Are you planning to start a business in the Philippines? Are you wondering how much will it cost to register and start a small business in our country?
Last year, I was able to register a small corporation, and I thought of sharing some of the information about the expenses I incurred to make my business come to life.
A corporation isn’t always a big company. In fact, the smallest possible paid up capital to register a stock corporation in the Philippines is only P5,000 — though this is not practicable since that amount is not enough to cover the cost of establishing a business in the country.
A corporation can still be considered as a micro or small business based on its amount of assets and equity.
What I am trying to point out is that everyone can start a corporation. You don’t need to have millions to start a corporate form of business in the Philippines.
So I registered and started one with my siblings.
Here’s the information about the small corporation I registered.
About the small business
Form of business: Stock corporation
Type of industry: Digital marketing services
Size of business: Micro business – family corporation
Location: Tacloban City, Philippines
Authorized capital: Php 1,000,000
Subscribed capital stock: Php 250,000
Paid-up capital stock: Php 62,500
Date of incorporation: October 24, 2014
Cost of Incorporation (Securities and Exchange Commission – Cebu Office)
Reservation of corporate name (90 days): Php120
SEC express lane registration form (stock corporation ): Php 600
SEC registration fee (for a paid up capital of 62,500): Php 2,730
Stock transfer book: Php 470
BIR documentary Stamp tax for the subscription of stocks: Php 1,250
Notarial fees (various incorporation documents): Php 1,400
Sub Total: Php 6,570
Visit this web page to compute your estimated SEC registration fees.
Cost of compliance with the BIR (Bureau of Internal Revenue)
BIR annual registration fee: Php 500
Documentary Stamp tax for the lease contract: Php 67
Books of account purchased at office supplies store: Php 100
Printing of official receipts (25 booklets) from an accredited printing press: Php 3,200
Sub Total: Php 3,867
Cost of Getting a Mayor’s Business Permit (Tacloban City)
Brgy. clearance fee: Php 350 (has increased to P500 in 2015)
Corporate community tax certificate: Php 500
Mayor’s business permit fee for new business: Php 2,504
Fire safety and inspection fee: Php 1,340
Sub Total: Php 4,694
Other costs and expenses
Supplies and printing of documents: Php 3,380
Fire extinguisher for fire safety compliance: Php 3,500
Bookkeeping for 3 months/processing of registration with SSS, PHIC and Pag-ibig: Php 6,000
Rent of a small office space (first 2 months and 1 month deposit): Php 18,480
Employee’s salary (one employee for the first 3 months): Php 36,000
Cost of telephone and Internet installation: Php 2,860
Sub Total: Php 70,220
Total cost: Php 85,351 (it already exceeded our paid up capital of Php 62,500)
Important notes and other costs to consider:
1. I did not include the travel and accommodation expenses I incurred in going to Cebu SEC Office from Tacloban City to personally process the incorporation. The total cost of transportation for going to and from the different government offices for several days is not also included above.
I did the incorporation myself since I already knew the processes. If you want to outsource the incorporation of your business, professionals and agencies may usually charge a minimum of P20,000, depending on the size and nature of your business.
2. The total cost above doesn’t include the cost of office furniture, office equipment, other utility expenses and other expenses. I have prioritized the office and installation of telephone so our address and telephone number can already be included in our official receipts and other business documents.
3. I was already tired after I got the SEC registration, BIR registration and Mayor’s permit so I decided to hire a bookkeeper to help me register our business with the SSS, Philhealth and Pag-Ibig.
4. I recommend hiring a bookkeeper or accountant for your business if you want to save time and money. Even though your business has not yet started operations, it has to file the necessary tax returns to the BIR once it is already registered.
5. If you like to register a sole proprietorship form of business, you will not spend money on incorporation and SEC registration fees. Registering a sole proprietorship is easier, quicker and less expensive than registering a corporation or partnership. DTI registration fees range from Php200 to Php 5,000, depending on your business territorial scope and type of business. Visit this web page of DTI to see the schedule of fees.
However, if you are planning to expand your business into a corporation in the near future, I think it’s better to register it as a corporation right away rather than register it as a proprietorship and incorporate it later. This is because incorporating a proprietorship business can be a seriously tedious process.
Final thoughts
Starting a small business in the Philippines is quite expensive, especially for small entrepreneurs like me. Getting different business permits and licenses from the government will not only exhaust your small capital but will also consume your time. In fact, it took me 3-4 months to complete all the business registrations from getting the SEC certificate of registration to getting the Mayor’s business permit.
Therefore, if you are planning to start a business, you have to have a sufficient capital to cover all the pre-operating expenses, like licensing fees and professional fees. You also need to have a standby fund to cover your fixed expenses like rent, utility expenses and employee’s salary while you are waiting for the completion of your business registrations and while you are still looking for customers.
If you have any question and other things you want to know about this post, feel free to leave a comment below.
