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Legal Requirements for Starting a Business in the Philippines

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.

Basic requirements

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.

Special requirements

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.

Comments

  2. I have a question, I’m planning to start a small home-based kakanin business,the food/products would be made from my own kitchen, not from a different location which afterwards I would sell to friends etc. I want to ask (1) aside from the DTI, BIR, mayor’s permit requirement, what other papers do I need to have and if there’s any how can I acquire those? (2) Since my business would be my main source of income, do I need to file separately an Income tax return and the taxes required for businesses?
    Thank You! Nice article, keep it up!

    • Hi Lloyd,

      How’s your business doing? You’ve written your comment 4 years ago and I have only noticed it today.

      For your first question. (I’d assume you have not started your business yet and still wants to start in putting up your “kakanin” business.)

      If you are only starting up and chose to be a sole entrepreneur;
      1. You can go to any DTI Office or Negosyo Center office near you to register the Business Name or Trade Name for your “kakanin” business. Registering your business name in Department of Trade and Industry will took you about less than an hour depending on the pool of clients on the day that you go to DTI or Negosyo Centers. Remember that it is on a first come first serve basis. Before you go to DTI/Negosyo Centers near you prepare the following documents needed in applying for Business Name in DTI/Negosyo Center ( 1. Two (2) copies of duly accomplished application form signed by the owner. Note that only the owner is authorized to sign the application form. 2. Presentation of original copy of one photo-bearing national issued Identification Document (ID) with signature. 3 Payment of registration fee plus documentary stamp tax.) Or you may want to visit this site for your other queries regarding business name registration. http://www.business.gov.ph/web/guest/faqs

      2. Get Barangay Business Permit in the barangay hall where you want to put up your business.
      Since you’ve mentioned that your business place is also your kitchen at home. You can get your Barangay Business Permit in the barangay where you reside. “note: that there are also cases that Business Address/Location is different from your residence address so you may want also to check on that.” Before getting Barangay Business Permit you must accomplished/get first your DTI Business Name Certificate

      3. Get Municipality or City Business Permit in the municipal/city hall where you want to put up your business. (Note that some of the requirements may not be applicable to your business)

      Below are the requirements in getting a Mayor’s/Municipality/City Business Permit
      1. Certification – either one of the following :
      DTI Business Name Certificate; or
      SEC Articles of Partnership / Incorporation
      2. Barangay Clearance / Permit
      3. Contract of Lease or land Title/ Tax Declaration
      4. Authorization letter of owner with ID
      5. Sketch of Location
      6. Occupancy Permit
      7. Locational Clearance
      8. Public Liability Insurance
      9. Community Tax Certificate (Cedula)
      10. Fire Permit
      11. Sanitary Permit
      12. SSS Clearance
      13. Philhealth Clearance
      14. Pag-ibig Clearance

      4. Register your business in Bureau of Internal Revenue
      List of Requirements:
      1. Accomplish in 2 original copies (BIR Form 1901 and 1903)
      2. Accomplish in 3 original copies (BIR Form 1906, 0605 (for Reg. Fee) and 2000)
      3. Sample Receipt of Job Order (from printing services accredited by BIR)
      4. Mayor’s Permit (Orig and Xerox)
      5. DTI/SEC Certificate (Orig and Xerox)
      6. Columnar, Ledger, Journal (provided by BIR???? not sure)
      7. Email address and contact numbers
      8. Must attend a BIR Seminar

      As a start-up above must suffice for you to operate legally as a business. But in the future, as you grow your business you may want also to consider having your “kakanin business” be certified by FDA – Food and Drug Administration.

      Good luck working on the above requirements. And please avoid fixers as it will only add up to the cost when you start your business. Every thing you need to know is already available in the internet.

      For your second question:
      Since, you have mentioned that the “kakanin business” would be your only source of income then BIR would only get the taxes due from your “kakanin business”.

      Below are the taxes you need to report to BIR.
      1. Percentage Tax – To be reported monthly
      2. Business tax
      3. Witholding Tax – To be reported quarterly

      Please refer to this link for more of your BIR related concerns: https://www.rappler.com/business/151205-askthetaxwhiz-startups-taxes-frequently-asked-questions

      • Is it still legal if I stopped in the Barangay Business Permit process? and not redirecting to the Mayor’s Permit?

