Business Registration
Business Registration in the Philippines

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Complete Guide on How to Register a Business in the Philippines

Business Registration in the Philippines: Everything You Need to Know

What Business Entities Can I Register in the Philippines?

Corporation

The most common business entity in the Philippines, a corporation is a legal entity created by natural persons to conduct business and generate profit. It is granted with the right to own assets, transfer shares, enter contracts, hire employees, loan and borrow money, sue and be sued, pay taxes, and others permitted under Philippine laws. Its legal personality is separate from its stockholders and such individuals are only liable to the extent of their contribution to the capital. 

Corporations doing business in the Philippines are generally distinguished from their nationality (i.e., where they were incorporated). Domestic corporations are incorporated under Philippine laws. Foreign corporations, on the other hand, are incorporated in other countries but allowed to do business in the Philippines through a local corporate entity. 

Domestic corporations are generally classified into four types:

Foreign corporations can do business in the Philippines through any of the following entities:

Domestic corporations which only consist of Filipino stockholders can freely participate in any economic activity and industry sector. Those with foreign ownership are restricted to participate in areas that are included in the Foreign Investment Negative List (FINL) a list of economic sectors where foreign ownership and participation are prohibited or limited.  Many domestic corporations with foreign ownership register as an outsourcing, IT-BPO or fintech company.

Registering a corporation in the Philippines is tedious and complex. There are more or less 6 government agencies involved in the entire process, depending on the type of corporation you want to register. The registration process can last for 2 to 4 months. 

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Partnership

A partnership is a business arrangement among two or more people binding themselves to contribute money, property or industry to a common fund, with the intention of dividing the profits among themselves. Its debts and liabilities are also divided among the partners. 

A Philippine partnership can be classified into two types: general partnership and limited partnership. In a general partnership, the partners have unlimited personal liability for its debts and obligations. In a limited partnership, on the other hand, the liability of limited partners is only up to the amount of their contribution to the capital. 

Similar to a corporation, a partnership’s legal personality is separate and distinct from its partners. However, unlike corporations, it does not enjoy the right of succession. Though its legal existence is also perpetual, it will dissolve after the death of a partner or for reasons non-prejudicial to third parties. 

Registering a partnership with the Securities and Exchange Commission (SEC) is necessary when its capital is P3,000.00 or more. But SEC registration is not necessary for a partnership to acquire legal personality. Unregistered partnerships can still have legal personalities that are separate and distinct from their partners. 

This type of business entity is commonly used by individuals seeking to collectively exercise their profession, i.e., lawyers and accountants.

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Sole Proprietorship

The simplest business entity in the Philippines, a sole proprietorship is owned by an individual who has full control over the business and exclusively owns all assets and profits of the business. The business owner is referred to as the “sole proprietor” and is personally liable for all debts and liabilities that the business will incur.   

Registering a sole proprietorship is quick. The law treats the owner and business as the same, so they only need to register their name with the Bureau of Trade Regulation and Consumer Protection (BTRCP) of the Department of Trade and Industry (DTI) and secure local permits to start operating. 

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What Are the Setup Requirements for Registering a Company in the Philippines?

Corporation

The passage into law of the new corporation code, the Revised Corporation Code of the Philippines, last February 2019, redefined the corporate rules that both local and foreign enterprises have to follow when operating a business in the Philippines. Among the major changes of the Revised Corporation Code (RCC) are the setup requirements for registering a company. 

Number and Qualifications of Incorporators

According to the RCC, any person, partnership, association or corporation, singly or jointly with others but not more than fifteen in number, may organize a corporation for any lawful purpose/s. Each stockholder (also known as incorporator) must subscribe to at least one share of the capital stock. Foreign investors can be included in the Articles of Incorporation (AOI), subject to restrictions under the FINL and other applicable laws and regulations. 

Natural persons licensed to practice a profession, along with partnerships or organizations organized for the purpose of practicing a profession, shall not be allowed to form a corporation unless otherwise provided under special laws. 

