Introduction
If you aim to start a business in the Philippines, you may want to begin as a sole proprietor. After all, it’s simple to register as one, thanks to minimal requirements and regulations. Moreover, you don’t need a high capital.
This venture type is also easy to register thanks to the Department of Trade and Industry (DTI) simplifying and digitizing business name registrations. Proof that the modernization worked? Over 900 thousand enterprises were registered in 2022 alone, many categorized as sole proprietorships.
However, while simple, registering this type of business requires some legwork, including acquiring documentary requirements and visiting government offices.
To spare you the hassle, this article by Yap, Kung, Ching & Associates Law Office details everything you need to know before applying for a business registration in the Philippines. Read on to learn about the application steps and requirements and discover how our legal experts can help make the process more convenient.
How Do I Register My Business in the Philippines?
Business registration in the Philippines involves securing official documents, as DTI must confirm your citizenship (or your working permit if you’re a foreigner). This means you must acquire government IDs and provide a legitimate local address before applying.
We have a list of documentary requirements and fees for your quick reference, but before that, let’s look at the steps you should follow to register a sole proprietorship:
Register Your Trade Name
Business registration in the Philippines starts with you deciding on a trade name. Essentially, it’s what you’d call your enterprise, whether it be a sari-sari store, a phone repair shop, or a carinderia. We suggest you prepare two to five names to ensure at least one can pass DTI’s criteria. Also, avoid using common words like market, shop, or store, as names with these terms will be automatically declined.
After deciding on a name, visit DTI’s registration page, read and confirm acceptance of the terms and conditions, and fill out the online form. When you input your trade name, the system will check if it’s available. Once approved, you’ll be directed to pay the registration fee. Upon completion of payment, you’ll receive your Certificate of Business Name Registration via e-mail.
Secure a Barangay Clearance
Next, register your business with your barangay to legally operate in the area. Doing this is especially important if you have a physical store within the LGU’s jurisdiction. While you can go straight to the Bureau of Internal Revenue (BIR) after acquiring your DTI certificate, we advise you to complete your requirements within your local government to avoid any possible hassle.
To get your clearance, simply visit your barangay office, fill out the application form, submit your requirements, and pay the fees. Most offices will have your document ready within the day.
Acquire a Mayor’s Permit
After obtaining your barangay clearance, the next step is to ensure you have your municipality’s permission to operate. Similar to how you did it at the barangay level, you simply need to visit the municipal office, fill out the application form, submit your documents, and pay the stamp tax and other fees.
Depending on the nature of your business, you can also process other permits with the municipal office. Food establishment owners, for instance, must acquire a sanitary permit.
Note that applying for additional permits entails another set of requirements, with the list varying depending on the LGU. Be sure to check what documents your municipality needs to avoid going back and forth during the processing.
Register Your Business With BIR
The next step is registering your business with BIR, which you can do online or on-site. Regardless of the method, you need to fill out BIR Form 1901 and submit the completed document along with other requirements. Don’t worry if you’re not yet a taxpayer—the agency will issue a TIN during processing.
Meanwhile, application fees for BIR business registration include the stamp tax and payment for printing an invoice booklet/s. If you choose to create your own invoice, include in your application the printing service that will reproduce your receipts (the service should be BIR-accredited).
Note that you’ll have to pick up your BIR Certificate at a later date, usually two weeks after you submit your application.
Take Note of Renewal Dates
After acquiring certificates and permits, note their validity periods:
- DTI Business Name Registration – 5 years
- Barangay Clearance – 1 year
- Mayor’s Permit – 1 year
Don’t forget to schedule filing for renewal before the documents become invalid. Saving the date on your calendar app or keeping a list of dates would be helpful.
As for your BIR Certificate of Registration, the document remains valid unless you implement changes, like changing your trade name or incorporating your business. As such, you must follow the tax filing schedules indicated in the document.
Requirements for Small Business Registration
Processing your business registration in the Philippines should be easy if you bring all the requirements before application. Here’s a list of the documents and fees for your quick reference:
DTI Certificate of Business Name Registration
| Documents | Fees |
|---|---|
| Not applicable
*Prepare at least two trade names |
Registration Fee
Documentary Stamp Tax
|
Barangay Business Clearance
| Documents | Fees |
|---|---|
| Application form
Two (2) valid IDs DTI Certificate of Registration Proof of Address, such as:
|
Documentary Stamp Tax
*Other fees vary per barangay |
Mayor’s Permit
| Documents | Fees |
|---|---|
|
Application form Two (2) valid IDs Barangay Business Clearance DTI Certificate of Registration Proof of Address, such as:
|
Documentary Stamp Tax
*Other fees vary per municipality |
BIR Certificate of Registration
| Documents | Fees |
|---|---|
| BIR Form 1901
One (1) valid ID Proof of Address DTI Certificate of Registration *Additional documents may be required depending on the nature of business |
Documentary Stamp Tax
BIR Printed Invoice (if buying from the New Business Registrant Counter)
|
YKC Law Can Assist You With Your Business Registration Needs
YKC Law offers assistance with business registration for individuals setting up sole proprietorships. If you plan to put up an enterprise, our legal experts will guide you through the process and provide advice to ensure your application proceeds smoothly.
Our company registration services support not only sole proprietors in the Philippines but also venture partners and corporations. We welcome both Filipino and foreign-owned enterprises, ensuring guidance and clarity regarding the process and tax concerns. With our help, you’ll be operating your business in no time!
Conclusion
Starting a sole proprietorship in the Philippines entails a business registration process involving DTI, BIR, and your LGU. Before applying, ensure that you have valid government IDs as proof of identity and documents pointing to your place of business. Applying for certificates and permits comes with a standard documentary stamp tax fee, but other fees will vary per office and location.
To ensure you’re not missing any requirement and not skipping any step, consulting with business registration experts is a smart move. Contact us today, and let us help kickstart your small enterprise!
