and labor cases. Thus, registration with SSS, Pag-IBIG Fund, and PhilHealth is required but is usually done after the business has been registered with the SEC, DTI, LGU, and BIR, as these agencies require information that can only be provided once the business is registered with them. Generally, the process is automated when registering a corporation through the Philippine Business Hub, but this is not true for sole proprietorships, where registration across different agencies is not yet integrated, so the business owner must personally visit their respective offices.
5. Special Registrations
Depending on the nature of the business, there may be a need to register with other government agencies. For example, if one intends to sell cosmetic products or medicines, one needs to secure a permit to operate with the Food and Drug Administration (FDA). Some businesses are also required to register with the Anti-Money Laundering Council or the National Privacy Commission if their business operations fall under their respective criteria.
This article was prepared by Morfe, Ceneta & Co., and CPAs for general information only and should not be used as a replacement for expert advice.