So, you have an ingenious business idea that you want to execute as a sole proprietor in the Philippines, but lack legal knowledge on how to get started, right?
You can take the help of professionals for setting up a company in the Philippines. Herein, this article aims to educate on certain crucial aspects of the same process of being a sole proprietor.
Before we go any further, it is imperative to know what draws the attention of entrepreneurs and investors from all parts of the world to this small South-East Asian country?
There is no single reason. Instead, an amalgamation of favorable factors, spanning from less doing business, curtailed corporate taxes, to a talented workforce.
What is a Sole Proprietor?
A sole proprietor is a prevalent business entity owned & managed by a single individual. It is easier to set up & register, requiring minimum capital and minimal regulations; above all, you have no one to share your profits. However, sole proprietors have a set of shortcomings such as risk & liability are all on your shoulders. The loss is suffered alone, and as the business grows, management becomes next to impossible.
Procedure to Register a Sole Proprietorship in the Philippines
First things first, sole proprietors are treated the same way as the LLP, private ltd, or other entity business owners. They also have to register their name with the DTI, known as the Department of Trade and Industry, and secure licenses based before commencing the services.
Here’s a practical guide to register your sole proprietor business in the Philippines:-
Step 1: You require a Certificate of Registration for registering your company name with DTI.
What is the Registration Fee for DTI?
- National-P2000
- City-P500
- Regional-P1000
What is the Time to Complete the Registration?
It’s between 1 and 2 days.
Step 2: A Barangay Certificate is required to register with the Barangay Office — where your business is located.
What is the Registration Fee for the Barangay Office?
The registration fee is PHP 800. Further, it depends on the local government unit issuing the Mayor’s permit.
What is the Time to Complete the Registration?
It’s two days
Step 3: In the third step, you need the Mayor’s permit, for that, you’ve to be registered with the Mayor’s Office.
What is the Registration Fee for the Mayor’s Office?
- PHP 2000 for permit fee for businesses engaged in the retail
- PHP 360 for occupational tax
- PHP 905 for occupational police clearance/ health clearance.
- PHP 900 for sanitary permit fee, besides, 0.2% of capital for the license fee.
- PHP 2,500 for the garbage collection fee.
What is the Time to Complete the Registration?
Time to Complete: 2 days
Step 4: Finally, you got to register with the Bureau of Internal Revenue (BIR) to obtain the Registration Certificate.
What is the Registration Fee for the Bureau of Internal Revenue?
PHP 500 is the registration fee, PHP 100 is the certification fee, and PHP 15 for documentary stamp tax, to be attached to Form 2303 in loose form.
What is the Time to Complete the Registration?
It’s two days
Final Thoughts
The majority of the Philippines’ small businesses are launched as sole proprietorships. Later on, they move on to other business entities as they mature, profits increase, and whenever there is a need for expansion.
The philippine sole proprietorship transition to any other business model is not complicated, but specific guidelines need to file the request application successfully.