Requirements for Corporate Officers

Corporations in the Philippines are required to have at least three officers:

  • President
  • Corporate Secretary
  • Treasurer

The Corporate Secretary must be a Filipino citizen. The Treasurer can be a foreign national but must be a resident in the Philippines. The President can be a foreign national not residing in the Philippines but must be a director and hold at least one share of the capital stock.

Appointment of Independent Directors and a Compliance Officer

RCC requires corporations vested with public interest to have the following:

  • A board with independent directors (occupying at least 20% of board seats)
  • A compliance officer

An independent director shall be independent of management and free from any business or relationship which could (or could reasonably be perceived to) materially interfere with the exercise of independent judgment in carrying out their responsibilities as a director.

A compliance officer is a mandatory corporate officer elected by the board to perform duties such as but not limited to the following:

  • Ensure the company’s compliance with existing laws and regulations
  • Ensure the integrity and accuracy of all documentary submissions to the government
  • Appear before the SEC when summoned in relation to concerns about compliance
  • Perform other duties and responsibilities as may be provided by SEC

Minimum Capital Requirement

For wholly Filipino-owned corporations, the minimum capital requirement is P5,000.00 or US$100.00. This also includes corporations with 60% Filipino-40% foreign ownership, since they are considered local corporations. Under the RCC, there is no longer a need to subscribe at least 25% of the authorized capital stock and at least 25% of said stock be paid upon subscription. As such, the requirement of a sworn statement by the Treasurer stating that such has already been complied with is no longer applicable. 

However, a domestic corporation with foreign ownership exceeding 40% is required to have a minimum paid-up capital of US$200,000. This amount may be reduced to US$100,000 if the corporation involves advanced technology as determined by the Department of Science and Technology (DOST), or if it employs at least 50 direct employees. 

Additionally, certain laws require minimum paid-up capital for companies seeking to engage in regulated activities. These include financing companies where the minimum paid-up capital is between P2.5 to P10 million; insurance companies – P1 billion; investment house – P300 million; health maintenance organization (HMO) – P10 million; and securities broker/dealer – P100 million. 

Partnership

To register a partnership in the Philippines, two or more individuals seeking to practice their profession through a partnership must agree to set up a general partnership or a limited partnership. 

In a general partnership, all partners have unlimited personal liability for the debts and obligations. On the other hand, in a limited partnership, one or more of the partners have unlimited personal liability while some have limited personal liability only up to the amount of their contributions to the capital. 

When the capital is P3,000.00 or more, the partnership must be registered with SEC. If the capital is less than P3,000.00, it must be registered with DTI. 

Sole Proprietorship

Registering a sole proprietorship in the Philippines is relatively easy. An individual, whether local or foreign, must register their name with DTI and secure a Mayor’s Permit and Barangay Clearance to start operating.

What Should I Accomplish Before the Registration Process?

Depending on the type of entity, the business registration process can take months to complete. But before you lodge your application, you need to be aware of the pre-registration requirements you need to settle. 

Reserve Company Name

The first step in registering a company in the Philippines is reserving your company name with the Securities and Exchange Commission (SEC) — the government agency responsible for registering and monitoring corporations and partnerships in the country. 

SEC will verify if your desired name is available and not identical or confusingly similar to that of another company. SEC does not accept proposed company names with offensive words or words restricted from usage in accordance with existing laws.  

You can reserve your proposed company name in two methods:

  1. Company Registration System (CRS) — SEC’s online reservation system
  2. Personal visit to SEC’s office

Once approved, the company name will be reserved for you for a maximum of 90 days. During such time, you must process your business registration. If your registration is not yet finalized after the 90 days lapse, you can apply for an extension of the name reservation.  

If you reserved your company name online, you need to visit the nearest SEC office to confirm the reservation within 4 calendar days from the date of approval. Non-confirmation within the prescribed period will forfeit the reservation. 

Draft Articles of Incorporation/Partnership and Bylaws

While awaiting approval of your proposed company name, you must prepare the Articles of Incorporation (AOI) and bylaws of your proposed corporation. For partnerships, the equivalent of such document is the Articles of Partnership (AOP). You can engage the services of a business consulting firm or hire a lawyer to expedite the process. Make sure to have the AOI/AOP notarized. 