Disclaimer: This article is for general information use only and doesn’t constitute a professional advice. The cost of doing business in the Philippines varies, depending on the size, nature, form and location of the business.
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.
Note large corporations will often not do business with a sole proprietorship. The other issue of a sole proprietorship is the unlimited liability of the owner, something goes wrong, he will lose all he owns.
Thanks Dayanan for sharing your insignts.
I am a freelancer and I also want to start a business selling handmade goods bazaars and online.
The cost of registration and the time needed to set it all up is disheartening for someone who is on a limited budget.
Got any tips for an aspiring sole proprietor?
Im an ofw,i want to stablish a small business of my own…can you advice me plsss…well,im into franchising before…is it still ok to run s franchise business?
For sole proprietorship, things are faster, but not as fast I would expect. I had a conflict with a trade name I wanted to register. From SEC It took 8 days to get the certificate of revocation which is needed for DTI trade name registration. If you have many options for trade name, you can skip SEC. DTI was secured within the day (2-3 hours). If you come after 4pm, lines are much much shorter. Barangay clearance was acquired within 30 minutes. Locational clearance is a requirement in Makati unlike in Manila. That took 5 days to finish. Then comes Makati City Hall. In 2 days I received the approved business permit. Payment was made after approval. In Manila, it will take atleast 7 days but you get he OR in the same day you pay before they give you a date to come back for releasing.
Im currently awaiting for the release of my Barangay micro business enterprise from Makati Cityhall before heading to the BIR. It was approved and now waiting for the certification to be printed and signed. Im expecting tomorrow so thats 7 days. COR would take anywhere from 1 to two days depending on volume when I inquired at their National Office assuming you complete their requirements.
All in all you’re looking at 21 days of processing to get your COR in Makati (not counting issues with SEC of course). If you are going to import items, you’ll have to wait longer. You also need to secure special permits from your respective agency, if it applies on your goods.
If you are online seller inside a commercial office you will need the COR to apply for Globe Broadband for business. If you are home-based, you can just go with their broadband for residential. They offer the same speed, the same price.
I highly recommend registering as BMBE (pronounced as”Bambi” in Makati License division) .
You get the benefit of being exempted from income tax / withholding tax among other incentives.
Here is the cost for registration for my ecommerce enterprise so far.
SEC = 300 (wont apply to you unless you have a name you want that’s already taken but inactive and want to claim it)
DTI = 2,000 national (you can go with regional @ 1,000 pesos so your DTI will still cover if you move outside the city but within NCR or you can go 500 at the city level or 200 at the barangay level)
Barangay = 550 (declared paid up capital 80,000)
Locational Clearance = 600 (26 sqm)
Business permit = 7,700 pesos
BMBE = 1,000 pesos
BIR = not yet processed
Hi,
After SEC registration, can we pay BIR DST for the subscription of stocks right way even though I don’t have the Business Permit and BIR certificate yet?
Also, you mentioned took you 4mos. to complete, was there any penalty? Wasn’t it that within 30days from the issuance of SEC cert, the business must be completely registered? Thank you for the reply.
Hi,
I am a Singapore PR and want to start small business in the Philippines. I am thinking of importing some products from Singapore to Philippines. I have no idea how to start. Can you please give me advice particular the tax that the custom will charge me legally. I really no idea . How and from I must start including registering my own family company?
Permission to comment to the website owner helo mr. Vic!..If not allowed please delete. Thanks
I like the articles here very informative!
Hello @Lex, I want to know what happened to your planned venture in Philippines?
Give some details please. if possible send me details:
g—mail: janipaz16 Thanks!
Victorino Abrugar
Dear Sir, Can you please update for 2016, if okay all your figures here in your article on Opening an RP business. In particular, too if you can approximate for a simple TV broadcasting upstart. Thanks for your great help. Grateful, Marisse Urquico
You mentioned you spent all the initial capital right away.. is there a formal way to add more capital?
Hey Vic.
Been looking around for a site that deals with business registration.
This page is so helpful and so easy to understand especially for a business idiot like me.
Thank you so much.
I am also trying to register a small corporation. May I ask how exactly did you compute for these:
” Authorized capital: Php 1,000,000
Subscribed capital stock: Php 250,000
Paid-up capital stock: Php 62,500″
We can’t afford to hire a lawyer that’s why we are doing it on our own but we’re stuck with these figures. Need help. Thank you.
#Subscribed capital stock should be equal to OR greater than 25% of authorized share capital..:25%*1000000=250,000
#Paid up capital stock should be equal to OR greater than 25% of subscribed capital stock. : 25% *250000=62,500
Kapag barangay level ba kailangan pa rin ba mag-register sa BIR at DTI? Or pwede na Mayor’s and Barangay certificate/permit?
