How to Register a Sole Proprietorship Business in the Philippines

How to Register a Sole Proprietorship Business in the Philippines
So you got tired of your monotonous job and now you want to start your own sole proprietorship business. You have saved enough money as the capital. You already have a business plan as well as the products and services you wanted to sell.

Registering your business as a sole proprietorship can be a daunting experience if you don’t know the steps and procedures. While the Philippines have made progress in reducing red tape in government offices, registering your business still takes plenty of time and work.

You can hire someone else to register your business for you, and it’s money well spent because it saves you the hassles of dealing with bureaucratic red tape. However, if you just want to do it yourself, I have created a short guide that will definitely spare you the headaches.

1. Register Your Business Name With The Department of Trade and Industry (DTI)

The first step is to go to your local DTI office and register the name of your sole proprietorship business. You can do it online on the DTI website but I suggest that you do it personally so that they can advise you on what mistakes you made in your application form.

You are advised to give a minimum of three (3) different and unique business names in the order of priority. So writing down “Acme Internet Cafe” and “Acme Computer Shop” is not allowed as they are similar. It can be “Acme Internet Cafe” and “Counterstrike Internet Cafe” or something different.

You can use the DTI eBNRS or Business Name Search website to check if nobody has registered your proposed business name before.

Pay the registration fee which is as follows: P 500 for the city/municipal and provincial level, P 1,000 for the regional level and P 2,000 for the national level. If you plan to operate only within the province, you should pay only P 500.

You will usually get your DTI certificate of business name registration within one day but in my case, it took me four days because I submitted the form on Friday afternoon. So if you’re in a hurry, submit your form in the morning so that you’ll get the certificate on the same day.

DTI Certificate of Business Name Registration

A copy of the DTI certificate of my sole proprietorship business.

2. Get a Barangay Clearance

This is easy. Just go to the barangay hall of the district or barangay where you are planning to set up shop, and ask for a business clearance. They will ask you what type of business you are planning to set up and then you will be asked to pay a certain amount.

3. Apply for Mayor’s Permit

Now this the hard part. Getting your business registered with your local city or municipal government usually takes days or even months in rare instances.

To minimize delays, I advise you to prepare copies of the following documents beforehand:

  • DTI certificate of business name registration (from Step 1)
  • Barangay clearance (from Step 2)
  • Community tax certificate or cedula
  • Real estate lessor’s permit (if you are renting a space, building or land)
  • Contract of lease (if you are renting)
  • Certificate of occupancy (if the building is newly constructed or renovated)
  • Birth certificate
  • Notarized affidavit of capitalization
  • License to operate from BFAD, DECS, TESDA, DENR, DOT and other government agencies (if applicable)

First, go to the business licenses division of your city or municipal hall and get their registration form. Fill up the form diligently and submit it together with the other required documents. They will check if your papers are in order.

They will then tell you to wait for the inspection of your business premises on a particular date (in my case, it took 3 business days). So make sure that you are in your office or shop on that day because the inspection team might show up without warning.

Mayor's Permit Flowchart

A simple flowchart of the steps in applying for a Mayor’s Permit.

After the inspection, go to the treasurer to have your fees and taxes calculated. Pay the computed fees and then proceed to the following offices:

  • City planning and development office (to get a zoning clearance)
  • Health office (to get a sanitary permit)
  • Fire department (to get a fire safety inspection certificate)

Afterwards, return to the business licenses division and submit all your documents and receipts. You will be told when you can claim the Mayor’s Permit, which is usually in less than a week. In my case, I was able to get the permit in three days.

Take note the procedure may differ with your city or municipality. In any case, be sure to ask your local government unit on the correct procedure in applying for a Mayor’s Permit. This section is just a rough guide to help you get an idea of what it takes to register your business with your LGU.

4. Register Your Business With the Bureau of Internal Revenue (BIR)

Before you start doing business, it’s imperative to register your sole proprietorship with the Bureau of Internal Revenue. If you already have a personal Tax Identification Number (TIN), this can be used for this purpose. Otherwise, you should apply for a TIN.

Prepare copies of the following documents:

  • DTI certificate of business name registration (from Step 1)
  • Mayor’s permit (from Step 3)
  • Birth certificate

Fill up BIR Form 1901 and submit it together with the aforementioned documents. Pay P 500 for the annual registration fee, P 15 for the certification fee and P 15 for the documentary stamp tax. There may be other fees depending on the assessment of the BIR.

Next, if you haven’t done it yet, go to your local bookstore and buy books of accounts. Ask the officer-in-charge at the BIR about which books to buy. In my case, I was instructed to buy a ledger and two columnar books. Hand the books over to the officer-in-charge to be registered and stamped.

All you have to do is to wait for the BIR Certificate of Registration. Now is also a good time to go to a BIR-accredited printing press and order your official receipts.

5. Register With the Social Security System (SSS)

Go to your local Social Security System (SSS) office and fill up SSS Form R-1 (Employer’s Data Record) and SSS Form R-1A (Report of Employee Members). Submit the forms together with copies of your DTI Certificate of Business Name Registration and the Mayor’s Permit.

Now is a Great Time to Start Your Business

As you can see, registering your sole proprietorship business is a quite complicated process but as long as you have a good idea of what steps to take and which documents to prepare, you’ll avoid mistakes and minimize frustrations.

If you have any questions about registering your business, please feel free to comment below. Good luck on your future business venture!

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