Business registration, a.k.a. company incorporation, is one of the prerequisites for starting a business in the Philippines. It is a must for legalizing your business and offers numerous benefits for your company. Apart from avoiding legal troubles in the future, advantages of business registration include securing a corporate bank account, having the freedom to sell and market your business to customers, gaining trust from potential customers and employees, and of course, engaging in business in the Philippines.
Triple i Consulting’s core services are centered around business registration and business incorporation in the Philippines. The Philippines provides great opportunities for both local and foreign entrepreneurs and multinational corporations. Before companies can finalize their business plan and schedule the company launch, it is important to understand and comply with existing laws and business regulations in the country. Before an entity can legally operate a business, it must first obtain all the legal documents and requirements. Registering and incorporating a business is one of the first steps, among many, that a company must take.
Types of Philippine Business Structures and Ownerships:
Before you can start the incorporation process for your business, the first thing you need to do is to identify the type of business ownership structure best suited for your needs. Listed below are the various types of business structures in the Philippines:
Business Structures Governed By Local (Philippine) Laws
- Sole Proprietorship/Ownership
Also known as sole ownership, a sole proprietorship is a business owned by only one person and pays income taxes based on the profits that the business incurs. Common examples of this type of ownership include consultants, freelancers, individual contractors or small business owners. This type of business is registered with the DTI (Department of Trade and Industry).
A partnership business consists of at least two individual owners. Both the duties and the revenues are divided between the partners. Partnerships usually require fewer legal requirements and tax responsibilities than a corporation. This type of business is registered with the SEC (Securities and Exchange Commission).
- Philippines Domestic Corporation
A regular domestic corporation has a separate juridical character from its stockholders and other corporations it is associated with. A domestic corporation is similar to a Limited Liability Company (LLC) or a Private Limited Company (PLC) in terms of the powers and aspects given to a domestic corporation by the Corporation Code of the Philippines. Just like LLCs, a domestic corporation obtains its own liabilities and is responsible for paying its obligations legally. Similarly, the stockholders of a domestic corporation may only be held liable for their corresponding share capital.
- One Person Corporation (OPC)
One person corporations are also a domestic corporation, but not a regular corporation because it features only one stockholder that could either be a natural person, trust, or estate. An interesting difference between a One Person Corporation from a Regular Domestic Corporation is that it only requires one stockholder who is considered the director and president of the company, unlike in a Regular Corporation where there is a need for two or more incorporators and directors, but not exceeding 15, and corporate officers (Corporate Secretary, Treasurer, and President). Another notable business entity differentiation between sole ownership and OPC is that there are higher risks involved for sole ownership, as creditors can take the sole owner’s personal assets when the business incurs debts. Meanwhile, for One Person Corporation, the corporation’s assets are separated from the owner’s assets so creditors may only go after the company’s assets. Furthermore, a One Person Company is regulated by the SEC, while a Sole Proprietorship Corporation falls under the jurisdiction of the DTI.
- Philippine Branch Office
The Philippine branch office is an extension or branch of a foreign-owned corporation that performs some of the business functions of its head office from across the seas to the Philippines. As part of its parent company, Branch Offices follow the laws of the country where its company originated.
- Philippine Representative Office (PRO)
The Philippine Representative Office is a local office of a foreign corporation that aims to build a corporate presence in the Philippines. It usually acts as a communication center, or handles information dissemination, product promotion, and quality control of the company’s products for export. A representative office is not permitted to earn income in the country and attributes all its operating expenses and liabilities to its parent company abroad. A representative office does not have a separate legal personality from its parent firm.
- Philippine Regional Operating Headquarters (ROHQ)
A Philippine ROHQ is established to perform qualifying services to the multinational company’s affiliates, subsidiaries or branches in the Philippines, the Asia-Pacific region and other foreign markets. It is prohibited from offering its services to entities other than the foregoing. It is also prohibited, directly or indirectly, to solicit or market goods and services on behalf of the multinational company or any of its affiliates or subsidiaries. It is allowed to derive income from sources within the Philippines.
- Philippine Regional Area Headquarters (RHQ)
A Philippine RHQ is established to supervise, communicate and coordinate a multinational company’s subsidiaries, affiliates and branches in the Asia-Pacific region. It is not allowed to do business or derive any income from sources within the Philippines. Its operations must be fully subsidized by way of inward remittances from its head office.
