Small Businesses in the Philippines

Small businesses in the Philippines can be defined according to the size of assets, size of equity capital, and number of employees.

The Magna Carta for Micro, Small and Medium Enterprises (RA No. 6977, as amended by RA 8289, and further amended by RA 9501) defines a small business as any enterprise or business activity engaged in the major sectors of the economy (i.e., industry, trade, services, practice of profession, operation of tourism-related establishments and agri-business) whether single proprietorship, cooperative, partnership or corporation whose total assets, inclusive of those arising from loans but exclusive of the land on which the particular business entity’s office, plant and equipment are situated, are ranging from more than P3,000,000 to P15,000,000.

If the total assets stated above will amount to P3,000,000 or less, they can be considered micro businesses. If ranging from more than P15,000,000 to P100,000,000, they can be considered as medium enterprises. And if the total amount of those assets will exceed P100,000,000, they might be considered as large enterprises. Businesses are also considered large enterprises if they are publicly listed companies or if they are operating public utilities.

Businesses can also be defined according to the number of employees. Micro businesses usually employ less than 10 workers, while small businesses employ 10 to 99 workers. Moreover, medium enterprises employ 100 to 199 workers, while companies employing 200 employees and above could be considered as large businesses.

Determining whether a business is micro, small, medium or large is important because the size of a business is a factor used by the government when it comes to regulation and support. For example, MSMEs (Micro, Small and Medium Enterprises) are covered by The Magna Carta for MSMEs which aims to promote MSMEs in the Philippines. Micro businesses should also be determined if they qualify as BMBE under R.A. 9178 so that they can avail the benefits provided by that law, such as exemption from income tax, exemption from the coverage of the Minimum Wage Law, priority to government financial assistance, technology support and others.

As you learn, businesses in the Philippines are categorized in to micro, small, medium, and large enterprises. You have to determine what kind of business you have or you will have to know what laws, rules, regulations, and privileges are available for your business.

So what business do you have now or are you planning to start?

It doesn’t really matter if you can only start a micro or small business. What matters is you will start it right and honest. Most businesses in the Philippines start as micro businesses or enterprises which have less than 3,000,000 in total assets (excluding land). That’s even smaller than a small business whose assets are more than P3,000,000. But these categories only measure financial assets. So there’s nothing to be ashamed of. Remember that the real size of a business is measured by the usefulness and happiness it gives to yourself (passion), to your workers (leadership), to your customers (quality), and to your community (social responsibility).

If you are just planning to start a small business, there are many ideas and opportunities that will come from your mind. However, you should also take great consideration on the things that will come from your heart. In other words, you have to enter into a business that you really love.

Small businesses have assets ranging from P3,000,001 to P15,000,000. With these assets, Filipino entrepreneurs can already operate a business, such as a restaurant, lending company, pawnshop, travel agency, money changer, service firms, online business, and any business that they think they can stick with until they achieve ultimate success. Filipino businessmen can also consider franchising if they think a franchised business is feasible for them.

There are many large companies in the world that started small. Some of them are even started at their founders’ home and others were started at their garage – just think of Google and Facebook. Filipinos just need to boost their entrepreneurial spirit and be persistent in realizing their business goals. The government should also intensify their support to all micro, small and medium businesses in the country, as well as to the talented and creative Filipinos who are just planning to start a business.

There are many reasons why Filipinos don’t start a business, and one of these reasons is the lack of effective and efficient implementations of laws that were supposed to promote entrepreneurship in the Philippines. But I feel that our government will keep on improving and many small businesses in our country will eventually grow and become bigger. It’s just a matter of unity and harmony. We pay taxes… and the government must spend or invest our hard-earned money wisely.