A

Complete Guide for Business

Registration and Basic Taxes in the
Philippines
By ADV Consultation Firm

A Complete Guide for Business Registration and Basic Taxes in the

Philippines

In the Philippines today, there are many businesses that have grown
and there are some that are just starting to bloom. There are many
things to consider when you decided that you want to run your own
business. It is not easy to determine which classification of business an
individual can invest the money into. Aside from choosing the right
classification of business, there are also some difficulties that an
individual can face.
In this article, you will learn how to register your business, basic taxes in
the Philippines and some related topics. The discussion is divided into a
set of questionnaires below:
1. What are the Classifications of a Business?

a. Merchandising business
This classification of business is selling an actual product without any
modification. Some examples of this classification of business are real
estate, supermarket, restaurant (restaurants are considered service
business), automotive dealers and more.

b. Service business
This classification of business is offering a service or an intangible
product. Some examples are hotel, dental services, blogging, web
development, and more.
c. Manufacturing business
This classification of business provides finished products to the seller.
Some examples are cell phone parts manufacturers, drug
manufacturers, automobile manufacturer and more.
d. Other business
There are some businesses that do not belong to either of the three
above like rice farming.

2. What are the Types of Ownership of a Business

a. Sole Proprietorship
A business that is owned by a single individual is called as sole
proprietorship. There is only one individual who has the full control of
the business.

b. Partnership
A business that is owned by two or more individuals that are referred
to as partners is called partnership.
c. Corporation
A business that is owned by shareholders is called as a corporation.

3. What are the Basic Requirements of Putting up a Business?

a. Department of Trade and Industry registration

This requirement is for the registration of your business trade name or
also known as BTR.
b. Security and Exchange Commission registration
If you are planning to have a business with partnership or corporation,
you need to register it under the SEC.
c. Barangay clearance
This is one of the basic and simplest requirement. This certificate
means that your business complies with the barangays requirements.

Each barangay has its requirement and this will depend on which
barangay your business will be located.
d. Social Security System employers registration
This is required if a business renders the service of another person or so
called employee. This usually required in the corporation. (all private
entities are required to register)
e. Philhealth employers registration
This is a requirement to all business and its employees. Philhealth will
secure the health insurance coverage of employees.
f. Pag-ibig employers registration
This is required for a business and its employees. Pag-ibig will secure
the benefits to its members.
g. Mayors business permit
This is a basic requirement within a local municipality and this permit
enables you to pay the local business tax.
h. Bureau of Internal Revenue registration
This is very important in having a business, you need to get the TIN for
your business. Aside from TIN through BIR, you need to register your
books of accounts and pay your tax.

i. Department of Labor and Employment registration

If a business has at least 5 employees, it should be registered to the
DOLE. For a business which has at least 50 employees, it needs to be
registered under the Bureau of Local Employment which is still with the
DOLE.
4. Are there any other Special Requirements?

Aside from the basic requirements, there are also some special
requirements depending on the nature of your business. It can be any
of the following:
Money:
a. Bangko Sentral ng Pilipinas
If you will run a business that involves financial transactions such as
money changers, bank, pawn shop and credit company.
b. Insurance Commission
This is required for a business which specialized in insurance plans and
other related insurance businesses.

Food and Drugs:

c. Bureau of Food and Drugs
This is required if you will put up a business which involves food and/or
drugs such as restaurant, drug manufacturing, food repacking, food
importing or exporting and drug distribution.
d. National Food Authority
This is required for a business which involved rice, flour and corn
dealers.
Education:
e. Technical Education and Skills Development Authority
If you are planning to put up an institution which is specialized in
technical education and skills development, such as culinary institution
and cosmetology program.
f. Department of Education
This is required if you are planning to open an education institution or
school.

g. Commission on Higher Education

This is an additional requirement prior to DepEd if you will open an
institution with higher education.
Cooperative:
h. Cooperative Development Authority
This is required if you will open a cooperative such as credit cooperative
and multi-purpose cooperative.
Plant and Vegetable:
i. Bureau of Plant Industry
If you plan to open a plant nursery, business or vegetable cropping
business, you need to secure a permit from this bureau.
j. Philippine Coconut Authority
Aside from plant and vegetable farming, if you are planning to operate
a grain-related farming and trading, you need to go to this institution.
Samples of grain-related are rice and barley.
k. National Tobacco Administration
This is required for a business that is related to tobacco products such
as tobacco farming and tobacco distribution.

