How to Register a Business in the Philippines: Compliance Made Easy

Starting a business in the Philippines?

Then, you have to learn the ins and outs of business registration. This registration process legalizes your operations in the country.

Whether you’re starting a Philippine branch or you’re a natural-born Filipino, the rules are the same. Thus, you must know how to get an ecommerce business permit in the Philippines. This article will tackle everything you need to know. Let’s dive right in.

Understanding the Importance of Business Registration in the Philippines

Are you thinking of starting an online freelance business? Or maybe you have an existing online side hustle that is finally making some serious money? Whatever the case, registration is not something you can shrug off.

Having your online business registered is not just a want – it’s a must for anyone who wants to operate in the country. 

But don’t worry, you’ll get lots of benefits from it too! 

Let’s see some of the benefits of business registration:

• Government benefits. The Philippine government provides lots of support for registered businesses. They often conduct free webinars or seminars, workshops, trade events, and more. They also hold forums for other business owners to know more about your company or industry.
• Avoids risks or penalties. Not registering your online store and failing to secure legal documents have big penalties. Aside from the fines enforced by law, you also risk going to jail.
• Gives you a good reputation. Registration indicates that your business and company are legal. This makes customers trust your product and services.
• Your tax returns can be proof of income. Tax returns mean that the government recognizes your income and tax payments. This means that your business/company is earning money. You can use this document for financing or getting investors.

These benefits guarantee you an excellent operating business. First, you will avoid unnecessary risk. Secondly, this also creates a good relationship with your customers and with future investors.

Identifying the Business Structure That Fits Your Needs

Your business structure is one of the most essential parts of starting your business.

A business structure or legal structure is a government classification. It determines important aspects of your business, such as your ever-important tax obligations.

Thus, identify your structure properly based on your goals. You need to do this as early as when you’re brainstorming for business ideas.

Below, we will review some of the business structures that you can choose from. This knowledge lets you decide which is the best fit for your business.

Sole Proprietorship

This is one of the most uncomplicated online business structures or entities. A sole proprietorship means that the company is only governed by one person. They are responsible for the company’s profits and debts. It is like a one-person corporation.

Being a sole proprietorship for ecommerce in the Philippines has several advantages:

• Low cost,
• Easy to set up,
• Limited tax burden, and
• Easy to exit or end operations.

However, such entities are also pretty limited in the support they can get. Sole proprietorships can’t become too big. If this happens, the government will mandate to change its structures.

Sole proprietorships must register with the Department of Trade and Industries (DTI).

Corporation

There is a law that separates the corporation from its owner. Thus, the corporation has legal rights independent of its owner. 

People can own and sell corporations. You can even distribute ownership rights in the form of stocks.

There are six types of corporations:

• S Corporation is for small businesses.
• Shareholders own C Corporations and are taxed as separate entities.
• B Corporations are also known as benefit corporations. They’re structured to have a positive and good impact on society.
• Open Corporations are for trade in a public market.
• Shareholders run Closed Corporations. They are sometimes referred to as privately held companies.
• Nonprofit corporations help people in some way, and they have tax exemptions.

Remember that you need to register with the Securities and Exchange Commission (SEC).

Limited Liability Company (LLC)

The LLC provides business owners with liability protection. Thus, corporations can do typical business practices.

Meanwhile, earnings will come to the business owners as income on their tax returns. LLCs also protect the owners from any potential legal repercussions of corporation actions.

Many small existing businesses have this structure. However, primarily, large companies use this model because it benefits them the most.

Partnership

A partnership is a legal structure that two or more individuals own. You can classify it into two categories.

A general partnership is where both partners share everything equally. A limited partnership is where one owns the company while other partners contribute and earn, too.

This kind of business also must be registered with the SEC.

Cooperative

A co-op is owned by the people it serves, who are also called user-owners. Choosing a co-op is complicated because it requires you to pick a business name that indicates whether you are a corporation (having these in the business name: Inc., Ltd, etc.).

Conducting Name Verification and Reservation

Your business name is one of the most essential things in your business. This is especially true for online stores, because we do all our business online.

For the public to know you, your name has to be unique and appealing. That’s part of your branding, separate from your actual business or products.

Republic Act No. 3883 is critical for business registration in the Philippines. This law is also known as the Business Name Law. You must register your name with the Department of Trade and Industries or DTI.

How do you pick a name?

