I usually read people over the Internet asking “what are the legal requirements for starting a business in the Philippines?”. This is one of the questions I have gathered in my attempt to answer all of the most common questions in doing business in our country. So how do you make your business legal or what are the legal requirements in establishing your company in the Philippines?
Firstly, I assume that your business will not be selling goods or services that are considered illegal according to the Philippine laws – I also presume that you already knew those kinds of products. If you are a minor or under the legal age of 18, you should also have a guardian since any business contract signed by a minor is voidable or annullable in the Philippines (Chapter 7 of the Civil Code of the Philippines).
The legal requirements for starting a business in the Philippines depend on its type of business and industry. Partnerships and corporations are required to be registered with the Securities and Exchange Commission (SEC), while single proprietorship businesses are not. Proprietorships are instead required to register with the Department of Trade and Industry (DTI) for the registration of their business name.
I noticed that some business starters are already considering their DTI certificate of registration as evidence that their companies are already legal to operate. But this is not the real case. The DTI certificate of registration only registers the “trade name” of a business but not the business itself. This doesn’t also give anyone a license to commence their business operation as they still need to obtain official receipts and invoices to issue to their customers. Furthermore, they still need to register with other government offices to comply with their requirements before business operation.
The following are the basic requirements to start commencing your business in the Philippines:
1. SEC registration – for registering as a partnership or corporation
2. DTI registration – for registering your business trade name (BTR)
3. Mayor’s business permit – for getting the license to operate in the city or municipality and payment of your local business taxes.
4. BIR registration – for getting TIN, official receipts and invoices, registering your books of accounts, and paying your national internal revenue taxes (Income tax, VAT or Percentage Tax, Withholding Taxes, etc.,).
5. SSS, PhilHealth, and Pag-Ibig Fund registration – for registering yourself or company as an employer and for remitting your employees’ contribution together with your employer’s share.
Usually, the BIR and the City/Municipality Office require the certificates of registration with the SEC or DTI before a business can be registered with them. Thus, you need to register through those offices to start commencing your business.
In early 2012, the government has launched the Philippine Business Registry (PBR) system – a one-stop shop for entrepreneurs who need to register with the various government agencies, such as the DTI, SEC, BIR, SSS, Pag-Ibig Fund and Philhealth. However, this service is only available to a few cities in Metro Manila and is not yet available nationwide.
Aside from the basic requirements, there are also special licenses or registrations that must be obtained by a business to start its operation. For example, banks, financing company, lending company, pawnshops, money changers, money remittance business, and other financing institutions are required to be registered with the Bangko Sentral ng Pilipinas (BSP). If you are manufacturing and selling products related to food and drugs, you also have to register with Bureau of Food and Drugs (BFAD). For schools and entities involved in providing education, they should register with the Commission on Higher Education (CHED) and Department of Education (DepEd).
To check a more comprehensive list of those legal requirements, please read our post about the basic and special business permits in the Philippines. You can also read our post on how to register your business in the Philippines for more reference.