Wood:
l. Forest Management Bureau
If the business involves wood products such as logs, coco lumber and
plywood.
m. Bureau of Forest Development
This is required for wood products that will be exported.
Animal:
n. Bureau of Animal Industry
This is required for animal-related businesses such as hog raising,
poultry farming and animal breeding center.
o. Bureau of Fisheries and Aquatic Resources
If the business is about fish and other aquatic products like milkfish
pond, marine shrimp farming and aquarium store.
Fiber:
p. Fiber Industry Development Authority
This is required for a business that is related to fiber producing
products such as synthetic and natural fibers.

q. Garments and Textile Industry Development Office

If the business is about exporting garments and textile manufacturing,
you need to secure a permit from this office.
Patent:
r. Intellectual Patent Office
This is very important for the copyright of the business logo,
trademark, slogan and other related matters.
Commodity and Exporting
s. Bureau of Product Standards
This is required if your business is related to producing, manufacturing
or exporting of products.
t. National Subcontractors Exchange
If the business is a sub-contractual or supplying products that are tied
up with an export business. For example, you are supplying leather to a
shoe company which is for export, then you need to secure a permit in
this office.

5. What are the Procedures to Follow in Registering a Business?

Step 1: Business name registration at the DTI office

The first step in registering a business is to register its trade name. The
trade name is a very important part of your business, this will be used
in your transactions. Your trade name must be unique and it is
important to register it under DTI so that it will not be used by another
entity.
Without a DTI registration, you cannot proceed to the next step if you
are a sole proprietor, but if your business is a partnership or
corporation, you can skip this step. However, it is suggested that you
register your business name under DTI so that your trade name will not
be used by other people. (for partnership and corporations please
proceed to step 2)
Business name guidelines:

Must be related to the business and can easily be described

the nature of business.

Must be composed of letters and/or numbers, punctuation

is also acceptable as long as it can be found in the English and

Filipino language such as dash and question mark.

Must not be identical to an existing business name

Must not be composed of abbreviation of any country and

government names

Must not include misleading, illegal and offensive names

2 Ways to Register Your Business Name:

a. Online
You can easily check if our preferred business name is still
available via their database. The first thing you need to do is to
register through DTIs Business Name Registration Systems
website. You need to open an account on the website to be able
to register your business name. Aside from the application of your
business name, you can also renew the expiring certificates and
pay your fees there.
The first step is to fill our the application form on the website and
then submit it. Check your email for the transaction reference
number. You can now pay the fee via GCash or at the DTI office.
The reservation of the business name is only valid up to 3 working
days, if not paid then it will be forfeited.

b. Offline
You can walk-in to their regional office that is located in your area
to register.
The first step is to fill up an application form. In case you are not
available to do this, you can authorize your Attorney. After filling
up the form, submit it to the DTI processor for assessing if the
business name is still available. The last step is to pay the
registration and processing fee, then you can now get the
Business Name Certificate which is valid for 5 years.

Step 2: Registration at the Security and Exchange Commission

If you will register a sole proprietor business, you can skip this step.
Otherwise, your business is required to register under the SEC. The SEC
registration provides the business the license to operate. Without
completing this step, you cannot secure a permit from the Mayors
office and from the BIR.
First, you have to verify your preferred name in the Name Verification
Unit at the SEC office. You can also check the availability via the SECs
website.

The second thing to do is to prepare the following and secure it via the
Company Registration and Monitoring Department.

The Articles of Incorporation and By Laws

The Treasurers Affidavit

You can make the draft of the Articles of Incorporation and By Laws or
you can consult a corporate lawyer.
Third, you need to get the clearance and/or endorsements from the
government agency/agencies if needed. The documents depend on
your business industry.
Fourth, you need to get a bank certificate of the required deposit for
the paid-up capital. This is also via the Company Registration and
Monitoring Department in which you need to pay the filing fees but the
documents must be complete.
Finally, you can claim your SEC certificate or license via the Releasing
Unit, Records Division. You need to present the official filing receipt.

Step 3: Get the Barangay Clearance from your local Barangay Office
For a sole proprietorship, you need to present the Business Name
Certificate from the DTI.

For partnership or corporation, in able to get the Barangay clearance

you need to present the Certificate of Partnership or Incorporation for
the SEC. Other requirements include the Land title and Tax Declaration
for the location of the business if you owned the place or the contract
of a lease if you are renting. For business inside a subdivision,
condominium or village then you need to present a permit from your
Homeowners Association.
The first thing to do is fill out the application form from the Barangay
Hall and then submit it to the Barangay secretary along with other
documents required by the Barangay. The assessment will usually take
30 minutes upon submission of the form.
After the assessment, you have to pay for the clearance to the
Barangay cashier. Then you can wait for the releasing of your Barangay
clearance, this will usually take at least 1 day.