Secure the Contract of Lease of Your Office Address

You need to have a registered office address before starting the company registration process. Though SEC does not require you to have an office address to approve your application, it is not the only agency you need to register with. You also need to register your company with the Bureau of Internal Revenue (BIR) and local government unit (LGU) and both agencies require you to present the Contract of Lease of your office address. A document that you will only be able to provide if you have a registered office address. 

However, you have the option of renting a virtual office to fulfill the requirement for the meantime if you will not be able to lease a physical office during the registration process. 

Open a Treasurer-in-Trust (TIT) Account

Foreign corporations seeking to acquire an SEC license to operate a Branch Office or Representative Office in the Philippines must open a Treasurer-in-Trust (TIT) Account with their preferred bank. The TIT Account will serve as the temporary depository account of the required paid-up capital of the corporation. 

To open a TIT Account, the basic requirements are as follows:

  • proposed AOI and by-laws 
  • account opening forms with the specimen signature card to be accomplished by the TIT
  • valid identification cards of the TIT 
  • minimum deposit required by the bank (which can range from P10,000.00 to P50,000.00) 

Upon completion, the bank will issue a Certificate of Deposit, which is among the documentary requirements to be submitted to SEC. 

Appoint a Resident Agent

Foreign corporations seeking to do business in the Philippines must appoint a Resident Agent who shall represent the company in legal proceedings, become the signatory for official documents, and receive notices and summons served to the company. 

The resident agent can be a foreigner or a Filipino citizen. A Board Resolution from the foreign corporation must be presented to officialize the appointment.

What is the Process of Registering a Company in the Philippines?

Corporation

As the most common business entity, registering a corporation in the Philippines is tedious. Depending on the specific type of corporation, there are more or less 6 government agencies you need to coordinate with to complete the entire process. 

If you want to set up a domestic corporation, you need to obtain a Certificate of Registration from SEC and BIR to start operations. Conversely, if you conduct business overseas and want to expand your business or open a cost center/headquarters in the Philippines, you need to obtain a License to Do Business from SEC.  

You must indicate in your application the Tax Identification Number (TIN) of the stockholders/members (for corporations) or partners (for partnerships). If you have documents signed abroad, you must have them authenticated by the Philippine Embassy or the consulate of the country where they were signed. 

Each government agency involved in the business registration process has its own set of requirements, so you have to do extensive research before proceeding with each step of the registration. You can engage the services of a consulting firm to expedite the process.  

Domestic Corporation

Similar to a Private Limited Company (PLC) or a Limited Liability Company (LLC), a domestic corporation, or subsidiary corporation, is the most common type of corporation in the Philippines. It can be incorporated by a maximum of 15 individuals (known as incorporators), who must all subscribe to at least 1 share of the capital stock. If it will only have a single incorporator, it shall be considered a One Person Corporation

Under the Revised Corporation Code (or RCC, an amendment to the old Corporation Code), a domestic corporation can have perpetual corporate existence, unless its AoI provides otherwise. 

How to Register a Domestic Corporation in the Philippines

Generally, registering a domestic corporation in the Philippines has five steps:

  • Register with SEC to obtain an SEC Certificate of Registration
  • Obtain business permits from the local government unit (LGU) where the company will be located
  • Register with the BIR to obtain a BIR Certificate of Registration and corporate tax number
  • If you will employ local employees, you need to register as an employer with the following government agencies:
    • Social Security System (SSS)
    • Philippine Health Insurance Corporation (PhilHealth)
    • Home Development Mutual Fund (Pag-IBIG Fund) 
  • Apply for secondary licenses (if will register in a regulated industry)

Domestic corporations with foreign equity are required to provide a Proof of Remittance from their foreign corporate subscribers if they want to register their investments with the Bangko Sentral ng Pilipinas (BSP) or an affidavit that they will not register their investments with said agency. Those with more than 40% foreign equity must submit an SEC Form No. F-100 (Application to Do Business under the Foreign Investments Act of 1991). 

