Cebu Business Registration

Business-Name

How to register your business in the Philippines ? 

Business name registration is the first step to officially establish that you are the owner for such company name or brand. Before pursuing your quest to entrepreneurship, you need to understand How to register your business in the Philippines.  

Business name registration is very important. It’s no rocket science to understand why. You certainly do not want to build a successful business only to find out that the brand name you have been carrying out in the market is registered to somebody else. You’ll end up with copyright issues that will lead you to a lawsuit, and that’s the last thing you ever want as a start-up entrepreneur.

In this blog, I will be sharing you the business terminologies as defined by the Philippine Law so you can have a concrete idea on the general framework that involves around the registration of your business in the Philippines.

Before anything else, there are 3 type of business enterprise that you can pursue when doing business in the Philippines.

  1. Sole Proprietorship 
  2. Partnership
  3. Corporation

I would like to dedicate this blog entry for aspiring entrepreneurs (that are exclusively Filipino Citizens) who would want to come up of a start-up business. Therefore, I will be talking about SOLE PROPRIETORSHIP.

What is Sole Proprietorship?

As per DTI (Department of Trade and Industry), It is a business structure owned by an individual who has full control/authority of its own and owns all the assets, personally owes answers all liabilities or suffers all losses but enjoys all the profits to the exclusion of others. A sole proprietorship must apply for a business name and be registered with the DTI-National Capital Region (NCR). In the provinces, application may be filed with the DTI regional/provincial offices.

Simply put, it is a type of business enterprise that is owned, managed and directed by a single individual. 

Why Sole Proprietorship is ideal for start-ups in the Philippines?

  • Easy to set-up your business structure
    • Start without any arguments or disagreements from anyone
    • Because you will be the CEO / PRESIDENT / OWNER of the business, you do not need to concur from other people on your decision making process. 
    • Most often, sole proprietorship has a simple organization structure having first line management.
  • Minimum required capital of investment
    • Before you can officially register your business in the Philippines, the Philippine government would require you an initial capital to start the business. With Sole Proprietorship, you can start a minimal capital lower than what is required of partnership and corporation.
  • Lower cost on license fees and registration fees
    • As compared to other business enterprise, the cost for the processing fees for sole proprietorship is cheaper since the requirements are easy to comply and you will only have to deal with government agencies on your local barangay where the business will be located.
  •  Minimal government regulations for your business
    • Aside from the business ethics that are surrounded within the industry of your business, you will only have to follow minimal government regulations to establish your start-up company under Philippine law. It’s just a matter of complying the requirements.
  • DIY Business Registration
    • Registering for a sole proprietorship is easy that you can even do it yourself! (see how to register your business below this blog)
  • Enjoy profits and the fruits of your business on your own

Important things to know about Sole Proprietorship as a business enterprise:

  • Since you enjoy all the profits (and you alone), you will also have to shoulder all the risk and liabilities of the business for yourself and nobody else. This means that the creditors for your business can go after you and your personal assets even if the registered debtor is your business.
    • Example: You own XYZ company. Your company (XYZ), applies for a business loan to a bank for the purposes of expansion. If your business could not make any payments or cannot see through the loan you have made, the creditor (bank) can go after your assets as the owner of XYZ company even if the application was named under XYZ company and not on  you. 
  • All losses of the business is suffered solely on you. Simply put, if your business fails for whatsoever reason, it will be your name on the line and nobody else.
  • All capital investments are made by you and nobody else. Even if you have people who claim as your “partners” in business, they cannot be recognized officially under Philippine Law.

Where and How to register your business in the Philippines? 

Read closely. This is the most important part of this blog. I will be guiding you on where and how to register your business in proper order. This is a step by step process so don’t skip anything.

STEP 1: Register your BUSINESS NAME to the Department of Trade and Industry

This can be done either online thru this link or you can visit on the nearest DTI branch on your region. (Example: DTI REGION 7: 3/F, WDC Bldg., Osmena BLVD, cor. P. Burgos, Cebu City 6000, Cebu, Philippines).

DTI will require you to register 3 business names. Your first choice of business name should be placed on Number 1. The rest of the names will be your alternative picks in the event that your preferred business is already chosen by somebody else.

Rather than going through the long line, I suggest that you would do this process through their online portal to make your life easier. Their payments include credit card or dragon pay (use dragon pay if you do not have a credit card. You pay at the your nearest 7/11 or through SM payment centers).

If you do use the online portal, ACCESS IT ON THE NIGHT TIME. This is actually a life hack since I noticed that in the morning, their website is so slow due to the enormous internet traffic (must be their server issue. I hope they can fix it).

Click “I Agree” to proceed to the next page where it will bring you to the BNR Form (Business Name Registration). This is where you check the availability of your business name. You will notice that there are 4 choices under scope namely:

  1. National
  2. Regional
  3. City/Municipality
  4. Barangay

I usually pick National as my choice since I always leave room for my business to grow nationwide. Please take note that your DTI permit and your Business Permit are 2 entirely – and different permits. Don’t confuse one from the other. DTI permit is a permit that authorizes you as the legal owner of your business name. Your business permit should be done where your business is located (see below under business permit section on this blog).

Once you get the go signal on your business name, your will redirected on the next page for the Business Name (BN) Application Form. Fill that up – Submit – Make payment. After you make your payment, DTI will send you a confirmation thru your email that you are now the owner of the business name. They will do this by sending you the Certification of Business Name Registration (as shown above on the photo on this blog).