Overview of How to Register a Business in the Philippines:
Business registration or company incorporation in the Philippines requires a series of steps before coming to full fruition. Here is a list of things you need to complete to process your company’s business registration successfully. Keep in mind that depending on the type of business structure best for you, these requirements may vary. Contact Us for an initial consultation to help assist you in properly setting up a business in the Philippines, selecting the best business structure, and taking advantage of any available tax incentives your business may be eligible for.
- Get your company name ready.
Prepare up to 5 company/business names so that you will have an alternative just in case your first choice for your business name is already taken by another company.
- Reserve your business name.
Sole proprietorship business structures should reserve their business names with the Department of Trade and Industry (DTI). For one person corporations (OPC) or domestic corporations, business name reservations should be made under SEC. Lastly, cooperative business industries should make their reservations at the Cooperative Development Authority (CDA).
- Prepare the requirements needed.
Visit the SEC, DTI, or CDA (CDA is the Cooperative Development Authority, which governs the registration of Cooperatives) to find out more about the requirements and documents you need to prepare and submit for your business registration. Or better yet, Contact Us for an initial consultation and let us do this work for you.
- Prepare and sign the Articles of Incorporation (for Corporations only) and By-Laws (By-laws are not required for a One Person Corporation).
- Submit requirements to your business structure’s corresponding government agency.
For corporations, prepare to submit your company’s Articles of Incorporation and By-Laws to the Securities and Exchange Commission (SEC). This will provide certain legal rights for your company. If you’re applying for a Sole Proprietorship or One Person Corporation, you need to register with the DTI.
- Register your business with Local Government Units (LGUs).
Legalize the operation of your business in the city you live in by securing these documents from various LGUs:
– Locational clearance (Zoning Administration Division, City Hall)
– DTI or SEC certificate
– Contract of a lease for rented space or Title and Tax Declaration for owned space
– Barangay Clearance (Barangay Hall)
– Business Permit (BPLO, City Hall)
– Fire Safety Inspection Certificate (BFP)
– Mayor’s Permit (Mayor’s Office, City Hall)
– Register with the Bureau of Internal Revenue (BIR).
Accomplish and submit the following with the BIR:
– BIR Form 1903 – Application for all types of business entities
– BIR Form 0605 – Tax payment form for Annual Registration
– BIR Form 1905 – For registration of Books of Account
– BIR Form 1906 – Application for Authority to Print Receipts
– BIR Form 2000 – For DST Shares and DST Lease for a Domestic Corporation
- Additional steps for corporations that will hire employees
For corporations that will hire employees, you are required to provide government benefits for housing, social security, and health. This is done through registration with the following government agencies:
– Home Development Mutual Fund (Pag-IBIG Fund)
– Social Security System (SSS)
– Philippine Health Insurance Corporation (PhilHealth)
Additional Business Incorporation Compliances:
The process of business registration can vary depending on the nature of your business. Some require additional requirements and the acquisition of extra licenses.
Some Businesses in the Philippines which requires licenses, permits or certifications include, but are not limited to:
- Agricultural Production
- Construction Business (PCAB license)
- Banking and Finance
- Cosmetic or Pharmaceutical Industry
- Energy-related Services
- Import and Export Trafficking
- Manpower or Recruitment Agency
- Mining and Mineral Processing
- Oil and Gas Sector
- Security-related Industry
Additional Services After Business Registration
Apart from obtaining licenses, businesses established in the country also need to attend to other aspects of running a business, namely:
Saving time, effort, and money is always a top consideration when going through application processes, business registrations, and other requirements. That’s where we come in, simplifying business and helping our clients achieve their business needs while they focus on running and growing their business(es).
Triple i Consulting is the first ISO 9001:2008 firm in the Philippines to provide company and business registration services. If you’re in need of assistance with company incorporation or business registration, please contact us so we can help you!
For businesses that register and are incorporated in the Philippines, the government has created an excellent plan to encourage investments in the form of tax and non-tax benefits. During business registration, a business either exporting its products and services or operating a domestic industry listed in the 2019 Investment Priorities Plan could qualify for tax benefits from the Board of Investment (BOI) or the Philippine Economic Zone Authority (PEZA), and other potential options.
Benefits May Include:
- Income tax holiday
- Duty-free import of capital equipment
- Reduced wharfage fees
- VAT exemption
- Employment of foreign nationals
- Special investors’ visa
To schedule a free initial consultation with one of our registration experts, please get in touch with us using any of the following channels:
Leave the intricacies of business registration to us while you focus on achieving your core objectives.
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