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Foreign Corporation

Foreign corporations seeking to expand their business in the Philippines need to obtain a License to Do Business before starting operations. They can choose among four types of entities:

  • Branch Office
  • Representative Office
  • Regional Headquarters (RHQ)
  • Regional Operating Headquarters (ROHQ)

Those who want to generate income in the Philippines by carrying out the business activities of their parent company can set up a Branch Office. Those who want to set up a cost/contact center or promote their services in the Philippines without engaging in profit-generating activities can set up a Representative Office

Moreover, those who want to supervise or coordinate their subsidiaries, branches, and/or affiliates worldwide through a contact center without generating profit can set up a Regional Headquarters (RHQ). Lastly, those who want to carry out the business activities of their parent company to provide a service center for their subsidiaries, branches, and/or affiliates worldwide can set up a Regional Operating Headquarters (ROHQ). 

How to Register a Foreign Corporation in the Philippines

Regardless of what type of entity, the registration process for foreign corporations seeking to operate in the Philippines has five steps:  

  • Register with SEC to obtain a License to Do Business
  • Obtain business permits from the local government unit (LGU) where the local corporate entity will be located
  • Register with the BIR to obtain a corporate tax number
  • If you will employ local employees, you need to register as an employer with the following agencies: 
    • SSS
    • PhilHealth
    • Pag-IBIG Fund
  • Apply for Work Visa* (for foreign directors, executives, and employees)

*can be done after obtaining the SEC license

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Partnership

Depending on your proposed capital, you can register your partnership with SEC or DTI. If your capital is P3,000.00 or more, you need to register with SEC. If it is below the said amount, you must register it with DTI. 

Most partnerships in the Philippines register with SEC, and the registration process is as follows:

  • Reserve company name and register with SEC to obtain an SEC Certificate of Registration
  • Obtain a Barangay Clearance from the local government unit (LGU) and a Mayor’s Permit from the Mayor’s Office where the business will be located
  • Register with BIR to obtain a BIR Certificate of Registration and corporate tax number
  • If you will employ local employees, you need to register as an employer with the following agencies:
    • SSS
    • PhilHealth
    • Pag-IBIG Fund

The fee for filing the partnership articles is 1/5 of 1% of the partnership capital, but not less than P1,000.00. 

Sole Proprietorship

The registration process for a sole proprietorship is with the Department of Trade and Industry (DTI) and not the SEC. The process is as follows: 

  • Register your name with DTI and obtain a DTI Certificate of Registration
  • Obtain a Barangay Clearance from the local government unit (LGU) and a Mayor’s Permit from the Mayor’s Office where the business will be located
  • Register with BIR to obtain a BIR Certificate of Registration 
  • If you will employ local employees, you need to register as an employer with the following agencies:
    • SSS
    • PhilHealth
    • Pag-IBIG Fund

What Are the Next Steps After Registration?

Conduct First Meeting and Elect Corporate Officers

After receipt of the SEC Certificate of Registration, companies should hold their first meeting of directors to deal with the following matters: 

  • Elect company president, managing director, and additional directors and trustees
  • Appoint a corporate secretary, treasurer, and compliance officer
  • Issue share certificates and, if appropriate, allotment of further shares in the company
  • Approval of banking arrangements, including agreeing authorized signatories in respect of the company’s bank account and passing the resolutions required by the bank
  • Approval of any business contracts
  • Approval of any employment contracts
  • Disclosure by directors of their interests in any contracts made with the company
  • Disclosure in writing by the directors of their interests in shares or debentures of the company and associated companies
  • Adoption of a company accounting reference date
  • Convening of a company general meeting (if required)

Open a Corporate Bank Account

If you intend to do business exclusively with local clients and suppliers in the Philippines, you can open a corporate account with any of the major commercial banks in the country, such as UnionBank of the Philippines, Banco de Oro (BDO) Unibank, Bank of the Philippine Islands (BPI), and Asia United Bank (AUB). 

If you want to do business with both local and international clients and suppliers, you should open a corporate account with an established international bank offering multi-currency accounts. International banks operating in the Philippines include JPMorgan Chase & Co., Citibank, HSBC, and ANZ. 

Local banks generally require an initial minimum deposit of at least US$20,000, which must be deposited into the corporate account within one week of approval. On the other hand, international banks will generally require an initial deposit and minimum monthly balance of US$10,000. Maintaining this minimum amount is highly advised to avoid average monthly service charges of US$25. 

