Basic Guide on How to Set Up a Business in the Philippines by cpf03


Basic Guide on How to Legally set-up a business in the Philippines

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									                       Basic Guide on how to set up a business in the Philippines

Legal Requirements
Once the form of ownership and organizational structure are defined by the prospective owners, the
enterprise will have to be registered with government agencies in order to obtain its legal personality and
the permit to engage in the business undertaking. The usual procedure to which the proposed firm should
adhere to are as follows:
A. General Procedures for New Business Registration
    1. Securing a Barangay Clearance from the Barangay Office
    2. Securing Mayor’s Permit: A Mayor’s Permit must be first secured by anyone who desires to
         engage in business.
        How to apply for Mayor’s Permit:
         a. The application form for business permit and license shall be fully accomplished in four
         b. Submit together with the application the following documents to the Business Permit and
              Licensing office for verification and assessment of building fees.
              • Barangay Clearance
              • Community Tax Certificate
              • SEC Registration Certificate
              • Articles of Incorporation and By-Laws
              • Lease contract of the place if it is rented / Tax declaration if the place of business is
              • 2 photographs of the business establishment façade including the sidewalk, signboard
               and its right and left members.
              • Zoning clearance or Locational Clearance
              • Clearance or permits from the regulating agencies: DTI & BFAD
         c. Proceed to the City Health Office for registration and stamping.
         d. If the place of business has an area of more than 100 square meters, proceed to the Anti-
              Smoking Task Force for registration for monitoring purposes.
         e. Proceed to the Fire Department for payment of the fire fee.
         f. Go to the BPLO for assessment of taxes & fees, review & compensation of Mayor’s Permit.
         g. Payment of the Business Permit
         h. Claiming of the License Plate and Sticker.
    3. Registration with the Department of Trade and Industry (DTI): Firm names, business names or
         styles must be registered with the Department of Trade and Industry. Registration can be done
         by accomplishing the application form for corporations in duplicate. Along with this form, submit
         photocopy of SEC Certificate of Registration & Articles of Incorporation issued by SEC.
    The following is the schedule of fees to be paid during application:
                     Basic Application Fee             P 500.00
                     Documentary Stamps                P 15.00
                     Bulk Sales                        P 55.00
    4. Registration with the Securities and Exchange Commission (SEC): Corporations should register
         their articles of incorporation and by-laws with the Securities Exchange Commission (SEC). The
         basic requirements are following:
         a. Name Verification Slip
         b. Articles of Incorporation and By-Laws
         c. Treasurer’s Affidavit
         d. Affidavit of incorporator or director undertaking to change corporate name
         e. Registration Data Sheet
         f. Endorsements/clearances from other government agencies, if applicable.
         g. Additional requirements based on kind of payment of subscription indicated:
              • Cash: Bank Certificate of deposit of paid up capital notarized in place where executed
              • Land and/ Building/Condominium Units: (1) Detailed schedule of the property showing
                   its registered owner, location, area, TCT No., Tax declaration number and the basis of
                   transfer value ( market value / assessed value / Zonal value or appraised value ); (2)
            Copy of TCT/CCT and tax declaration sheet(s) certified by Register of Deeds and
            Assessor’s Office respectively; (3) Latest zonal valuation certified by BIR , if transfer
            value is based on zonal value; (4) Appraisal report by a licensed real estate appraiser, if
            transfer value is based on appraised value ( not more than 6 months old ); (5) Deed of
            assignment with primary entry by Register of Deeds; (6) If property is mortgaged, submit
            mortgagee/creditor’s certification on the outstanding loan balance and his consent to the
            transfer of property; (7) For assignment of buildings where assignor is not the owner of
            the land, submit the lease contract on the land and consent of the land owner to the
       • Inventories / Furniture / Personal Properties: (1) Detailed schedule of the property
            showing its description and the basis of transfer value (market value or book value); (2)
            Special audit report by an independent CPA on the verification and valuation of the
            property; (3) Deed of assignment of property to the corporation
       • Heavy Equipment and Machinery: (1) Detailed schedule of the property showing its