You must try brainstorming ideas first. Then, you create an outline. Next comes mapping your potential business names to your product, services, or core missions. You should also get feedback on the name.

Lastly, conduct a trademark search and always ensure the name you choose is legally yours.

For this, here are some simple guidelines:

• Check with DTI if your preferred name is already registered.
• You cannot register a name already registered to someone else, be it as a trade, trademark, or business name of any government agency.
• Check your proposed company name via the following channels:
  • I-register system of the Securities and Exchange Commission (SEC)
  • Go to the Name Verification Unit at G/F Secretariat Building, PICC Complex, at Roxas Boulevard, Pasay City.

If you are a sole proprietorship, you can reserve your online business name in DTI with a 200 PHP reservation fee. Corporations or partnerships can reserve your name at SEC for 30 days with a 100 PHP reservation fee.

Obtaining Barangay Clearance and Mayor’s Permit

A business permit is one of the most important things to get for your online store’s registration.

Business permits in the country require a Barangay Clearance and a Mayor’s Permit.

To get a Barangay Clearance, you must:

1. Visit your barangay hall;
2. Bring your valid government-issued ID;
3. Also, bring proof of residency. This can be an official document with your place’s address. It can also be a recent utility bill (phone, internet, etc.);
4. Submit a duly filled-in form requesting a barangay clearance.

Barangay clearance is typically free. However, some Barangays have filing or registration fees for as low as 20 PHP.

A Mayor’s Permit is somewhat similar. Get all initial basic requirements such as:

• Barangay clearance or barangay business clearance;
• Registration form for SEC, DTI, or CDA;
• Complete application form;
• Lease contract or land title;
• Sketch of the business location or document containing business address;
• Building permit;
• Electrical inspection permit;
• Zoning clearance.

After that, file your requirements and application to the Bureau of Permits (BP). You can also file on a Business Permit Licensing Office (BPLO) at your municipal or city hall.

After filing your application, get a Community Tax Certificate (CEDULA).

After obtaining a cedula, you must take an assessment facilitated by a BP/BPLO officer. Then, submit all requirements and the Official Billing Address to the designated office. Officials will then redirect you to the cashier’s office to pay some fees. 

After paying the fees, you can present your documents as proof. You can present a paid application or registration fee, an official receipt, or the payment form.

The same goes for obtaining a temporary Sanitary Permit from the Sanitary Department. 

Finally, all the acquired requirements and permits must be submitted to the designated office. Then that’s it; you will soon get your Mayor’s Permit, so wait for its release.

Registering With the Securities and Exchange Commission (SEC)

Domestic and foreign corporations starting a business must register with the SEC. The same goes for a new business that wants to start a corporation or partnership.

This regulation mandates that anyone who wants to do business must register. Otherwise, they can’t:

• Operate;
• Trade;
• Buy shares of stock;
• Acquire interests in companies, and
• Gather other financial or personal assets.

The SEC is the primary agency for this. Once you get placed in the SEC books, you’re a legal business.

If you are going for company incorporation, you must register with the SEC.

The required documents for registering a corporation will vary. A lot will depend on your company’s nature and business operations.

Here are the most basic requirements:

• Articles of Incorporation (AOI);
• By-laws;
• SEC registration form;
• Joint Undertaking to Change Name;
• Clearances or permits from government agencies or local government units.

Here are the requirements for registering partnerships with the SEC:

• Cover Sheet;
• Your reservation payment proof or confirmation;
• Articles of Partnership (AP);
• Joint Undertaking to Change Name.

All the business structures must register with the SEC. This includes:

• Stock Corporations
• Domestic Corporations
• Resident Foreign Corporations
• Non-stock Corporations, and
• Partnerships 

They also must deposit their smallest capital requirement to get approved, too.

If the SEC approves your application, you will get an SEC registration certificate. This would allow you to start your business in the Philippines.

Securing a Tax Identification Number (TIN) from the Bureau of Internal Revenue (BIR)

Registering with the Bureau of Internal Revenue (BIR) is essential in setting up an entity in the Philippines. The taxpayer identification number/tax identification number is used to ensure that your company gets the appropriate credit for taxes paid.