Hire and Register Employees with the Government

Registered companies in the Philippines are required to report their new employees to four government agencies:

  • Bureau of Internal Revenue (BIR)
  • Social Security System (SSS)
  • Philippine Health Insurance Corporation (PhilHealth)
  • Home Development Mutual Fund (Pag-IBIG Fund)

Under labor laws, it is mandatory to notify these government agencies on the status of employment of an individual to grant them the employee benefits they are entitled to. 

As an employer, you must pay tax dues to BIR and contributions to SSS, PhilHealth, and Pag-IBIG on a monthly basis by withholding a portion of your employees’ actual monthly salary. Employers who fail to remit the required tax dues and contribution by the scheduled deadlines are liable for payment of interest penalty, which is computed from the due date until the time of payment.  

Apply for Tax Incentives

The Philippine government provides tax incentive schemes as a means to encourage foreign investments in key areas of development, granting regulatory powers to the agencies of the Philippine Economic Zone Authority (PEZA) and Board of Investments (BOI) to administer tax and non-tax incentives to qualified enterprises. 

To be eligible for incentives from PEZA, you must locate your office address in one of its Special Economic Zones (SEZs). BOI, on the other hand, will require you to engage in any of the areas of investment listed in its Investment Priorities Plan (IPP). 

There are also a few agencies that provide incentives to specific industries. If you want to engage in tourism-related business activities, you can avail of tax incentives from the Tourism Infrastructure and Enterprise Zone Authority (TIEZA). If you want to operate an online gambling or online gaming company, you can register your business with the Cagayan Economic Zone Authority (CEZA) to avail of special tax breaks and other incentives. You can also avail of tax incentives from the Bases Conversion and Development Authority (BCDA) and Clark Development Corporation (CDC). 

Comply with Annual Regulatory Requirements

As a registered enterprise in the Philippines, you are required to submit year-end compliance requirements to the government, from business permit renewal and filing of Audited Financial Statements (AFS) to submission of BIR Form 2316 (Certificate of Compensation Payment/Tax Withheld) and registration and submission of books of accounts.  

Business Permit Renewal

All registered businesses have to renew their business permits annually with the following agencies: 

  • Local Government Unit (LGU)
    • Barangay 
    • Municipal
  • Bureau of Internal Revenue (BIR)

You need to secure a Barangay Permit first before applying for a Mayor’s Permit from the municipality where your business is located. The deadline for the Annual Payment of Business Registration Renewal is every January 20. You have the option to pay the renewal fees on a quarterly basis, which shall be due 20 days after the close of each quarter (April 20, July 20, and October 20). 

The penalty for non-compliance with the LGU is a 25% surcharge on the tax assessed, plus an additional 2% penalty for every month of non-renewal after the deadline. For extremely delinquent accounts, the penalty is closure and/or seizure of properties and assets. 

After renewal of Barangay Permit and Mayor’s Permit with the LGU, you can proceed with renewing your BIR Business Registration. The deadline for business registration renewal with the BIR is every January 31. The annual registration fee of P500.00 must be filed and paid to the BIR on or before January 31. 

The penalty for non-compliance with the BIR is a fine of not less than P5,000.00 but not more than P20,000.00 and imprisonment of not less than 6 months but not more than 2 years. 

Distribution and Submission of BIR Form 2316 (Certificate of Compensation Payment/Tax Withheld)

A BIR Form 2316 is a form that enumerates an employee’s income earned, with the corresponding tax withheld and remitted to the BIR by the employer during the taxable year. The deadline for distribution and signing of the current employee is every January 31

The employer must submit to BIR signed copies of BIR Form 2316 on or before February 28. 

Registration and Submission of Books of Accounts

The submission deadline depends on the type of books of accounts you registered with the BIR, which can be any of the following:

  • Manual 
  • Loose-Leaf 
  • Computerized

Manual books of accounts will only be eligible for renewal or re-stamp if they are already fully exhausted or used. Hence, they are not required to be submitted to BIR annually. But they are usually required to be presented during audit and/or tax mapping. Loose-leaf books of accounts must be submitted to BIR every taxable year on or before January 15. Lastly, computerized books of accounts must be submitted to the BIR in CD-R, DVD-R or other optical media format every taxable year on or before January 30.  

