In starting a business in the Philippines, an entrepreneur must first acquire the legal requirements from the government. These requirements or documents are mostly in the form of certificates, clearances or permits needed to make sure that the nature of desired business conforms with the laws, regulations and ordinances being implemented in the city or municipality where the business is to operate.
It is very essential to get first the legal documents before starting your business. This is because, when the business is found operating without complete legal documents, this might result to closure of business, confiscation of business properties and assets, monetary fines and worst case scenario, imprisonment.
There are 5 major legal requirements in starting a business in the Philippines. Commonly, you’ll start from getting a Certificate of Registration from DTI or SEC and end up with BIR Registration. In between, there could be more addition documents depending on the nature of your business.
This time, you might already came up with a business plan and you are ready to make this into a reality. Well, getting these documents is your starting point that might take some time, but you’ll soon acquire them all and start your business operation.
5 Legal Requirements in Starting a Business in the Philippines
1. Certificate of Business Name Registration
One of the major requirements in starting a business in the Philippines is the Certificate of Business Name Registration. Depending on the type of business you want to start, you need to register you business name and acquire this certificate in the administering government agency.
For sole proprietorship, you need to register your business in the Department of Trade and Industry (DTI). This type of business is very common in the Philippines wherein you (the owner) and the business exists as one. You alone are responsible by the losses of your business but no one can share the full benefits of your profits.
On the other hand, if the type of the business is a partnership or corporation, you need to register it on the Securities of Exchange Commission (SEC). As a brief explanation, in partnership, the distribution of profits and loses of the business is based on the agreement of partners. While in corporation (stock), the distribution of the dividends (payments) is based on the stockholder’s shares of stock.
Note that after you have registered your business name and got the Certificate of Business Name Registration from DTI or SEC, this doesn’t give you an authority to commence the operation of your business. The purpose of it is to register your business name and protect it from anyone without the authority to use your business trade name.
2. Barangay Clearance
A Barangay Clearance is an essential document which certifies that the business that you are about to start is in compliant with the barangay standards requirements where the business is located. Your Certificate of Business Name Registration might be required in getting this clearance so bring it upon your application.
3. SSS, PhilHealth, PAG-IBIG Registration
If you need to hire employees in the business you are about to put up, you are required to be a registered employer in the three government-owned and controlled corporations that mainly provides handful benefits to your future employees. Membership to these corporations are required by the government.
- Social Security System (SSS) – benefits includes financial assistance in times of sickness, maternity, disability even retirement, death and funeral.
- Philippine Health Insurance Corporation (PhilHealth) – provides health care services to its members.
- Home Development Mutual Fund (HDMF, commonly referred to Pag-IBIG Fund) – administers national savings and housing programs.
Every month, you are going to remit the monthly contributions of your employees along with your share of the contribution to the above mentioned government corporations. If you are not familiar how to calculate your share, you may refer to these tables: SSS Contribution Table, PhilHealth Contribution Table and Pag-IBIG Contribution Table.
4. Mayor’s Permit
It is very reasonable to ask permission from the local government administration about the business you want to start in the city or municipality. This is the step when you need to get a Business Permit or commonly recognized as Mayor’s Permit since you can get this at the Office of the Mayor in your locality.
However, before you can apply for a Mayor’s Permit, you must first acquire the Certificate of Business Name Registration from DTI or SEC and the Barangay Clearance. Acquiring the Mayor’s Permit takes some time. Depending on the standards and ordinance being implemented in the city or municipality, additional requirements might arise such Fire Permit, Health and Sanitary Permit, Solid Waste Certificate, etc.
5. BIR Registration
The final step to legally start your business in the Philippines is to register your business in the Bureau of Internal Revenue (BIR). Then again, you cannot register unless you have the legal documents previously mentioned. The registration of your business in BIR is primarily for tax purposes. This is the step where you should apply for the business’ Tax Identification Number (TIN) and have your Book of Accounts, Receipts and Invoices stamped by BIR.
Moreover, depending on the nature of your business, there could be addition requirements such as special permits, clearances, licenses, certifications, etc.. For example, if you want to put up a pawnshop, you need a clearance from Bangko Sentral ng Pilipinas (BSP). The table below contains examples of nature of business that requires additional requirements/documents.
| Nature of Business | Government Agency |
|---|---|
| Food, chemicals, health related business. | Registration Certificate from Bureau of Food and Drugs, Department of Health (DoH-BFAD) |
| Pawnshop & lending investor. | Registration Certificate from Bangko Sentral ng Pilipinas, Department of Finance (DoF-BSP) |
Service and repair shops for:
|
Accreditation License from Bureau of Trade Regulation and Consumer Protection (DTI-BTRCP) |
| Animals and animal products, registration of veterinary drugs and animal facilities. | Registration Certificate from Bureau of Animal Industry |
| Aquatic animals, importation, fishpond lease agreement. | Permit from Bureau of Fisheries and Aquatic Resources (DA-BFAR) |
| Fertilizer products and registration of pesticide products. | Registration Certificate from Fertilizer and Pesticide Authority (DA-FPA) |
| Fiber and fiber products processing and trading. | Registration Certificate or Commodity Clearance from Fiber Development Authority (DA-FIDA) |
| Flour processing, grains wholesaling and retailing, milling, warehousing, exporting, importing, indenting, packaging, threshing, corn shelling, mechanical drying. | License from National Food Authority (DANFA) |
| Sugar trading, muscovado converting and trading, processing or manufacturing sugar-based products for export. | Registration Certificate from Sugar Regulatory Administration (DA-SRA) |
| Meat plant accreditation for meat and meat products, slaughterhouse operations. | Accreditation Certificate and Registration Certificate from National Meat Inspection Commission (DA-NMIC) |
| Plants and plant products: nursery accreditation seed certification and phytosanitary certificate. | Permit and Registration Certificate from Bureau of Plant Industry (DA-BPI) |
| Recruitment or placement agency for foreign employment. | Registration Certificate from Phil. Overseas; Employment Administration, Department of Labor (DOLE-POEA) |
| Recruitment or placement agency for local employment. | Registration Certificate from Bureau of Local Employment (DOLE-BLE) |
| Schools and educational institutions. | Permit from Department of Education (DepEd); Commission on Higher Education (CHED); Registration and Accreditation Certificate from Technical Education Skills Development Authority (DOLE-TESDA) |
| Security agency business. | Permit from Philippine National Police, Department of Interior and Local Government (DILGPNP) |
| Telecommunications business. | License from National Telecommunication Commission, Department of Transportation and Communication, (DOTC-NTC) |
| Tourism-related projects. | Registration and Accreditation Certificate from Department of Tourism (DOT) |
| Transportation: Land transport service; Sea transport service. | Land Transport Franchise and Regulatory Board (DOTC-LTFRB); Maritime Industry Authority (DOTC-MARINA) |
| Film and television production, export and import, booking, etc. | Registration Certificate from Movie & Television Review and Classification Board (MTRCB) |
| Video production, sales and rental. | Optical Media Board (formerly Videogram Regulatory Board), Office of the President (OP-OMB) |
Fore more information about the legal requirements in starting a business in the Philippines, you may refer to this PDF File from DOLE: Securing Business Permits and Business Registration. If you found this helpful, do let us know your thoughts in the comment section.
