Business Tips Philippines: Business Owners and Entrepreneurs’ Guide

Business Tips Philippines, an online entrepreneurship, management & marketing guide for Filipinos, business owners, leaders & entrepreneurs around the world.

Add Business

Login

  • Home
  • Business
  • Management
  • Marketing
  • Business Category
  • About

15 Common Costs of Doing Business in the Philippines

March 15, 2016 Vic 1 Comment

Are you starting a small business in the Philippines? Starting a business is surely exciting, especially if it’s about your dream and passion. However, being a businessperson or an entrepreneur is not always fun, as it also comes with a lot of expenses. So before starting a business and imagining about all the profits and the glories you can achieve, consider these 15 common costs of doing business in the Philippines first.

1. Office space and building improvement
If you own a building or space which is ideal for your business, you may not need to rent. However, you will still spend money on building improvement to prepare it for your business. If you don’t own any building, you will need to rent. This will make you incur monthly rental expenses. Moreover, landlords usually require advance and deposit payments. Hence, this could be one of your major costs in doing even for a small business in the Philippines.

2. Business registration and licenses
This cost includes registration fees with the Securities and Exchange Commission (for partnerships and corporations), Department of Trade and Industry (for sole proprietorship businesses), Bureau of Internal Revenue (BIR), Mayor’s Office, and other required government agencies. Most of these permits and licenses are usually renewed annually.

3. Taxes
This cost includes the recurring taxes you will pay with the BIR, such as monthly percentage tax or Value Added Tax, quarterly and annual income tax, and monthly withholding taxes. Taxes also include the local taxes you will regularly pay with the local government. These taxes usually depend on the amount of your initial capital or gross sales.

4. Bookkeeping
Business registrations and compliance with the government are strenuous processes. Thus, you will most likely hire a bookkeeper to save your time and focus on the more significant and profitable steps of your business. Bookkeepers are usually hired in a monthly retainer agreement. The cost varies from business to business.

5. Legal fees
To avoid legal disputes and liabilities in the future, business owners should seek legal advice first before doing any major business decision. Legal fees also include notarial fees on important business documents, such as contracts and incorporation papers.

6. Furniture and equipment
Furniture and equipment are essential to run your business. You have to provide office tables, chairs, computers and other equipment for your workers or employees.

7. Utilities
Your computers and other equipment will not work without electricity. Your people cannot work without water. Electric and water bills are part of your monthly business expenses. You cannot live without them.

8. Employee salaries and benefits
This includes the cost of selecting and hiring the most qualified workers for your business. Their daily, semi-monthly or monthly salaries and other benefits (SSS, Philhealth, HDMF, bonuses, etc.) are one of the biggest costs you will incur in doing business, especially if you will provide services rather than sell goods.

9. Employee training and development
Not all the people you will hire are automatically fit to do the jobs that you expect them to do. You need to invest for their training to sharpen their talents and skills. If you will be coaching them personally, expect to spend a lot of time.

10. Travel and transportation
Speaking of time, transportation can be costly in the Philippines, especially if you’re doing business in Metro Manila due to heavy traffic congestion. Travel and transportation expenses also include cost of fuel and other costs of your business travels.

11. Internet and communication
This cost includes your monthly Internet and telephone bills. Internet in the Philippines can be slow and expensive, especially in the provinces. Thus, you might want to stretch your budget to have the most reliable Internet and telephone monthly service package.

12. Repairs and maintenance
What would you do if your computers do not turn on anymore? What would you do if your car’s engine is not already starting? Your office space, furniture and equipment will certainly wear and tear. Hence, expect to incur expenses on repairing and preserving them.

13. Insurance
Your business, employees and vehicles need insurance. The common insurances you would incur include business insurance (like fire insurance), car insurance, and life or disability insurance for your people.

14. Loan interest
Many Filipino entrepreneurs start a business without adequate capital coming from their own pocket. Consequently, they resort to getting loans with a promise to pay a monthly interest aside from the principal. Some business owners also use their credit cards to pay suppliers, thus, incurring interests and other charges.

15. Marketing, sales and advertising
A new business need to reach its target market for the first time. This requires a series of advertising, paying commissions to sales agents, and other marketing efforts. If you’re starting a business, you have to set a budget to stand out from the crowd. And even after 5 or 10 years, you would still need to continue implementing an effective marketing strategy to constantly win your competition.

There you are. Those are only some of the common costs and expenses that you should expect when starting and operating a business in the Philippines. They don’t include yet the “cost of materials” or “cost of goods to be sold” for retailers and manufactures. Those business expenses will also depend on your specific industry, location, competitors, and business size.

If you want to succeed in business, don’t ignore them. You have to come up with a sound financial plan. Finally, don’t forget that you have to spend, not only money, but also time, passion and dedication in your business to succeed.

What other business costs or expenses in the Philippines can you add to the list? Feel free to make a comment below.

Vic
Vic

Victorino Q. Abrugar is a marketing strategist and business consultant from Tacloban City, Philippines. Vic has been in the online marketing industry for more than 7 years, practicing problogging, web development, content marketing, SEO, social media marketing, and consulting.

Business business cost Philippines, business expenses, business in the Philippines, cost of doing business, types of business cost

Comments

  1. Sheila says

    April 13, 2016 at 10:07 am

    Hi, would like to know process and details on taxation part; I’ve always been not too keen on documents, just want to know how extensive documentation is – with complete documents and BIR registration na lang ang pending,

    – How do we go about BIR registartion – process and documents/attachments please 🙂 Will this be a one-day filing including ATP?

    -When we file once a year, for general merchandise, what are the documents and attachments we need to prepare on filing day? Will it just be the booklet/copies of issued receipts?
    -What are the operating expenses that we can exclude in filing for a gen merch business (e.g. gas, shipping,etc ? )
    -Is it a one-day filing?

    – Request also for link please within your site on how to compute annually. Up until what day do we compute?

    Thank you so much!!!! 🙂

    Reply

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Like Us on Facebook

BusinessTips.ph

Get Our Latest Business Tips

Latest articles

Home Dream

5 Ways You Can Actively Save Up for Your Dream Home

How to Find a Reliable Online Loan Provider in the Philippines: A Practical Guide

Is a Call Center Career a Viable One in 2025? 6 Insights

Bookkeeping

Bookkeeping 101: 7 Fundamentals Every Startup Owner Should Know

Loan

How to Choose the Right Business Loan for Your SME

Top Business Articles

How to Register Business Name with DTI Philippines

How to Register Your Business with the BIR Philippines

How to Close a Business in the Philippines

How to Register Your Home-based Business in the Philippines

Legal Requirements for Starting a Business in the Philippines

Top Marketing Articles

The Most Powerful SEO Technique in the Universe

36 Ways to Rock Your Small Business Online

What‘s the Best SEO Technique for Websites and Blogs?

Integrating Search Marketing and My Experience at MORCon 2013

What is the Essence of SEO?

© Copyright 2017 BusinessTips.ph · All Rights Reserved · Archives · Advertise · Terms, Disclaimer & Privacy Policy