Business Partnership

The Basics of Incorporation

A stock corporation is an entity that is created for profit. The ownership is based on stocks
and owners of stocks are called shareholders or stockholders. Proof of ownership comes in
the form of stocks certificates. Stockholders may or may not be actively participating in
business operations; it is the incorporators who take care of the management of the
business. The Incorporators are the original shareholders of the corporation. After the
incorporation, stockholders whether individuals or a business entity, may be added.
There must be at least five (5) but not more than fifteen (15) incorporators when registering a
business. Majority of the incorporators, who are all of legal age, must be legal residents of the
Philippines. All incorporators are required to subscribe at least one (1) share of stock. Upon
registration, 25% of the authorized capital stock must be already subscribed and at least
Php5,000.00 must be paid-up. Given the requirements on subscription and paid up capital,
incorporators must subscribe to at least 25% of the authorized capital stock but paid-up
capital must not be below Php5,000.00.

Process of Incorporation

1. Verify and Reserve the Company Name with the Securities and Exchange Commission
(SEC)
The verification of the availability business name can be done online but the reservation fee
must be paid directly to the SEC along EDSA near Ortigas Avenue. Pay Php40.00 to reserve
the name for the first 30 days. It can be extended up to 90 days, just pay Php120 every time
extension is requested.

2. Prepare the Articles of Incorporation, By-Laws, and Treasurer’s Affidavit. Have the Articles
of Incorporation and Treasurer’s Affidavit Notarized
If you must, consult a lawyer about these documents. Make the incorporators sign on all
pages and have a notary public sign the Articles and the Treasurer’s Affidavit.

3. Deposit the Minimum Paid-Up Capital at the Bank

The SEC would not check if the minimum paid up capital of Php5,000.00 is deposited in the
bank or not but the law requires it. It is better to have the paid-up capital deposited.

4. Register with the SEC and receive a pre-assigned Tax Identification Number
Registration may be done online but payment must be made directly to the SEC.

5. Get Barangay Clearance

Pay from Php300.00 to Php1,000.00 to get this clearance from the Barangay covering your
place of office. This is needed when applying for the business permit from the city hall.
6. Pay Annual Community Tax and Get Community Tax Certificate (CTC) from Your City or
Municipal Treasurer
The community tax depends on the form of business, whether a corporation, single
proprietorship, or an association.

7. Obtain Business Permit to Operate from Your City’s Business Permits and Licensing Office

8. Buy Books of Accounts to Be Used in the Business

Blank books of accounts are available in local office stores or bookstores.

9. Go to Bureau of Internal Revenue (BIR), Specifically the Revenue District Office (RDO)
Where the Head Office of the Organization Is Located to Apply for Certificate of Registration
and Register the Pre-Assigned TIN from the SEC
For tax concerns, registration with the BIR is necessary.

10. Pay Registration Fee and Documentary Stamps at an Authorized Agent Bank (AAB)
Within the RDO
Payments are not accepted in the RDOs. Taxpayers are to pay fees and taxes through
authorized banks.

11. Get Authority to Print Receipts and Invoices from the BIR
Printers will not print official receipts and invoices if there is no authority to print documents
from the BIR.

12. Have Receipts and Invoices Printed

Find your local printer authorized by the BIR to print. Sometimes, it is the RDO that assigns the
printers to certain taxpayers.

13. Bring Books of Accounts and Printer’s Certificate of Delivery to BIR and Have Them
Stamped
The printer will provide you with a Certificate of Delivery and this must be presented to the
RDO within 30 days of issuance together with the books of accounts.

14. Register with the Social Security System (SSS)

Fill in the forms and provide list of employees. The SSS will issue SS Numbers.

15. Register with Philippine Health Insurance Company (PhilHealth)

Submit documents and forms needed that include employee records, and copies of
registrations and business permits. Philhealth numbers for both employer and employees shall
be released within 3 months.

16. Register with Home Development Mutual Fund (Pag-Ibig)

Submit documents to the HMDF that include Data forms, signature forms, and copies of
registrations and business permits. Pay the first contribution and HDMF will issue certificates
afterwards.
The whole process may take about a month to finish.

Assignment of Shares
Shareholders may be increased after the company is incorporated. Likewise, shares are
transferable. Here are the steps when re-assigning shares:
1. Assignor and Assignee execute a Deed of Assignment of Shares of Stocks and have it
notarized.
2. Pay the corresponding Capital Gains Tax and documentary stamp.
3. BIR issues Certificate Authorizing Registration (CAR)
4. Present CAR to the Corporate Secretary.
5. Corporate Secretary records the transfer of shares in the company’s Stock and Transfer
Book.
6. Corporate Secretary ensures the submission of revised General Information Sheet.
7. The old Certificate of Stock is canceled and a new one is issued in favor of the new
shareholder.