Here is what you need to register a TIN for Self-employed/Sole Proprietor and Mixed-Income Individuals, Non-Resident Aliens Engaged in Trade, Business, Trusts, and Estates:

• Get a BIR Form 1901;
• Any ID issued by the government agencies who are authorized to do so (Birth Certificate, National ID, Passport, Community Tax Certificate, Driver’s license, etc.);
• Prepare 500 PHP for the Registration Fee and 30 PHP for loose DST or Proof of Payment of the Annual Registration Fee (ARF);
• BIR printed receipts, sales invoice.

All individuals engaged in ecommerce should accomplish or file registration before operating the business.

Here is what you need to secure a TIN for Corporations and Partnerships (Taxable/Non-taxable):

• Get a BIR Form 1903.
• Photocopy of acquired SEC Certificate of Incorporation.
• In case of partnership: Photocopy of Certificate of Recording.
• In case of foreign corporation: Photocopy of License To Do Business in the Philippines.

• Articles of Incorporation (AOI) or Articles of Partnerships (AOP).
• BIR printed receipts/invoices.

Fill the BIR Form 1903 and submit it. After that, pay the following at the New Business Registrant Counter in the BIR Office: Annual Registration Fee – 500 PHP, Documentary Stamp Tax – 30 PHP, and obtain a BIR printed receipt/invoice (if needed only). All corporations/partnerships must accomplish or file registration before operating the business.

Registering With the Philippine Health Insurance Corporation (PhilHealth)

Do you plan on having more people work with you in your ecommerce business? Perhaps you need more staff to help with managing inventory or packing and shipping orders. Even if you run a very small business, you might need a few additional employees to help.

All employers must register and follow Philippine Health Insurance Corporation or PhilHealth. This provides social health insurance benefits for their employees. This is important when you’re starting a business in the Philippines.

If you are registering as an individual, here’s what you need to do:

• Go to PhilHealth branches or any Local Health Insurance Offices (LHIO).
• Fill out two (2) copies of the PhilHealth Member Registration Form (PMRF).
• Submit the application form to LHIO or PhilHealth Express.
• Wait for the Member Data Record (MDR).
• Wait for the PhilHealth ID card.
• Pay if there are necessary contributions using your PhilHealth card.
• Inform yourself about the schedule of payments.

Employers must register with the Philippine Business Registry (PBR). Get an employer registration form and submit it. Once registered, you no longer need to go to PhilHealth. You can then register your employees once you start hiring.

Enrolling With the Social Security System (SSS)

Registering as an employer to the Social Security System (SSS) is essential.

This is especially true for new businesses. You must check the following documents before registering with the SSS:

• Business registration documents;
• Other permits;
• Relevant icenses, certificates;
• Employees’ information/data, and
• Proof of income or financial records of the company.

The two processes for enrolling with SSS are Online Registration and In-Person Registration. For online registration, you must go to the SSS website and create an account.

After registering, submit the requirements by uploading all necessary documents. Once approved, you’ll receive a confirmation from SSS. More on that in the next sections.

You can also do all of this in person. Visit the nearest SSS branch and bring all necessary documents. After that, submit all your requirements to the SSS officer in charge. Once approved, you’ll receive a confirmation.

Complying with the Home Development Mutual Fund (Pag-IBIG) Registration

Republic Act 9679 mandates all employers must register their employees to Pag-IBIG. This is the Philippines’ home development mutual fund. This means that if you are an entity, your business should be in Pag-IBIG’s lists.

Here are what you need before applying:

• Accomplished Employer’s Data Form;
• Accomplished Specimen Signature Form;
• Mayor’s Permit;
• Proof of SSS certification;
• For Sole Proprietorship – DTI Certificate of Registration;

For corporations or partnerships, bring your SEC Certificate of registration. Include your Article of Incorporation or Article of Partnership, and by-laws.

If you are a cooperative, your Articles of Cooperation and CDA Certificate will do.

Got all the required paperwork? Go to Pag-IBIG’s website and download and complete the Employer Enrollment Form. After that, submit the completed form to the Pag-IBIG branch near you. Wait for your status update via email.

Fulfilling Other Regulatory Requirements and Compliance Obligations

Aside from all these, you should also get an OTR. An Occupational Tax Receipt or OTR is a legal document. It’s issued by a local government unit or LGU to:

• Businesses,
• Individuals engaged in trade, or
• People with an occupation within the scope of their jurisdiction.

This tax is also known as a professional tax. You must get it if you are starting a business.

A Professional Tax Receipt is proof of your annual payment of professional tax. This permit would enable you to practice your profession without any issues.

