Starting a business often starts with an idea and passion. There are no two entrepreneurial stories that are ever the same. It starts with a Eureka moment and the zeal to monetize the concept. While not all businesses are purely about profit, it is a fact that an enterprise is not effective until it is sustainable and generates a need for profit. The formalization of the business begins with the planning stage.
First, you have to decide the name of your business. You need to ensure that no one has a similar business. If someone does, you may have to use another name or if you intended that similar businesses share the same name, you need to decide on a specific location. Business permits or licenses are often very specific about which locality the business is based. A single business may have more than one location and operate in several cities. In this instance, you must secure several permits for each locality the store operates in. Starting a business in the Philippines can be an exciting venture with great potential.
Overview of Business Environment
The World Bank report in 2004 pointed out that the Philippines ranked 122nd in doing business, scoring high marks on starting a business and paying taxes but ranked very low in enforcing contracts and closing a business. The registration requirements involved in starting a business impose substantial taxes and expenses. The practice discourages the country of depth and competitiveness in attracting more investors. This paper aims to contribute to the ongoing efforts of reducing the cost and time of doing business in the Philippines. I want to thank the U.P. Institute for Small-Scale Industries, the National Economic Development Authority, the Department of Trade and Industry, and the Bangko Central ng Pilipinas for the discussions during the Early Warning System workshop and the National Income Accounts/Demography group for providing additional AFE data.
The Joint Foreign Chambers of the Philippines, a group that represents around 900 companies from different countries, pointed out that the procedures involved in starting a business take time; around 2-6 months for local companies and 6-8 months for foreign companies. The process and length of time vary from province to province. Settlement of the matter in court would take 53 months compared to 14 months in Vietnam, 21 in Singapore, and 24 in Thailand. Barriers to doing business also remain in having the required business permits for operation. The Aquino Administration launched last year its transaction slip reduction program. The program is based on 9 of the 21 recommendations of the Private Sector Round Table that had helped cut red tape. The program faces various legal and constitutional constraints. Its implementation also encounters strong resistance from entrenched agency and departmental interests.
Importance of Business Permits
Setting up a business Philippines requires knowledge of local laws and procedures. No one can stress the importance of having a business permit. Before starting your business, you must know that getting your business permit is an application process to the local government. The process might consume a lot of time, effort, money, and resources. Therefore, it is important for the business owner to go through the application process.
This is the permit and should be accomplished within the first quarter of each year for those setting up a new business. The new or renewed business permit shall be valid until the last business day of the year unless sooner revoked or suspended. A business permit should be renewed once a year, hence it is recommended to book an appointment at the earliest possible time for renewal. The benefit of undergoing the process is the legal protection that comes with it. If your business does not have the proper permits, you will get in trouble with the law. It is necessary to complete all legal requirements to avoid large penalties and fines imposed by the local government as well as from national government agencies.
Understanding Business Permit Registration
Business permit registration Philippines is essential for operating your business legally. In the Philippines, business owners of corporations, partnerships, and sole proprietorships must secure a business permit before engaging in commercial activities. The detailed process for the registration of a business permit will only be shared with our readers. However, we recommend hiring a liaison officer or agency specializing in business and bureau permits when the volume of transactions and number of businesses continue to expand. Liaison officers are available for business solutions and corporate services to governments. Professional business permit consultancy is what we do. With our experienced team, you may certainly depend on us. For us, your business matters – and we truly believe this statement.
A business permit’s definition and purpose are not explicitly stated in Philippine laws. The Business Act of 1990, implemented by local government units (LGUs), is the sole national rule regulating local governments’ business permit and license issuance and renewal. It regulates business operations and provides penalties. In a broad manner, generally, we consider the primary intention of a business permit to be a tool or device used and provided by the LGUs. The LGUs provide the business permit itself to boost economic stability and promote city initiatives. While also being compliant, it requires investors and business owners to apply for and have one. As a device, we want to emphasize and clarify how local government units use the business permit. To achieve this, in Article 69-79 of the Business Act of 1990, we list various LGU government objectives for the issuance of business permits and penalties issued for breaching any mandates.
Types of Business Permits in the Philippines
For business planning and tax compliance, there are several types of business permits and licenses issued by particular individuals or government agencies in the Philippines. These licenses are often based on local legislation at the city or municipal level. You must register or renew some of these permits or licenses annually. Let’s define some key terms and delve deeper into the different types of these particular government type of licenses.
All enterprises operating in any Barangay-Village in the Philippines are supposed to secure a Barangay permit or clearance that will register each business and track the income it generates. These barangays are usually smaller administrative divisions of Filipino cities. This barangay permit is much more of a certificate showing how much the enterprise is making. To obtain this permit, you will be asked to provide some minimum documentation and a registration fee (as per the local Barangay, there is no fixed application fee). After the barangay permit has been issued, the barangay will communicate with you to know when to submit your income statement.
To make your business a legal entity, you must secure both a Mayor’s permit, issued by the city or municipality where your business is registered. This is often the most widely known type of permit. Together you are mandated to report to your local Revenue District Accounting Office monthly and file an income tax return within three months of the fiscal year. If you have a professional tax receipt, you will receive an additional 10 days on top of the previous obligations.
Process of Setting Up a Business in the Philippines
Determining the right business for you is on top of your list. This section is intended to provide a basic explanation of the process of setting up a business through SEC. If you decide to take this route to formalize your business, this may offer you a more stable position in the community and better access to funding and a wider clientele base.
First, you need to do a name reservation from SEC. The fee is PhP40.00 for the first 30 days and PhP80.00 for the next 30 days. After 60 days, the reserved name will be purged from SEC records. Fees are subject to change, please verify the amount with the SEC. However, to save on your costs, you may opt to visit SEC by yourself and fill up a name reservation form. SEC has many lawyers outside the premises who can facilitate the filings for a minimal amount. Alternatively, if your time is worth more than the money you intend to save, you may talk to your lawyer about handling this for you. This phase is the most crucial because the business takes off when this phase is done. The costs of mistakes are substantial. You, therefore, cannot afford to cut corners in dealing with SEC on this point. If you get refused to register the name you want, the SEC shall, in fact, furnish you with a list of trade names similar to or verily resembling the name you prefer, advising you on the appropriateness of choosing a new one. The final determination of availability can be made only upon submission of the completed application for reservation of name. The SEC shall be responsible for the following rules against similarity or duplication. This is now Section 39 of the Corporation Code or Batas Pambansa Bilang 68. For corporations, the numerical and word designation should be used entirely differently.
FCB Law: Specialized Services in Handling Business Law Cases
FCB Law specializes in handling business law cases, including the registration of a business permit in the Philippines, as well as providing consultations. It caters to large and small-scale clients in their search for business solutions. They are composed of highly qualified lawyers and legal paraprofessionals who are able to ensure that their clients receive the best legal services.
Unsure about how to get your building, business, and other permits in the Philippines? We are here to help you out. Having been in the industry for years, you can sleep well knowing that your business is in good hands. While FCB Law is not in any way affiliated with the BIR, SSS, PhilHealth, PagIBIG, or DTI, it ensures that all that is needed for your business will be completed first to ensure that you can focus entirely on managing your business. Just send your name and email address, and they will be getting back to you with the next steps to take.
The road through the day of obtaining your business permit can be more or less confusing. However, all your hard work and time taken in its application and processing will pay off, giving outstanding performance in your business. And in the event of even growing your business. Business permit processing may come off as hard for you to do at the start. But then, once you’ve already passed it, you’ll be amazed at what new heights your business can achieve.
