Many Filipinos are currently not contented with working for someone, so they chase the dream of being their own boss and opening up their own businesses. However, starting a business in the Philippines is not a walk in the park.
Many things should be first accomplished. An example is obtaining business permits and licenses. Licenses and permits must be consistent with your business category; otherwise, you might end up facing lawsuits.
Before you even register for your business permits and licenses, you should identify first what type of business you have. Regardless of whether you’re registering for sole proprietorship, partnership, or corporation, you must familiarize yourself with the business permits and licenses that you should secure to prevent future loss.
Below are five essential business permits and licenses that are required to commence a business in the Philippines:
1. Bureau of Internal Revenue (BIR)
This is the most important requirement of all, because this is necessary to acquire other permits and licenses. All Philippine-based businesses, individually owned or corporation, must submit a tax statement at the end of each fiscal year; thus, having a tax identification number (TIN) is crucial.
Four (4) kinds of BIR forms are mainly used for registration:
|Forms||Who is it for?|
|1901||Mixed-income and self-employed individuals|
|1902||Employees with full compensation, nonresidents, and resident aliens|
|1903||Corporations and partnerships|
|1904||One-time taxpayer who just rendered business in the Philippines for a year|
2. Barangay Clearance
This clearance certifies that your business complies with the requirements of the local barangay where your business will operate.
These are the requirements needed to secure a barangay clearance:
- Community tax certificate or cedula
- Application form, and
- Valid ID (SSS ID, passport, postal ID, or any government-issued ID)
3. Department of Trade and Industry (DTI) Business Name (BN) Registration Certificate
Obtaining a registration certificate from DTI is also important. This certificate authorizes you to use your own trading name for any business-related operation. It also secures your name from being used by someone else. Although you are given a right over your business name, running a business without TIN, barangay clearance, or other licenses is useless.
Here’s what you need to know in obtaining DTI registration certificate:
- Come prepared with a list of business names.
- Applicants must be a Filipino citizen and 18 years old and above.
- Note that some businesses, such as services, brokers, dental clinics, hospitals, may need other requirements.
- Fees apply depending on the scope of your business: Barangay – Php 200; City/Municipality – Php 500; Regional – Php 1,000; and National – Php 2,000.
The business name certificate is valid up to 5 years from the date of registration.
4. Mayor’s Permit / Business Permit
Mayor’s permit is sometimes referred to as business permit, since it is processed in the office of the mayor. Since all cities have different ordinances, securing a mayor’s permit ensures that your business is safe to operate under your city’s ordinance. Take note that receiving a mayor’s permit can only be done after registering your business with DTI (for self-employed individuals) and Securities and Exchange Commission (SEC; for corporations and partnerships). Mayor’s permit needs to be renewed annually.
- DTI Business Name Certificate for Self-Employed Individuals
- SEC Registration Certificate for Corporations and Partnerships
- If the nature of your business is similar to that of cinemas, malls, restaurants, then public liability insurance is needed.
- Community tax certificate or cedula
- Lease contract or tax declaration
- Barangay clearance
5. SEC Registration Certificate
If your business involves two or more persons and have an agreement to contribute time, money, or property, your business falls under the corporation or partnership categories. Corporations, either stock or nonstock, must obtain a SEC certificate to be considered legal. The following are the requirements needed for SEC certificate:
- Name verification slip, which can be secured online or at SEC Name Verification Unit
- Articles of incorporation and by-laws
- Joint affidavit of two incorporators to chance corporate name
- For nonstock only: List of members certified by the corporate secretary and list of the names of contributors or donors and the amounts contributed or donated certified by the treasurer
All businesses who have employees must register on the following government-mandated permits:
SSS Employer’s Registration
Business owners are obliged to register their employees to SSS to ensure that these employees are covered with insurance benefits, such as disability, sickness, maternity, death and others, in accordance with Republic Act No. 8282.
PhilHealth Employer’s Registration
Business owners must register their employees to PhilHealth, which covers health insurance.
Pag-Ibig Employer’s Registration
Pag-Ibig is beneficial for employees who will apply for housing loan.
Department of Labor and Employment (DOLE)
Businesses with five or more workers must register with DOLE. DOLE ensures that the aforementioned benefits are observed.
These business permits and licenses were created for a reason—to protect your resources. Being a startup or a newbie entrepreneur is never an excuse to be disorganized. Plan by knowing what to do.