How to Open a Business in the Philippines

Starting a business in the Philippines can be a challenging and confusing task. For those seeking to gain an idea of how to open a business in the Philippines, this article gives you the basics of how to do just that. The process is straightforward but there are other considerations to ponder that are outside the scope of this article.

Despite the type of business entity you plan to establish, it is highly recommended that you research a subject like this one further and seek legal advice when establishing a venture overseas, not just in the Philippines.

Things You'll Need

• An attorney or other authorized agent well-versed in the incorporation process in the Philippines.

Instructions

1. Figure out what type of business you want to open in the Philippines. Why that particular market, what risks are involved and what are your alternatives are some questions that should be answered. Research the culture and approved social norms if you are not from there as these details will affect the success of your venture. As the old saying goes, "Know your market."

2. To form a sole proprietorship you would need to apply for a business name and register at the Department of Trade and Industry (DTI).

   To form a partnership with 3,000 Philippine pesos or more in capital, you must register with the Securities and Exchange Commission (SEC). There is more detail involved in forming corporations.

   Philippines-based corporations are established under the Corporation Code; they are then registered and regulated by the Securities and Exchange Commission. To form a corporation you need to begin by having a minimum of five incorporators. These incorporators all must own one share of the corporation, register with the SEC and possess a minimum paid-up capital of 5,000 Philippine pesos.

3. Next, you will have to obtain a certificate of deposit from your bank verifying your paid-up capital. You will need to verify your corporation's name of choice is available. This requires that you check with the Securities and Exchange Commission. After you have verified your company's name is available, you now have to register your corporation's name with the Securities and Exchange Commission. Once you have filed your incorporation with the SEC, you will need to obtain a community tax certificate (CTC). This is needed to obtain barangay clearance. A barangay is a district where your corporation will be doing business. To get barangay clearance you will need to file in the local district where your corporation will be conducting business and pay any fees in full.

4. Obtain a permit and municipal license from the mayor's office in the licensing section. You will need to provide the following documents to complete this transaction, in duplicate: your application along with a clear sketch of the location where you are doing business attached to the back of your application; certification issued by the corporate secretary that authorizes your corporation to conduct business; certificate of registration; proof verifying the corporation's paid-up capital; receipts from certification transactions and other fees paid in full, and lease contracts; barangay clearance; and proof of having comprehensive general liability insurance.

5. After you have applied to the mayor's office for a license to operate your business must receive an inspection from the mayor's office. The inspection verifies that your corporation is as you say it is and actually conducting the activities that you claim you are. After completing and passing inspection, you will be issued proper licenses and permits to operate from the mayor's office. You must now buy special accounting books available at any bookstore. These books, sold in sets, contain these four accounting books: the cash receipts account, the disbursements account, the ledger and the general journal.

6. You will now register for VAT (value-added tax) and other local and municipal taxes you think your corporation might be liable for in the course of doing business in the country and barangay. Apply for authorization for printers to print sales receipts and invoices for your corporation or receive a permit from the Bureau of Internal Revenue (BIR) that allows the business to print their own forms and invoices and apply for authorization to use alternate means of bookkeeping including electronic accounting software or ledgers other than government-issued accounting ledgers. Pay for any documentary stamp taxes on original issuance of shares of stock.

7. By now you should have received permission to print those receipt invoices and/or receipts. Now it is time to place the order. Head over to the printers with the authority to print. The order can take up to two weeks to fill. The special accounting ledgers, invoices and receipts need to be stamped. Take these over to BIR. This office will oversee this step.

8. You or your representative must now register with the Social Security System (SSS). This process takes about seven days to complete. Employees must attend a seminar scheduled within a week of application to the SSS. Once the seminar is completed, a certificate of membership is then issued to the corporation. After becoming a member of the SSS, your corporation can now register with a commercial health insurance company and file per its requirements.

Resources

• Doing Business - Measuring Business Regulation
• Kittelson & Carpo Consulting
• PinoyBusiness.org - Philippines Business Guide