Getting your business off the ground in the Philippines is a thrilling idea filled with optimism for future prospects. Many investors have b...
Getting your business off the ground in the Philippines is a thrilling idea filled with optimism for future prospects. Many investors have been drawn to this dynamic location by its expanding economy, rapid growth in the service sector, vibrant culture, and ideal environment. You are not the only one who sees the opportunity that is there in front of you.
Since 2006, the Philippines has had an annual increase of 13,000 new firms.
Before making your investment, there are a few things you should understand about this nation.
At Horizons, our local specialists go over the procedures for launching a company in the Philippines. Please contact us if you would like to discuss your particular circumstances during an initial consultation.
Different Types of Business Structures in the Philippines
The following corporate formations are recognized in the Philippines:
Sole Proprietorship
A sole proprietorship is a company with only one owner, esponsible for all of the company's debts individually. The person and the company are regarded as a single entity.
Partnership
A partnership is an organization where two or more persons work together professionally. You have the option of structuring the partnership in the Philippines with either limited or unlimited liabilities. Partnerships with limited liability are only liable for the amount invested by each partner. The Securities and Exchange Commission registration requirement applies to larger partnerships.
Corporation
A corporation is another well-known type of commercial entity. You must have at least five shareholders to operate under this business form. Shareholders' total invested capital is the sum of their total obligation. Registration with the Securities and Exchange Commission is required for corporations.
Options Besides
If your company already operates outside of the Philippines, you might want to look into other possibilities, such opening a branch or representative office there. Although technically not different legal organizations, these could still let you grow to the Philippines without having to make a big investment.
These offices can have restrictions on the kind of work they can do and whether they can turn a profit.
What to know before starting a company in the Philippines 2023
Remember that there will be a number of fees related to the registration process. For notarizing your papers, getting legal counsel, or taking care of other registration-related tasks, there can be extra costs.
Foreigners and locals in the Philippines go through various registration procedures for businesses.
You frequently need numerous copies of the same paperwork when registering your business, so make sure you submit enough forms where necessary to prevent unnecessary delays.
In addition, depending on the sort of business structure you choose, the registration process for your company will vary greatly.
Important Guide Line to Starting a Business in The Philippines
Step by Step Procedure and Requirements (Legal Other Documents)
It can take a lot of time to Start a business in the Philippines because there are numerous stages involved. Some of the steps that could be included in the process are as follows:
1. Search for and Register Your Business Name
Checking to determine if your desired business name is available is the first step. If your first choice has already been taken by another company, you can look for the name on the Business Name Registration Site by submitting a priority list of three names for your company.
A certificate that is good for five years will be given to you after the fees have been paid and your name choice has been authorized.
2. Notarize paperwork
Your company's articles of incorporation and the treasurer's affidavit are two examples of official documents that must be notarized. Your notarized paperwork will be delivered in a subsequent stage.
3. Apply for Company Incorporation
To the Securities and Exchange Commission, you will need to submit a number of forms and additional supporting documentation. The kind of paperwork you'll need depends depend on the kind of business you're starting. For a sole proprietorship, for instance, you might submit:
- Application for business name registration
- A passport photo included, along with your passport or special investor residency visa
- Evidence of the minimum inflow payment
The business name registration application and your articles of partnership, which must be signed by two or more directors, are also required in order to form a partnership. Depending on the type of business you are starting, you could additionally need permissions.
You must submit the following paperwork in order to register a foreign-owned business:
- Filled-out application
- Articles of incorporation and bylaws notarized
- Written confirmation of your consent to rename your company
- Resolution of the Board approving the establishment of a branch or office in the Philippines
- Evidence of the minimum inflow payment
- Financial statements
After reviewing the provided materials, the Securities and Exchange Commission pre-approves the application.
The company must pay the necessary fees and present receipts as confirmation of payment. Then, a waiting period is started so that the required paperwork, including the incorporation certificate and supporting paperwork, can be created.
Once the SEC has given its approval for formation, the company is given a Taxpayer Identification Number.
The company must yet register with the Bureau of Internal Revenue in order to ascertain the taxes that will apply to it, to pay a yearly registration fee, and to receive authorization to print invoices and receipts.
You are in charge of deducting the appropriate amounts from employee salaries for tax withholding and contributions to the tax system, as well as paying taxes on your firm.
4. Pay Fees
As soon as a business submits an application for company incorporation, the SEC will issue payment fees. The name approval and registration fees must be paid at a bank, and the online system must receive documentation of the payment.
The majority of businesses are accountable for covering the following costs:
- 100 PHP is required for name verification.
- For new corporations, it costs PHP 1,000 to register the bylaws
- PHP 150 plus PHP 320 to transfer stock.