Filing of Annual Income Tax Returns and Audited Financial Statements

Registered enterprises are required to submit to SEC (for corporations only) and BIR a copy of their Annual Income Tax Return (BIR Form 1701 or 1702) and Audited Financial Statements (AFS) on or before April 15.  

Filing of General Information Sheet (GIS)

Corporations are required to submit to SEC their General Information Sheet (GIS) 30 days after the actual annual stockholder’s meeting (for Domestic Corporations) or anniversary of the issuance of the SEC license (for Foreign Corporations). The GIS must be signed by the Corporate Secretary. 

Filing of General Form Financial Statements (GFFS)

The SEC requires corporations with gross sales or revenue of more than P5,000,000.00 during the year to file their General Form Financial Statements (GFFS), an excel form required to be filled out and submitted to SEC in electronic format after 30 days from the last day of submission of AFS

Submission of Summary List (Alphalist)

In alphabetical list, the following must be submitted to BIR annually: 

  • BIR Form 1604CF (Annual Information of Income Taxes Withheld on Compensation)
  • BIR Form 1604E (Annual Information Return of Creditable Income Taxes Withheld (Expanded) / Income Payments Exempt from Withholding Tax)

BIR Form 1604CF consists of the summary of withholding taxes on compensation (BIR Form 1601C) paid and filed to BIR during the taxable year. It also includes the summary list (alphalist) of employees, existing and resigned, during the same taxable year. The deadline for submission is on or before January 31

BIR Form 1604E consists of the summary of expanded withholding tax (BIR Form 1601E) paid and filed to BIR during the taxable year. It also includes the summary list (alphalist) of income payees during the taxable year. The deadline for submission to BIR is on or before March 1

Summary List of Regular Suppliers

In accordance with Revenue Regulation 14-2008, large taxpayers (those included in Top 5,000/20,000 Private Corporations) as determined by the Commissioner of the Internal Revenue, shall submit on semestral basis a summary list of its regular suppliers of goods and/or services to the Large Taxpayers Assistance Division/Large Taxpayer District Office on or before January 31 for the second semester (July to December) and July 31 for the first semester (January to June). 

Submission of Summary List of Tenants and Other Requirements

In accordance with Revenue Regulation 12-2011, taxpayers engaged in leasing or renting of properties for commercial activities are required by the BIR to submit the following:

  • Layout of leased property
  • Certified true copy of lease agreement per tenant
  • Lessee information sheets as of December 31 

This summary list is due for submission on or before January 31 for the second semester (July to December) and July 31 for the first semester (January to June). 

Submission of Inventory List and Other Reportorial Requirements

In accordance with Revenue Memorandum Circular 57-2015, inventory list and other tangible asset-rich balance sheets are required to be submitted to BIR in DVD-R with proper label and notarized certification signed by an authorized representative on or before January 30.

Business Registration in the Philippines FAQs

What business entities can I register in the Philippines?

You can register any of the following business entities in the Philippines, namely:

  1. Corporation (Domestic Corporation, One Person Corporation or Foreign Corporation)
  2. Partnership (General Partnership or Limited Partnership)
  3. Sole Proprietorship (Filipino-owned or Foreign-owned)

What should I accomplish before the business registration process in the Philippines?

Before undergoing the business registration process in the Philippines, you need to be aware of the pre-registration requirements you need to settle first, which are generally as follows:

  1. Reserve company name
  2. Draft Articles of Incorporation/Partnership and Bylaws
  3. Secure the Contract of Lease of your office address
  4. Open a Treasurer-in-Trust (TIT) account (for branches/representative offices only)
  5. Appoint a Resident Agent (for foreign corporations only)

What are the next steps after business registration in the Philippines?

After registering your business in the Philippines, you need to accomplish post-registration requirements, which are generally as follows:

  1. Conduct first meeting and elect corporate officers
  2. Open a corporate bank account
  3. Hire and register employees with the government
  4. Apply for tax incentives (optional)
  5. Comply with annual regulatory requirements

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