Need to know where and how to start your business from scratch? Confused about legalities and cost? No clue about the cost and permits you need to acquire on Philippine turf? If you’re starting to lay down the groundwork and structure of your business plan, then read on.
Through this article, Founder’s Guide will walk you through the Philippine business guidelines. As a platform that provides valuable business knowledge and information, we aim to support entrepreneurs and people who want to start their own business.
Things to Consider When Opening a Business in Philippines
This list includes the following: what requirements they need to comply with, the factors they need to consider, the steps they need to take, and so on.
I’m assured that you as the reader right now are perfectly convinced that starting a business is not a walk in the park. You may find yourself at a loss as to which measure needs attention and priority. True, the path is long and can get critical at some point.
Take a look at the checklist I have prepared for your perusal. This step-by-step guide can help you inch toward your business goals.
1.Finding a temporary office space
1. A coworking office
2. Incubation center
3. Personal space (at home)
You can be halfway in structuring your business model, or it can be almost in completion. While you’re at this stage, you can segregate a professional space for you to work on that. This is a very crucial phase in your business, so make sure that you scout the right location. You will be surprised to learn that there are a lot of shared and coworking offices around the corner you can utilize and be a part of.
2. Opening a TITF (treasurer-in-trust-for) bank account
This is the first order of business. You need to open this simultaneously with your SEC (Securities and Exchange Commission) registration. To give you an overview, these are the application requirements needed by the bank. Make sure that you present complete documents to the bank officer who will evaluate/screen the details for smooth processing.
- Declaration of the 25 percent of the authorized capital stock that will be put on hold by the bank until you open the official corporate bank account.
- Articles of incorporation
- Board resolution
- Valid identification of all incorporators
Maximum ETA will be within 5 days (if your business is located in Manila, you can secure this within 1 day).
3. Registering the business officially
Not only is this the call of highest importance, but this is mainly a complex part that requires detailed and intensive processes and applications (as are all government-related concerns in the Philippines). Note that there’s no definite time frame as to when your application will be approved, so the earlier the better. The easiest way to start processing is to hire specialists and let them take the lead.
Maximum ETA: 1 month exclusively for SEC registration.
Note that, according to the law, Filipino incorporators must not be fewer than the foreign partners. After the SEC approval, you need to request for TITF account cancellation to proceed to opening the corporate bank account. You also need to remember that the maintaining account balance will vary from P5,000 to P50,000.
4. Securing LGU (local government unit) permits
Aside from securing the official certificate of (business) registration from SEC, there are other LGU permits you have to acquire, such as a mayor’s permit, sanitary permit, environmental (CENRO permit), fire permit, and barangay clearance (depending on your location).
Aside from securing the official Certificate of [Business] Registration from SEC, there are other LGU permits you have to acquire such as Mayor’s permit, Sanitary permit, Environmental (Cenro permit), Fire permit and Barangay Clearance (depending on your location)
5. Opening a business bank account
Managing your finances begins with having an official corporate-bank-account type. Most business owners use their personal bank accounts for their business needs. However, it is best to keep personal transactions separate from those for business. As your business grows, your cash transactions (both inflows and outflows) will grow as well. To manage your cash flow efficiently, you will need the right deposit system in place.
- Open a business bank account with your bank of choice.
- Open a payroll account for each employee.
- Enable online banking services (for disbursement of expenses).
*FYI, there are 26 types of common expenses.
6. Employer registration in government-mandated sectors
This includes SSS (Social Security System), BIR (Bureau of Internal Revenue), PhilHealth (Philippine Health Insurance Corporation), and Pag-IBIG Fund services. It is mandated by law that all business establishments need to register and remit to those institutions for legal purposes. You as an employer are also required to enroll and grant all your employees an account access to all these said sectors. Make sure they can avail of the services being offered to them as members.
7. Employer preparation of monthly remittance
As an employer, you are required to update government agencies such as BIR, SSS, PhilHealth, and Pag-IBIG about your new hire’s most recent employment. During every pay period, the employer must withhold employee contribution and remit it to these agencies every month.
- Additional Points:
1. If you don’t have a company accountant, you can outsource bookkeeping services to maintain your books and records monthly.
2. This is also the time when you have to secure proper working visa permits if you have foreign associates.
Note: There will be penalties if you are late in remitting monthly contributions.
8. PEZA (Philippine Economic Zone Authority)
This is only applicable to foreign or international companies. If you’re a foreign company scaling out your business here in the Philippines, then registering your company with PEZA has its perks. Basically, if your operations are conducted within a PEZA-approved zone, you will be exempted from certain tax regulations. Although it’s not compulsory for all foreign investors, you can acquire PEZA accreditation on the later part, when you see it fits and benefits your company in the long term.
9. Hiring of employees
Referral from network
Post in newspaper
Recruiting suitable people to work in and manage your business is equally important as every point stated here. From an outsider’s (foreigner’s, that is) point of view, it can be difficult to distinguish qualifications given the scope of work. Jon Fry (CEO, ChannelGrowth) emphasizes this idea well, “Just giving them [employees] a flexible contract and building trust with them by treating them better than everyone else, basically. I just feel strongly that this is important.”
Make sure that whoever you hire will fit in your company culture for them to be effective and productive.
10. Order of operations
Setting up physical office
Furnitures / Interiors
Suppliers / Orders
Before jumping into the work grind, make sure that you have fully established and fully furnished your place of trade–be it a restaurant, a coffee shop, or an 8–5 office. Depending on the nature of your business, an Internet connection (but that is a problem that needs addressing) is a must-have for most establishments. You have to prepare this as the requirement and waiting period may get tedious. It also depends on your bandwidth needs.
Maximum ETA is 1 month, together with a regular follow-up with the sales officer.
11. Application of insurance for employees
A good way of practicing appropriate business ethics is granting insurance coverage to all employees. In case of personal emergencies, this will serve as protection. There are numerous financial planners/insurance companies you can scout. You can check 2–3 different plans and compare their premium rates, coverage, and benefits that will suit your budget.
The minimum number of insured employees per company is 10. Otherwise, you have to get individual plans, which are more expensive. In this case, you can outsource financial advisors to get a cheaper deal.
12. Regular Order of Business (day-to-day operations)
The real challenge is growing your business on a daily basis. But never forget to validate your operations from time to time. This includes an annual renewal of all your business licenses and permits.
Government sectors will also conduct a yearly random inspection in your place of business to check if your company is complying with rules and regulations set by them. Failure to produce updated documentation subjects you to penalties.
Note: taxes will be explained in detail in another article.
This is a cheklist for SEC Registration Requirements: (for corporation application or business permit)
1. Name / Verification Slip
2. DOLE form
3. Bank Certificate of Depositor
4. Certificate of Inward Remittance (provided by the bank)
5. [Cover sheet] Articles of Incorporation (to be created and duly signed by all incorporators together with 2 witness)
6. Treasurer’s Affidavit
7. F-100 SEC form
8. Confirmation of corrections
9. By laws
10. Cover sheet for application at company registration & monitoring dept
Note: attach the meaning of your company name