Finalizing the business plan and deciding on the nature and structure of the business leads you one step closer to your goal of becoming an entrepreneur and establishing your sole proprietor business in the Philippines. But to legally be open for business, whether you're offering online services as a freelancer or selling products in your online store, you need to be registered with the appropriate government agencies and acquire permits from local government units.
Where to Register My Business?
Before answering the question of where to register my business, we must first identify what form of business we would want to put up. For sole owners, business registrations are to be processed at the Department of Trade and Industry (DTI). For partnerships and corporations, registration is due to the Securities and Exchange Commission (SEC). And finally for cooperatives, businesses are registered at the Cooperative Development Authority (CDA).
For start-ups, we will only cover business registration for sole proprietors.
Where to Register a Sole Proprietor Business?
Listed below are the government agencies where you will be required to register your sole proprietor business:
2. Local Government Units (LGUs) where your business is located: - Barangay
- Mayor's Office
How to Register Your Business with the Department of Trade and Industry (DTI)
For sole owners, you will need to process your business registration at the Department of Trade and Industry (DTI).
First, you will need to register your business name online at the new Business Name Registration System (BNRS). Registering your business name is now easier with the advent of online payment options, paving the way for business registration to be done at the comfort of your home. You will need to prepare at least three (3) business names, just in case there are already existing ones similar to yours. You can come up with names such as ABC Trading, ABC Retail and Trading, and/or ABC Trading Enterprises. You will be asked to identify the scope of your business with corresponding registration fees: barangay (P200), municipal (P500), regional (P1,000), and national (P2,000). There will be an additional P30 for the documentary stamp tax along with the said registration fees.
Once you input your unique business name, you may provide your business address and residence as well as optional data like your TIN, and other necessary information. Paying the registration fees is now made easier and more convenient online through GCash, PayMaya, or Credit/Debit Card. After filling up the online registration form, you may pay the necessary registration fee within seven (7) days from the application date.
Upon confirmation of your payment, you may download your Official Receipt (OR) and Business Name Registration Certificate. Your DTI Certificate of Registration is valid for five (5) years from the date of its registration.
Source: https://bnrs.dti.gov.ph/
Obtaining a Barangay Clearance and Mayor's Permit
After successfully acquiring your DTI Certificate of Registration, you may proceed and register to the Local Government Units (LGUs), such as the Barangay and Mayor's Office. Take note that the barangay clearance is a requirement for filing your application for Mayor's Permit, so this must be accomplished first before proceeding to the Mayor's Office.
These are the following documents you will need to bring and accomplish when going to your own barangay to obtain a barangay clearance:
Certificate of Business Registration from DTI
Two (2) valid IDs
Proof of Address such as Contract of Lease (if rented) or Certificate of Land Title (if owned)
Duly accomplished barangay clearance application form
Barangay Clearance Registration fee of P500 (may vary according to barangay office)
Once you have claimed your barangay clearance, head straight to the City Hall of the area of your business to apply for your business permit. Prepare the following requirements upon your application:
Certificate of Business Registration from DTI
Two (2) valid IDs
Proof of Address such as Contract of Lease (if rented) or Certificate of Land Title (if owned)
Duly accomplished application form for Mayor's Permit
Barangay Clearance Certificate
Sketch/Picture of Business Location
Building Permit and Electrical Inspection Certificate
Certificate of Occupancy
Fire Safety/Inspection Permit
Sanitary Permit
Mayor's Permit processing fee of P5,000 (may vary depending on the LGU issuing the mayor's permit)
The mayor's permit is valid for one year. After claiming the DTI Certificate and Mayor's Permit, you may now proceed to register with the Bureau of Internal Revenue.
Registering with the Bureau of Internal Revenue (BIR)
Registration with the Bureau of Internal Revenue (BIR) is essential to ensure the legitimacy of your business. This is crucial in the determination of applicable taxes, issuance of your Tax Identification Number (TIN), paying your annual registration fee, and acquiring and stamping of sales invoices, receipts, and books of accounts.
1. For sole proprietors, these are the necessary documents you must prepare:
DTI Business Registration Certificate
Mayor's Permit
Contract of Lease (proof of rent) or Land Title (proof of Land Ownership)
Barangay Clearance
2. Next, fill out 3 copies of these forms based on your business classification. You may pre-download it online by clicking here or grab copies at the Bureau of Internal Revenue (BIR) office.
BIR Form 1901 - Application for Registration (for Sole Proprietor)
BIR Form 0605 - Payment Form
BIR Form 2000 - Documentary Stamp Tax
3. After filling out 3 copies of each of the aforementioned forms, proceed to the Revenue District Office (RDO) that governs your business.
The Regional District Office (RDO) is where your business is located and has jurisdiction over you. This is also where you submit your business registration application. See the list of Revenue District Offices by region by clicking here.
4. Submit the requirements below to the designated officer:
BIR Form 1901 - Application for Registration (for Sole Proprietor)
BIR Form 0605 - Payment Form
BIR Form 2000 - Documentary Stamp Tax
Photocopy of DTI Certificate
Contract of Lease (proof of rent) or Land Title (proof of Land Ownership)
Mayor's Permit
Barangay Clearance
5. After submission of the necessary documents, your registration fee will be assessed.
Fees:
Registration Fee is P500
Documentary Stamp Tax on Subscription is determined based on your capital.
Documentary Stamp Tax on Lease is determined based on your monthly rental.
6. After determination of your registration fees, you can pay the registration fees in BIR Authorized Agent Banks (AABs). You can access the list of AABs by clicking here.
7. Next, you may now queue at the Registration Section in your respective RDO and submit the following documents:
BIR Form 1901 - Application for Registration (for Sole Proprietor)
Photocopy of paid BIR Form 0605 - Payment Form
Photocopy of paid BIR Form 2000 - Documentary Stamp Tax
Contract of Lease (proof of rent) or Land Title (proof of Land Ownership)
Photocopy of Mayor's Permit
8. Get your receipt and schedule for release of your BIR Certificate of Registration Form (BIR Form 2303)
Some RDOs require attending a seminar about the filing of your taxes before releasing your Certificate of Registration (BIR Form 2303).
9. Purchase Books of Accounts.
For Non-Value Added Tax Taxpayers (Non-VAT Taxpayers), which is specifically the only type of taxpayer covered in this post, these are the kinds of books of accounts to be purchased:
Journal
Ledger
Cash Receipt
Cash Disbursement
10. Register the Books of Accounts.
Submit the following when proceeding to the Registration Section in your respective RDO:
Accomplished BIR Form 1905
Books of Accounts
11. Apply for Authority to Print (ATP)
Submit the following when proceeding to the Registration Section in your respective RDO:
Accomplished BIR Form 1906 (Application for Authority to Print Receipts and Invoices)
Photocopy of COR (BIR Form 2303)
Photocopy of paid registration (BIR Form 0605)
12. Claiming of your Official Receipt or Invoices.
This normally takes one to two weeks to be printed. Once claimed, you have finally registered your sole proprietor business and can finally focus on the operations of your business as well as prepare for future tax filings with the BIR.
Disclaimer: Registration fees for the LGUs and BIR are provided in general information. BIR fees for documentary stamp taxes may vary based on capital and monthly rental of sole proprietors.
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