            description and the basis of transfer value (book value or appraised value); (2) Appraisal
            report by a licensed mechanical engineer (not more than 6 months old): (3) Deed of
            assignment of property to the corporation
       • Shares of Stock: (1) Detailed schedule of the shares of stock indicating the stockholder,
            stock certificate number, no. of shares and the basis of transfer value (market value or
            book value) (2) Audited financial statements of the investee company as of the last fiscal
            year duly stamped received by BIR and SEC; (3) Deed of assignment of the shares of
            stock to the corporation; (4) Certification by the Corporate Secretary of the investee
            company that the shares are outstanding in the name of the assignor; (5) Photocopy of
            the stock certificates (present original for verification); (6) Latest market quotation in the
            newspaper or certification from the stock exchange/broker as to the latest market price
            of the shares of stock ( if same are listed in the stock exchange)
       • Motor Vehicles: (1) Detailed inventory of the motor vehicles showing the registered
            owner, make/model, plate number, chassis number, motor number, certificate of
            registration number, and market value; (2) Photocopy of the Certificate of Registration
            and official receipt of annual registration fee (present original for verification); (3)
            Appraisal report by a licensed mechanical engineer (not more than 6 months old); (4)
            Deed of assignment of the motor vehicle to the corporation
       • Sea Vessel / Aircraft: (1) Detailed inventory of the vessel/aircraft showing the registered
            owner, registry number, technical description, and appraised value; (2) Certified true
            copy of the certificate of ownership; (3) Certificate of seaworthiness / airworthiness
            issued by appropriate government agency; (4) Appraisal report by a licensed mechanical
            engineer (not more than 6 months old); (5) Deed of assignment of the vessel/aircraft to
            the corporation
       • Intangibles: (1) Copy of the mining permit ( for mining claims/rights ); (2) Appraisal
            report by an accredited appraisal company (not more than 6 months old); (3) Deed of
            assignment of intangibles to the corporation
5. Registration with the Bureau of Internal Revenue (BIR)
   a. Accomplish BIR Form 1903 and submit the same together with the required attachments
       below to the Revenue District Office (RDO) having jurisdiction over the registered address of
       the business establishment.
       • Mayor’s Permit or application for Mayor’s Permit
       • Articles of Incorporation
       • Sketch of Business Site
       • Trade Accounts (e.g. Ledgers, Journals)
   b. Pay the following fees at the Authorized Agent Banks of the RDO.
       • Annual Registration Fee: P500.00 using BIR Form 0605
       • Certification Fee: P15.00
       • Documentary Stamp Tax (in loose form to be attached to Form 2303)
       • Documentary Stamp Tax (BIR Form 2000)
   c. The RDO shall issue the Certificate of Registration (Form 2303) and Notice to the Public.
   d. Register Books of Accounts with the nearest Internal Revenue Office- Section 19 of the
        Bookkeeping Regulations
   e. File application form for printing of invoices and receipts. After printing, return to the BIR
        office for proper stamping and registration
6. Registration with the Social Security System (SSS) for coverage of all employees and officials of
   the firm. An employer is obliged to:
   a. Require the presentation of the Social Security (SS) number of a prospective employee; If
        the employee has no SSS number, he/should secure one by filing up SSS Form E-1.
   b. Report all his/her employees for SS coverage within thirty (30) days from the date of
        employment by submitting an accomplished SSS Form R-1A (Employment Report) at the
        nearest SSS office; If the employer has not enrolled for the employer ID number, he/ she
        should accomplish SSS Form R-1.
   c. Deduct from his/her employees the monthly SS contributions based on the schedule of
        contributions; pay his/her share of contributions including Employees' Compensation
        contributions (EC) through SSS form R-5 (Contributions Payment Return) and remit these
        contributions to any SSS-accredited bank/SSS Head Office/ SSS selected branches on or
        before the 10th day following the month when said contributions are due and applicable.
   d. submit a summary of all his/her employees' contributions SSS Form R-3s (Contribution
        Collection List) together with a copy of the Special Bank Receipt (SBR) and SSS Form R-5
        (Contributions Payment Return) to the nearest SSS branch Office within 10 days after the
        applicable quarter
7. Registration with the Department of Labor and Employment to comply with the provisions of the
   Labor Code. The requirements for registration are as follows:
        • Fully accomplished registration form
        • Layout Plan
        • Machinery Layout including the machine descriptions
        • Location or Vicinity Map

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