These other regulatory requirements are not prioritized when registering a business. However, they are still compliance obligations.

Additional Considerations for E-commerce Businesses

At this point, you’ve got the basics down for registering your online business.

But as is common for legal matters, things don’t end here. Philippines’ ecommerce business registration has other critical facets.  This section will explore specific registration platforms to assist your online store.

More importantly, it will also tackle data privacy compliance. Data privacy has become an ever-important piece in the Philippine legal puzzle, so learn how to navigate it.

These are essential for ensuring your business runs smoothly and legally. Learn more about them below.

Online Business Registration Platforms

You’re ready to take your e-commerce business to the next level by registering it legally. But by now, you’ve probably realized how troublesome that is. We Pinoys need 13 steps and about 33 days to register a business fully.

The sheer amount of time, money, and energy required is no joke. This hassle can discourage even the most ambitious entrepreneurs. That’s why few people launch their dream online store.

But recent inventions have made that easier. There are now multiple online platforms you can use to ease your business registration. They reduce the process down to 6 steps that take three working days.

Here are the most useful ones.

Philippine Business Hub (PBH)

The PBH is a new innovation from the Philippine government. It’s designed to be a one-stop shop for all of your business registration needs. It promises to deliver even on intricate needs like your BIR registration.

It does this by consolidating all the government services into one platform. By using PBH, you register for everything, including:

• DTI
• BIR
• SEC

All you need to do is create an account on the PBH website, and then follow the guided steps. You need the following documents and info:

• Business name registration from DTI;
• Mayor’s Permit;
• SEC registration (if applicable);
• Owner’s personal information;
• Payment for various registration fees.

Being a new technology, PBH has its fair share of issues and criticisms. Thus, keep in mind that one of the issues some users found is syncing. Although they’ve registered to PBH, the platform didn’t sync with the partner agencies.

If you want to ensure your registration succeeds, you can use the individual platforms below.

DTI BNRS Portal

Register your business name with the Department of Trade and Industry (DTI).

How can you do this?

1. Visit the DTI Business Name Registration Services page.
2. Read all the terms and conditions that apply.
3. Click “I Agree” in the bottom of the terms.
4. Fill out the online forms.
5. Pay the registration fee.
6. Receive your business name certificate via email.

Take note of the things you need:

• Proposed business name;
• Business scope (barangay, city/municipality, regional, or national);
• Business address;
• Owner’s personal information (name, nationality, gender, etc.);
• Registration fee.

DTI registration for online business in the Philippines ensures your business name is unique. 

The platform is user-friendly and guides you through each step of the registration process. Instead of physically going to the DTI, you can register your business name online.

BIR NewBizReg

The NewBizReg Portal takes care of all your tax-related registrations. 

To use this service, simply go to the NewBizReg portal. It contains every step you need to take to register your business. However, take note of the following requirements:

• Business name registration from DTI;
• Business address;
• Documentary stamp;
• Owner’s personal information (name, TIN, birthdate, etc.);
• Books of accounts;
• Payment for the registration fee.

It’s best to prepare these things in advance. You can read about more specific requirements on the portal.

BIR registration for ecommerce in the Philippines is critical. It lets you issue official receipts and fulfill tax obligations. Using the BIR’s online services ensures you comply with tax laws. Altogether, this lets you avoid heavy penalties.

Data Privacy Compliance

As an online store owner in the Philippines, data privacy compliance is crucial. 

In the country, the most relevant law is the Data Privacy Act of 2012. The primary enforcer is the NPC or the National Privacy Commission.

Data privacy laws protect individuals’ personal data. This ensures their privacy and trust in online transactions. For online businesses, this means safeguarding customer information such as:

• Names;
• Addresses;
• Payment details;
• Customer information;
• Website behavior, etc.

Here are some quick tips for compliance:

• Register with the National Privacy Commission;
• Create a clear and comprehensive privacy policy;
• Implement security measures (encryption, software updates, etc.) to protect data;
• Only collect data that is necessary for transactions;
• Train your staff on data privacy practices;
• Have a response plan for data breaches.

Data privacy is critical for businesses that exist primarily in the online world.

By complying with the relevant laws in the country, you ensure that you protect the interests of your customers. This increases trust. 

Keep in mind that Filipinos are very wary of scams. They love to feel confident in their purchases. Thus, you need to take all the necessary steps to ensure your store can give them that safe and enjoyable shopping experience.