Yes, it still needs to secure registration from BIR and DTI. If you business is on barangay level and is eligible as BMBE, register it with the DTI as BMBE to avail privileges like income tax exemption. Even if a business is income tax exempt, it’s still need to be registered with the BIR for other tax purposes. Please inquire with the DTI’s negosyo center near you so they can assist you.
Bakit po ang Mahal ng Barangay permit sa QC. P2,900 po ang sinisingil sa akin.
Tama po ba ang ganitong presyo?
Hi, regarding po dun sa BMBE ano-anong business po covered nun? We want to apply for a business permit sa Makati since dito po yung pinakamura na Virtual office na nakita namin.. plano po namin is magopen ng partnership .
Thanks
Hello. To learn comprehensively about BMBE or staring your small business in the Philippines, you may download the free resource provided in the website of the DTI http://www.dti.gov.ph/15-main-content/dummy-article/605-negosyo-center-your-guide-to-starting-a-small-enterprise
I’m a Singaporean interested to register an entity in Philippines for call Centre. No primary business, mainly for payroll to local staff and other regulatory requirements. Anyone can guide or provide advise, please email robin.ng at f12data dot sg
Magkano po ba ang gagastusin kung ang capital ay 28k para sa ukay ukay business na uupa ng space na may laking 22sqm? Sa barangay lang po
Hello. For fees on barangay clearance and Mayor’s business license, they will depend on where your business is located. Different barangays and cities/municipalities have different computations for licensing fees. For BIR, it will cost you P500 annual registration fee, cost of printing Official receipts, cost of books of accounts and others. You may visit your barangay, DTI, Mayor’s licensing office for assessment.
hello and good day
I am Swiss and would like to open a Business in farming on the Philipines, Leyte-area.
Does anyone know a good attorney who could be of help in matters of Registration and legal-laws?
Any help is highly appreciated.
Thank you.
Daniel
Hello po pano po mag file ng income tax? May barbershop business po ako pero hindi pa po sya Naka reqister da BIR. Gusto ko po sana malaman kong magkano an magagastos ko kapag magparegister ng business, barbershop lang po ang kapital ko ay 20k lang. I need your help po. Thanks po sa reply.
Hello. Before you can file your income tax, you should first register with the BIR. You should also have a Mayor’s Permit and a DTI registration for your business trade name.
1. DTI registration – if your registration is only in the barangay level/coverage, the fee is only P200. If municipal/city coverage, the fee is P500.
2. For BIR registration fee, the annual fee is only P500. Plus you will spend on buying books of account (probably P100) and the cost of printing your official receipts (cost will depend on the printing press). Read the article to get an idea.
3. For Mayor’s permit, it will depend on which city or municipality are you since they all have different tax rates.
I would recommend you visit the nearest DTI’s Negosyo Center to inquire if your business will be qualified as a BMBE so it will be exempted from paying income tax.
Good day!
My husband and I plan to put up a small corporation. Can I include my siblings as incorporators to complete the minimum 5 no. of incorporators to form a corporation? Chenicheck po ba ng SEC at ng BIR kung ang mga incorporators ng isang company ay may kapasidad or may pera talaga?
Hi, you will you know if the business you are planning to put up is eligible for BMBE?
what is BMBE? our business will be aircon installation repair and maintenance services
Hi. We are planning to setup a small corporation. But which city in Metro Manila has the lowest business tax and license fees? Thank you for your reply.
how much does it cost now to get a sole prop permit from BIR?
I already have all the other permits like DTI, Brgy and mayors permit, even secure fire clearance and sanitary permit.
even a ball park figure will be appreciated!
Hi Chris. BIR Registration will have the following costs for a typical sole proprietorship business:
1. Annual registration fee: P500 paid to BIR annually.
2. The cost of printing your official receipts and invoices: This will depend on how many booklets your business needs. This is paid to your chosen accredited printing press.
3. The cost of your books of accounts (Book of journal, ledger, etc.): You may buy this at bookstores or office supplies store.
Actually, you only pay the annual registration with the BIR to secure registration. Maybe there is also a minimal cost for documentary stamp.
If you hire a bookkeeper or tax professional, you may also spend more but it will save your time.
I want to open aircon installation repair and maintenance services and fabrication,
Anyone can give me idea which suits my business name: ABC manufacturing and Services or ABC manufacturing is enough? or ABC Gen. Services?
I am planning to open a small hotel ,inn,guest house . I just want to ask which is the easy way to acquire a business permit and the requirements to prepare. And which one there has atleast a cheapest tax to pay. Which one should I register on DTI is it hotel?Inn? Or guest house? Thank you in advance for your reply.
My Chinese client wants to import phones, laptops and other electronic materials and store in an office with 2 employees. This is intended to be sell in Lazada & Shopee. May I know how I can register the business under his name 100% foreign-owned and how much is the estimated cost/capital? Thanks
I don’t think you can have a 100% foreign owned business for a domestic sales business. I believe you need your revenue to come from abroad for that.