  3. Dear Sir,

    I have this small business in our province with seven employees, i would like to ask your good-self if SSS membership is mandatory for my employees considering that their salaries are on commission basis and my firm’s net monthly income is approximately 17K only. They already have their PHILHEALTH that my office is currently giving them. Thank you and Good Bless

    Joseph

    • Hi Sir. If your arrangement or contract with your workers are employment or you have an employee-employer relationship with them, I think you are required to remit their SSS contributions as an employer.

  4. Good day sir.

    I started selling cellphone batteries through online and I only use Facebook and OLX to market it. But now that I have my job, I’m having trouble managing my time and meeting my customers. So now I’m planning to sell online through the online shop LAZADA. But they require these requirements:

    1. BIR registration
    2. DTI or SEC registration
    3. Valid Business Permit

    Can you suggest the first step to take?

  5. Hi,

    May i ask, if the company have two warehouses located in one municipality in one barangay but different address. do i need to have business permit separately?

  6. Hi, I just wanted to ask. What certification do I need to get for us to be sold our product in the philippines?

  7. Hi, I would like to ask, what if the school already operated last year without any basic requirement or registration (SEC, DTI, BIR….) And they decide to register on the current year? Is it ok?

    Also, is their a need for them to have their FS for last year be audited?

    Please advise. Thank you.

  8. Magtatayo sana ang amo ko nang companya sa pilipinas maliit na maintenance company ano ba ang dapat unahin at anong mga requiments ito at mga magkano ang preso taga requrments

  9. Hi Sir!

    I’m Currently working in newly start company, But they not yet registered in any government mandated agency, As of now were planning to register, My question is , this type of problem can affect our operation or not?

    Thank you!

  10. Im planning to sale products through internet or online market.. I dont have enough money to have office to operate it. so, if there any permit for me if I used my online market?

  11. hi Sir,

    Can you please help us sharing info related on “required permits to register a catering company here in the Philippines?” What all government agencies regulate the catering business?

    thanks
    KMR

    • Registration Requirements for Catering Business:
      1) Register your business name with the Department of Trade and Industry.
      2) Obtain a barangay clearance.
      3) Get Sanitary Permit.
      4) Get a Mayor’s Permit.
      5) Get a TIN from the Bureau of Internal Revenue.

  12. Please i need advise

    We would like to open branch (office) in the Philippines, we are construction company. any ideas how and the procedure for the documents need to do.

    Thanks!

    • Hello,

      You must register a branch office with the Securities and Exchange Commission (SEC) who will issue a license to operate a business in the Philippines.

      The following are basic requirements:

      1) Fill up SEC Application Form F-103 (Application of a Foreign Corporation to Establish a Branch Office in the Philippines).

      2) Name Verification Slip of the company name to be used.
      You can visit the SEC i-Register, the web-based Company Registration System of Philippines SEC, to verify and register online.

      3) Authenticated copy of the Board Resolution authorizing the establishment of a branch office in the Philippines.

      4) Proof of Inward Remittance such as a certificate of bank deposit. As a 100% foreign-owned entity, a branch must have a capital investment of at least US$200,000.

      5) The latest audited financial statements of the head office.

      6) The Articles of Incorporation of the head office.

      7) Resident Agent’s acceptance of appointment (not necessary if the agent is the signatory in the application form).

      All documents must be in English and authenticated by the Philippines Embassy/Consulate of the home country.

      Once the SEC has issued a license to operate, the branch office is required to obtain Philippines local business permits and register with the Bureau of Internal Revenue.

  13. Hi sir,

    We are planning to start-up a business and this is actually my first time. This business is solely engaged in selling fresh eggs (wholesale/retail).

    1. What legal requirements do i have to secure?
    2. Do i need to secure receipts for every sales transaction and maintain salesbook with stamp from the BIR?
    3. Do i need to register my personnel/staff with sss, pag-ibig or philhealth? Probably, i will hire only 2 sales personnel for my store.

    Thank you! Your reply is highly appreciated.

    • Hi Mr. Emy,
      1. The legal requirements will depend whether you are registering your business as a sole proprietorship, partnership or corporation. The requirements are already listed above.
      2. Yes, you have to register it with the BIR, along with your invoices and books of accounts.
      3. Yes, it is mandated to all employers to register with SSS, Pag-ibig and Philhealth. Even “kasambahay” are required, so why not the real employees?
      — I recommend you visit the DTI’ Negosyo Center in your area so you can get more consultations. Also, check if your business will be eligible as a BMBE. You may inquire that with the DTI.