- A .2% of the authorized capital stock or the subscription price of the subscribed capital stock, whichever is higher but not below PHP 1,000, as filing fees
- 1% of the filing fee for legal research, but no less than PHP 10
- The legal research charge for the bylaws is PHP 10, please.
5. Register with Other Organizations
The company probably has to register with additional governmental organizations like the Home Development Mutual Fund and the Social Security System. Additionally, you might need to register your company with the Barangay Office and the Department of Trade and Industry.
You must register with the Philippine Health Insurance Corporation if you have employees. You are in charge of contributing a set sum for each of your employees to a health insurance fund, which is then used in the event that an employee is hurt or falls ill.
6. Obtain a business license
You might also need to apply for a business permit from the neighborhood government. Typically, your business permit will cost money.2% of the authorized capital stock's worth. You could also need to apply for more permits, such those required for:
- Fire inspection and safety
- Location authorization
- Checking the electrical
- Mechanical Sanitation
- You might also need a mayor's permission.
Your business's specific permission requirements depend on its kind.
The associated fees for these permits vary based on your company's type and the amount of space it will occupy on the land. Many of these costs are PHP 50 or less, and they range from PHP 7 to PHP 5,000.
Your business will almost certainly have to go through an examination before getting a permit.
7. Get barangay clearance
In the neighborhood barangay where your company is situated, you must obtain a clearance and pay the yearly community tax. The following must be submitted to get your clearance:
- SEC application form approved bylaws, articles of incorporation, and certificate of incorporation
- Location or site plan, as well as your office lease
- Pay the required fee, which in Quezon City ranges from PHP 300 to PHP 1,000 but might be greater or lower in other places.
8. Purchase specialized accounting records
You need particular books of accounts in order to register with the Internal Revenue Service.
They are easily accessible at bookstores across the nation. An alternative is for a company to register its computerized accounting system with the BIR.
Within 30 days of the date of registration, a specialized team from the BIR inspects and evaluates these systems.
Make an application with the Internal Revenue Service for specific authorizations.
You must disclose all internal revenue taxes for which you anticipate being liable and register your pre-registered TIN with the Bureau of Internal Revenue. The following paperwork needs to be provided to the BIR:
- Application form 1893, completed
- Certificate of Incorporation with completed payment Form 0605 Securities and Exchange Commission
- Articles of incorporation and bylaws notarized
- Agreement to lease
- Original share issuance documentation stamp tax return and payment form
- Application for a business permit or a mayor's permit
- Appropriate fees
9. Sign up with the Social Security Administration
To complete your registration with the Social Security System, provide the required paperwork:
- Form R-1 for Employer Registration
- Form R-1A, a report on employment
- A list of your staff members, including with information on their titles, monthly salaries, dates of employment, and birthdates
- Articles of incorporation, bylaws, and SEC registration all notarized
Your SSS employer and employee numbers will be provided to you once your documents have been processed. The SSS provides training to assist in educating you about your responsibilities.
10. Sign up for Philippine Health Insurance Company coverage
By submitting the following documents, you can complete your final registration with the Philippine Health Insurance Company:
- Record of employer data Report of Employee-Members Form ER1 Form ER2
- Registration with the Securities and Exchange Commission and the Bureau of Internal Revenue
- A replica of your business license
Until you obtain your employer and employee numbers within 90 days, you will receive copies of paperwork that serve as proof of membership.
11. Become a member of Home Development Mutual Fund
Submit the necessary documents to complete your final registration with the Home Development Mutual Fund:
- Employer information form
- Form for specimen signatures
- A copy of your certificate of incorporation from the Securities and Exchange Commission
- A duplicate of your adopted bylaws and articles of incorporation
- The duly designated authorized representative is shown by a board resolution or the secretary's certificate.
You will get your certificate of registration and HDMF number after submitting these papers and making your initial contribution to the fund.
12. Submit the printer's certificate of receipts and invoices delivered
You will get a Printer's Certificate of Delivery of Receipts and Invoices from the printer after your receipts and invoices are printed.
Within 30 days of the date you got it, you must submit this to the Internal Revenue Bureau. Additionally, you must provide the following paperwork to the Bureau of Internal Revenue:
- Your accounting records
- Your Value Added Tax registration certificate
- BIR Form W-5, your Securities and Exchange Commission registration
- certified photocopy of the ATP sworn declaration
Additionally, you have to deliver a copy of the PCD to the applicable BIR RDO.
A basic and supplementary community tax will be due from your company.
The basic tax is determined by the way your firm is set up, while the supplemental tax is calculated using the assessed value of any real estate your company holds in the Philippines.
Where to Find Assistance in the Philippines for Starting a Business
For people who are Starting a business in the Philippines, Horizons offers a full range of business services. You can start a business in the Philippines quickly and affordably with the help of our cutting-edge solutions. To find out more, call us right away.
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