Registering Your Business in the Philippines
I'm an accountant and part of my job is to help my clients start their businesses and keep them going. I have experienced first-hand how it is to register a new company and I thought of sharing them in here. So here goes...
Registering Your Business with the Philippine SEC (for Corporations/Partnerships Only)
If you are forming a corporation or a partnership, the first stop is the Philippine Securities and Exchange Commission or the SEC. You need to reserve a unique name for your company (which is good for 30 to 90 days). Once you have reserved your name, you need to place your desired capital (paid-up) in a bank of your choice, have that bank issue a certificate to you, fill up the official SEC form, obtain the signatures of all incorporators (and their tax identification numbers for Filipinos or passport numbers for foreigners) then file the said papers with the SEC. If all goes well, your papers may be approved by the SEC in one week's time.
As to the fees, these will depend on the amount of your desired capital. If your desired capital is 1,000,000 pesos (or $20,000), the fees will be approximately $50. You can access an online calculator on the website of the Philippine SEC so that you will not have any problems estimating the fees of your incorporation.
Just take note that, if you are a foreigner, there are certain limitations to the percentage of ownership. Some industries limit the percentage of ownership to 20%, others to 40%, and still others to 60%. There are also certain limitations on the seats on the board of directors, with the Philippine government usually requiring that the majority of the board should be Filipinos or in accordance with the percentages of ownership. Make sure you consult with a good lawyer who is well-versed in registering companies in the Philippines before you actually put up the corporation. Also, you can obtain more information by going to the Philippine SEC's website.
Registering Your Business: for Sole Proprietorship
If you are the only owner of your business (sole or single proprietor), you don't need to go to the SEC to register. Just reserve your name with the Philippine Department of Trade and Industry. If your name is unique, approval is immediate. The fees here are also minimal (around $10 or so).
Next Stop: The Bureau of Internal Revenue
Okay, so you have already registered your company with the Philippine SEC (which may take one week if all your requirements are in order). The next step is to register your business with the Bureau of Internal Revenue or the BIR. The BIR is our local equivalent of the United States' IRS. This is where we pay our taxes. As a new corporation, you are required to get your TIN (Tax Identification Number) from the BIR. You cannot transact in the country if you don't have this. Registering your company with the BIR is a fairly easy (and inexpensive) process. It may take only one week and the fee is minimal (less than $30). Again, your accountant can help you with this process. You can also go to the BIR's website for more information.
You can interchange this next step with the registration with the BIR. Some corporations register first with the BIR when they do not have any transaction yet. Others (which is maybe the majority) choose to register first with the local government where their business is residing. In any case, before registering with the local government (what we call the City Hall), you need to comply first with several requirements (clearances, payments, etc.). Unlike the SEC and the BIR, the fee here is not quite that fixed. The local government fee will depend on the prevailing local laws and the type of business you are in. You need to get your accountant to have this calculated at once so that you'll know how much you need to pay the local government. Once you get your business permit (which is renewed every year), you're ready to start your business.
- Note: Once you are registered with the City Hall and the BIR, they will provide you with certificates evidencing your registration. You are required to post these certificates in your respective offices. This is a requirement under our laws. Failure to do so will subject your company to penalties.
- A Further Note: If you want to save on taxes, you might want to register your business with the Board of Investments or BOI. It grants income-tax holidays for businesses that are in preferred industries or are pioneers in their industries. Usually, export businesses are given income tax holidays. If you don't want to go to the BOI, go to the local City Hall and the local investment board and apply for a holiday on local taxes. This will save you several years' worth of city taxes.
- Last Note: Make sure you get a good accountant and/or lawyer since they will be able to help you during your registration, and also do the legwork for you. For local registration requirements (the BIR and the City Hall), my recommendation is to get an accountant/lawyer who is from that city or province because he/she is more well-versed in the ins and outs of their local city hall or BIR.
All these requirements may be done within one month if all the requirements are in place. Keep in constant touch with your accountant and/or your lawyer so that you know the status of your registration. It might be better if you yourself have a working knowledge of my country's requirements so that you are aware of what you need to do and what you need to go through when you put up a business and invest in the Philippines.
This article is accurate and true to the best of the author’s knowledge. Content is for informational or entertainment purposes only and does not substitute for personal counsel or professional advice in business, financial, legal, or technical matters.
© 2009 emievil