  14. Hi. I’m securing my requirements for online store. I’m having a problem getting a Business Permit since they are requiring us a building and extension permit. Its a home based online store and I used my physical address. I followed requirement in their website but no Building and Extension Permit mention. Can you advise. I lived in Imus Cavite.

    • Hi, if you have registered your business using your home address, I think they will have to inspect it onsite – the address for zoning. After that, then maybe they can already issue a zoning certificate. They will also assess the building/real property/house if there are real property taxes to be settled.

  15. Hi. We are planning to put up an incorporation for freight forwarding/brokerage company. Is there such a bond? Some says we need to have atleast a million as required by SEC but i dont see any sa SEC site. Can you also give the one by one step. Thanks much for your help.

  16. I am starting nail spa business this October I already got my DTI Permit last September. Do I need to apply for Mayor’s permit that I can only use for 2 months and renew it on January or is there consideration to wait for January? Thanks in advance for the reply.

  17. Hi. You have to secure Mayor’s Permit, BIR Certificate of Registration, Official Receipts before starting operations even if it falls on December.

  18. Hi Sir,

    I am planning to build a small construction company. I have pooled several skilled people in different areas from electrical, tiling, to plumbing works but I have no idea where I should begin. The registrations, required papers, and all. This is my first venture to and I roughly got just over 100k to begin with.

    What are the exact things that I require to have for registration for a small construction firm? I’m from Dumaguete by the way.

    – Andrew

  19. Hi Sir,

    I have a question about registering our Partnership to SEC;

    1.) Does it require to have a Primary office address located in commercials? or I can use my residential dress?

    2.) Do we need to open a Joint bank account first before the SEC registration?

  20. Hi! I’m planning to acquire my own food truck, preferably in Makati area. I’m confused as to what rules or laws to follow on operating it. I’ve been told to get the usual permits like DTI, barangay permit, mayor’s permit and BIR. Are there legal complications that I should know about? Tips on starting a food truck business here in the Philippines?

    • Hello. Yes, get the usual business registrations DTI (for proprietorship), SEC (for partnerships and corporations), barangay permit, mayor’s permit, BIR, Philhealth, Pag-ibig, SSS. Actually, when you register and get a Mayor’s permit, they will require you the other requirements like sanitary permit since you’re operating a food business. It’s a step by step process, like you cannot register with the Mayor’s permit without barangay clearance, sanitary permit, etc. It’s also advisable to go to the DTI negosyo center area near you to get some advice.

  21. Hi, me and my sister is planning to open a kids indoor playground located inside the mall. I’m just wondering what to do first? Do we need to complete all the requirements first or open the business first and then complete the requirements? thank you and god bless.

    • Hello. You cannot operate a business yet without a license to operate. Some businesses operate without a license/permit but the BIR, Mayor’s office, and other agencies could tax map your place and impose a penalty on your business. Also, you cannot sell goods or services without issuing official receipts/invoices. There’s a hefty penalty for a business which does not issue official receipt. Furthermore, you are planning to have a business inside a mall, which is a popular location. Thus, I advise that you secure permits, licenses and official receipts first before operating your business.

      • Hello PO. I’m planning to open up a small photocopying center in school where they allowed me to rent a space for my photocopying machine. What will be the needed requirements to get an official receipt for my clients?

  22. Hello po. Meron po kaming maliit na mamihan. 1700 pesos po ang capital with 300 to 500 na kita on a daily basis. My questions po are:
    1. Need pa po ba talaga ng permit? If so, accdg po s mga nabasa ko, kung tama po ako ng understanding, do i need to secure a business name po muna before getting brgy clearance? o brgy clearance and mayors permit po muna? At kht wla ng business name? Do i also need DFA PERMIT? We are basically trying and chdcking our market. TIA po. Godbless

    • Hello. I would recommend that you first visit the nearest DTI’s Negosyo Center in your area to check if your micro business is eligible to be registered as a Barangay Micro Business Enterprise (BMBE). They will also give you a consultation about your business. Once registered as BMBE, you will be eligible to be exempted from paying Income Tax with the BIR, and other privileges. After DTI, or after securing your business trade name, you can already go for Mayor’s Permit. DFA is Department of Foreign Affairs? I don’t think you need it. If you mean FDA, I think you will only need it if you are into manufacturing or processing food products.

  23. Hi, Good day. I am applying for a business permit (sole Proprietor) and would like to secure a mayor’s permit for conducting my business. My question is, when paying for the for the following: Business tax, Sanitary inspection fee, garbage fee, fire inspection fee, business plate, sticker, should the receipt be named after my business or should it be named under me.