Step 4: Getting the Mayors Permit

First, you need to fill up the application form and submit it along with
other requirements to the Bureau of Permits. After this, you will be
issued with a Business Identification Number. Other requirements are:

Certificate from DTI- for sole proprietor

Certificate from SEC and Articles of Partnerships- for partnership

Certificate from SEC and Articles of Incorporation- for corporation

Barangay Clearance

CEDULA

Certificate from SSS

Lease Contract or tax Declaration

Additional Requirements (depends on the nature of business)

Second, you need to proceed to the License Division of the City

Treasurers Office. This is where your Business Tax and Regulatory Fees
assessed and then the office will issue the License and Regulatory Fees.
Third, you need to pay for the License and Regulatory Fees to the
cashier. Upon payment, your License and Regulatory Fees Form will be
validated, which will serve as your official receipt.
ourth, you need to submit the official receipt to the Bureau of Permits
office. Then you will get the Business Permit which was signed by the
BP Director.

Step 5: Registration at the Bureau of Internal Revenue

For single proprietorship, the first thing to do is to fill up the BIR Form
1901 and submit it along with other documents to the Revenue District
Office. Other documents that you need to submit are Certificate from
DTI, Mayors permit and valid identification which showing your name,
current address and birthday.
For partnership and corporation, you also need to fill up the BIR Form
1903 and submit to the Revenue District Office along with other
documents. Other documents are Certficate from SEC and Mayors
permit.
The second thing to do after submission of documents is the payment
of the Annual Registration Fee to any authorized agent banks of the
office. Then, you also need to pay for the Certification Fee and for the
Documentary Stamp Tax.
Third, upon payment you will be issued with the Certificate of
Registration Form 2302.
Fourth, you need to fill up the BIR Form 1906 for the Invoice/Receipts
authority to print. You will receive the Ask for a Receipt notice from
the BIR. This will be posted in your business together with the BIR form
2302.

Fifth, you need to register the book of accounts of your business and
have them stamped.

Step 6: Registration at Social Security System

For single proprietorship, you need to fill up and submit the SSS Form
R-1 or the Employer Registration and the R-1A or the Employment
Report.
For a partnership, you need to submit the same two forms together
with a photocopy of the Article of Partnership. Either you or your
partner can do this. You must also present the original copy of the
Article of Partnership.
For a corporation, you also need to submit the two forms, but the
President must sign the forms. In case the President of the corporation
is not available, any of the corporate officers can sign the forms. Along
with these forms, you also need to submit a photocopy of the Articles
of Incorporation but make sure to bring along the original copy.


Step 7: Registration at Philippine Health Insurance Corporation

The first thing to do is fill up the ER1 Form or the Employer Data Record
and submit it along with the Business permit. There are also other
documents that you need to submit. If you are a single proprietor,
submit the Business Name Certificate from the DTI. If your business is in
partnership or corporation, then you need to submit the SEC
Certificate.
After processing your application form and other documents, you will
be issued with a Philhealth Employer Number and Certificate of
Registration. The office will also issue the Philhealth Identification
Number and the Member Data Record (for your registered employees
under Philhealth).

Step 8: Pag-ibig Fund Registration
First, you need to fill up 2 copies of the Employers Data Form and
submit it along with other documents such as SSS Certification and
Proof of Business Existence. For a sole proprietor, you need to submit
the Certificate from DTI and the Business Permit.

For partnership and corporation, you need to submit the Certificate

from SEC and Business Permit. You will be issued with a Pag-ibig
Employer ID number. You can also register through Pag-ibigs website.

Step 9: Permit or Clearance from Other Government Agencies

If there are any additional requirements, you need to go to the agency

involved depending on your business nature. Bring all the requirements
upon applying for a permit or clearance from any of the agencies
involved, which you can find in the Are there any other special
requirements? section in this article.
6. What are the Basic Taxes in the Philippines?

a. National Taxes (through BIR)

Income Tax- the tax from an individuals income from

profession, property or trades

Value Added Tax- this is collected from every sale from the

seller, thus causing the goods to increase its base price

Percentage Tax- this is the tax that needs to pay by a person

who has a selling business which do not exceed the required gross
annual sale amount.

Excise Tax- this is the tax for goods that are produced in the

country which is produced for domestic sale. This is also imposed

on imported goods.

Documentary Stamp Tax- basic tax on documents

Capital Gains Tax- the tax for the profit realized after a sale

of capital asset

Donors Tax- the tax on a gift or donation

Estate Tax- this is required if there is a transmission of the

estate of a deceased to its beneficiary

b. Local Taxes (through local government units)

Barangay Clearance Fee- this is the fee that is collected upon

getting a barangay clearance

Barangay Service Fee or Charges- this is usually collected by

using of the barangays facility

Professional Tax- this is required for professionals which

requires government exams such as civil service examination

Community Tax- this is imposed to every individual which

are 18 years old and above that are employed

Tax on Business- this is the tax imposed before issuing the

business permit in a municipality or city

Franchise Tax

Taxes for fixed business establishments such as sari-sari

store

Tax on Transfer of Real Property Ownership- this is imposed

in transferring of ownership

Amusement Tax- this is imposed on amusement business

such as cinema and circus

Thanks for Reading!

God bless your Business!
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Registrations? Taxes? Internet System and External Audits?
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