If you prefer to brave the long cue line, go to your nearest DTI branch (My snappy salute to you and wishing you a good luck).The steps are the same. The only difference is, you get to fill-up a form with the use of a ballpen. The form you see online is exactly the same as you will be given on the office. Challenge yourself. Brave the heat and the long line. Go for the extra mile.

STEP 2: Register your business on your local barangay

You might want to ask, why do I need to register it on the barangay when I can just go to the Mayor’s Office? The purpose for this step is for your business to create presence within that barangay (also known as Town in the United States). It is the nature of work from the barangays to issue clearance and certifications from people that are living or operating within that specific barangay.

While this is usually overlooked by entrepreneurs, working closely with the barangays can actually give you a good  leverage for your business and your product to be introduced to the townsfolk.

To register your business in the barangay, simply submit to them the following:

  • Certification of Business Name Registration
  • Two (2) Valid IDs
  • Proof of address such as Contract of Lease (if you are renting a space from an establishment) or Certificate of Land ownership (Land Title) if you own the place where your business will be located.

After submission of requirements, the barangay will then issue you a certification or a clearance. Please do take note that as surprising at it may seem, different barangays have their own different system or regulations on how to do things (just don’t complain, trust me it will only delay the process. Just keep smiling.).

STEP 3: Register your business in the Mayor’s office (also known as the Mayor’s Permit / The official business permit

READ CAREFULLY – READ CAREFULLY – READ CAREFULLY

This is one of the most important paper of all time. If you do business without this paper hanging on your wall, and get the surprise inspection from the Mayor’s Office, consider yourself as the lucky winner where you will be awarded with high penalty fees… or get the chance to win FORECLOSURE OF YOUR BUSINESS.

This is called the almighty, most holy – Mayor’s Permit / Business Permit. Without this permit, you could not get the authorization to issue an official receipt. And if you do business without issuing an official receipt, be prepared to face penalty fees, foreclosure of your business – or worse, lawsuit from the Philippine Government.

To process for your Mayor’s Permit / Business Permit do the following:

  • Go to the city hall or municipal office to where your business is located and fill-up the application form.
  •  Submit the following requirements:
    • Barangay Clearance Certificate (see how important the barangays can be?)
    • Certification of Business Name Registration from DTI
    • Two 2 Valid IDs
    • Proof of address such as Contract of Lease (if you are renting a space from an establishment) or Certificate of Land ownership (Land Title) if you own the place where your business will be located.

Important note: please register your business according to it’s nature. Different businesses may require different kind of licenses (example: If you are opening a business that sells alcohol, you will need a separate license for it).

When you comply with the said requirements, the Mayor’s office will issue you the business permit and license. You can either wait for it, or just come back for it.

STEP 4: Register your business with the Bureau of Internal Revenue (BIR)

READ CAREFULLY – READ CAREFULLY – READ CAREFULLY

BIR is the government agency that takes care of our taxes (also known as the IRS in the United States). That being said, this is closely monitored by the government and everyday they are running getting strict – and running to those who have violated the tax laws.

You need to register you business with the BIR for you to issue an official receipt to your customers. Don’t even risk about the idea of not getting an official receipt to hide your taxes. While many can still get away with it for quite sometime – you will still end up at the losing streak once the long arms of the law will catch up to you.

Registering your business with the BIR is EASY but keeping your books clean, is a different story. Allow me to write passionately about this subject matter because I have seen, heard and felt the experience of not being able to record your taxes well. The BIR can be very tricky in the sense that it does not tell you that you are doing things completely wrong – they just keep on charging you the penalties… until it’s time for them raise the red card and call you out.

To keep your records clean, consult with an accountant or a book keeping expert. I personally recommend Clasen Business Solutions since they have been experts on business registration and book keeping services for the last 15 years in the Philippines. With their good work ethic, and the path on what is right – they follow the strict rules as imposed by the government and can tell you the work around to keep your books clean as well as keeping your taxes low without offending the Philippine Government. They do this through their robust Accounting System, and through their expertise in book keeping services by recording the taxes all the time – and on time.

To register your business in BIR just simply comply the following:

  • Proceed to the Registration District Office (RDO) to where your business is located or registered.
  • Fill up the application for registration on sole proprietorship (also known as BIR FORM 1901).
  • Submit the registration form together with the requirements you have complied based from the previous steps (I told you not to skip any of them).
    • Certification of Business Name Registration (DTI)
    • Barangay Clearance
    • Mayor’s Business Permit
    • Proof of Address such as Contract of Lease (if you are renting in an establishment) or Certificate of Land Ownership (Land Title) if you own the land.
    • Two (2) Valid IDs
  • Pay the registration form (also known as the BIR Form 0605)
  • BIR will ask you to register your book of accounts, receipts and invoices.

Question: Where do I get my official receipt?

  • When BIR will ask you to register your book of accounts, receipts and invoices, the BIR will issue you a certification where you can approach different printing press that are accredited by the BIR (please take note that the printing press MUST BE ACCREDITED BY THE BIR). Not all printing press are accredited.

After complying with all the said requirements, the BIR will issue your Certificate of Registration (BIR Form 2303).

If you have managed to complete everything at this point on your own, allow me to be the first to welcome you to the entrepreneurship world. Now that you have all the business permits and licenses on your hands, you may now go full operational on your business.

If you are an entrepreneur who’s time is too precious for you to waste on complying the requirements, and go through the drama of business transaction – We can do it for you! Here at Clasen Business Solutions, we can give you a business package that bundles up the services for business registration, book keeping services and even payroll outsourcing.

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