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
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.
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.