    Hoping for your assistance. THank you!

    • Hello. When applying for Mayor’s Business Permit, they will require you a DTI Certificate of Business Name Registration. The business name in your DTI will be the one that will be used. But actually, since your business is a sole proprietorship, you and your business will be considered as one legal entity for tax purposes.

  24. Good day,

    Hi mam/sir, may i ask or any idea what are the requirements or first step on how to start or register a small construction firm, actually we have, with my brother-in-law, im architect, ill get the project, manage, my brother in law is finance only, but we dont have contract about shares, verbal only. Now i decided to start construction firm for my own. Any advise? Thankyou and God bless

    • Hi Alvin, to register your construction firm, you should have the basic registration with the following government agencies.
      1. DTI for your trade name, if forming a sole proprietorship
      2. SEC for your corporate name, if forming a partnership or corporation
      3. Mayor’s permit
      4. BIR for books of accounts, official receipts, and filing of taxes
      5. SSS, Philhealth, and Pag-ibig for your employer’s registration.

      Additionally, you should also get a license from the Philippine Contractors Accreditation Board or PCAB so you can be able to join bidding and get contracts from the government’s projects.
      Read this page: https://www.dti.gov.ph/media/advisories/10043-pcab-e-filing

  25. Hello I’m thinking to start a simple brokerage business (Especially HMO/ Health Insurance) which will be handle by only 2 person. I just want to know regarding the Paid up capital. Do I really need to have that amount? can someone please enlighten me/guide me on what to do? Thank you.

  26. Hi! I have a commercial space (but not under my name yet) for rent. The lessee wants an OR from BIR since they are a registered company.

    Can I form my own company with DTI just so that I can provide BIR receipts to them?

    Thank You.

  27. Hi Sir, Plan ko po magstart ng microfinance or lending company. ask lang po sana ko kung ano ano pong permit ang kailangan before makapagstart?

    • 1,000,000 peso po ang capital ng Microfinance Company(non-stock registration at the SEC) . Minimum of 5 partners. Pero nanay ko dati nagNegosyo ng pautang, di naman sya binayaran hanggang sa namatay na sya. Wala kasing nakukulong sa utang based on our Constitution.

  28. Hi Sir, pwede po bang sa Metro Manila mag apply ng DTI permit tapos sa probinsya po yung business? kasi nasa Metro Manila po nakabased yung mg apply sir. Thank you so much. po

  29. Hello,

    I purchased a couple of condo units that i am planning to rent out, both as short and long term rentals. Do i need to register this as a business? If so, ano pong mga requirements and kelangan to operate my rental properties?

    Thanks in advance.

  30. What is the tax for sole proprietor and partnership for a laundry business if I invest 1.5m ?

  31. Hello. Rental income is subject to income tax and other related taxes in the Philippines. And since you are renting out a couple of units which could be long-term, it is ideal to register it with the BIR. Your tenants, especially the ones renting for business may ask for your official receipts, hence, you will still be forced to register your rental business. Lease contracts documents are also subject to documentary stamp tax, thus, your rental transactions should comply with the BIR.

  32. Many thanks for a very informative site.

    Can you please let me know if there is a time limit for accomplishing the rest of the business registration requirements after the initial SEC or DTI registration if i do not intend to operate the business? For example, after securing my SEC registration, can i put the rest of the process (baranggay, mayor’s permit, and BIR) and business operations on hold for a few months? Thanks.

    • Hello Danny, when you register your corporation with SEC there will be issuance of original shares of stock which is subject to documentary stamp tax. This DST is due within 5 days after the close of the month where the issuance of the documents were made. Therefore, it is advised that the corporation be registered immediately with the BIR to file and pay the corresponding tax and return to avoid penalties. A business is required to be registered with the BIR before it commences its business operation or on or before any tax will become due.

  33. Hello sir! May I ask about zoning?

    Is it LEGAL if I want to start an office in a unit/apartment designated as residential? If I want to start a business with a few employees (eg. 10), and that is in our apartment.

    I’ve been looking for zoning laws about this issue. Thanks

  34. Hi

    As a foreigner, could I set up a corporation with my minor children(Philippine nationals) as the 60% shareholders?

    Many thanks.

  35. Hi. I’m thinking to open business in the philippines. like sell pharmaceutical products of foreign country. what kind of permit I need?