How to Register a Sole Proprietor Business in the Philippines?

You have something that your target market will be happy to buy.

You might have started selling it to people you know. And now, you want to maximize the opportunity by registering a sole proprietor business in the Philippines.

If you’re not sure what business formation you should choose. You may want to read this previous article “What Form of Business Enterprise You Should Choose.”

If you’re decided, continue reading because this article will guide you in how to register a sole proprietor business in the Philippines.

The first step in how to register a sole proprietor business in the Philippines is by securing your Business name to the Department of Trade and Industry (DTI).

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

1. Fill up Philippine Business Registry (PBR) Sole Proprietorship New Application Form.

2. Prepare a huge list (10-30) of your Proposed Business Names (PBN).

3. Choose the business scope.

a. Barangay (P200)

b. City/Municipality (P500)

c. Regional (P1,000)

d. National (2,000)

4. Pay corresponding fees ranging from P200 – 2,000 plus Documentary Stamp Tax worth P30.

5. Submit a copy of the owner’s original government-issued valid ID.

If the filer is not the owner, present original gov’t ID of the owner and the filer.

After DTI approved your proposed business name, you can now claim your DTI Certificate of Business Registration. You can now proceed to the Barangay Hall where your business is located.

Register your business to the Barangay Hall

1. Present a copy of your DTI Certificate of Business Registration.

2. Present a copy of your government-issued valid ID

3. Submit other proof of business address like Contract of Lease (if rented) or Transfer Certificate of Title (if owned)

4. Submit Map/Sketch of your Business Location.

5. Pay corresponding fees (P500-P1,000)

After completing these steps, you can now claim your Barangay Clearance. You can now proceed to the Municipal or City Hall where your business is located.

Register your business to your Municipal or City Hall

1. Fill out application form of Business Permit

2. Prepare and submit a copy of your Barangay Clearance, DTI Certificate of Business Registration, Contract of Lease (if rented), Transfer Certificate of Title (if owned), Map/Sketch of your Business Location, Government-issued valid ID, sworn statement of Capital Investment, Community Tax Certificate (Cedula), Tax Declaration and Tax Clearance.

3. Have your fees assessed at the Business Processing and Licensing Office (BPLO) and secure licenses and permits to Municipal Health Office, Sanitary Office, Bureau of Fire Protection, Municipal Planning & Development Coordinator, and Office of the Municipal Engineer:

a. Municipal Assessor Office for Real Property Assessment of Land and Building where your business establishment is located.

i) Tax Clearance – You can get this after paying your Real Property Tax or Amilyar at Treasurer’s Office.

To know what you need to pay, you can request Statement of Account of Real Property Tax or AMILYAR to the Treasury Office.

If you lose your previous receipt or statement of account (SOA), you can seek help in the Assessor’s Office to give you necessary information about your Real Property. They will need a copy of your land title.

ii) Tax Declaration – You can get this at Assessor’s Office after submitting Tax Clearance, gov’t issued valid ID, and Cedula.

b. Municipal Planning & Development Coordinator (MPDC) Office for checking of your Locational Clearance.

c. Office of the Municipal Engineer for Building Permit.

Cost of Building Permit (10%) and Fire Code Construction Tax (.01%) is based on Bill of Materials and Labor Cost.

d. Bureau of Fire Protection for Fire Safety Inspection Certificate (FSIC) and assessment of business establishment.

Fire Safety Inspection Fee (FSIF) is 10% of Regulatory Fees and Charges plus P200.

Depending on the size and nature of the business establishment, the business owner/s might be advice to buy fire extinguisher/s and signage to a third party retail store.

Submit Map/Sketch of your Business Location so your business can be easily find by the Fire Inspector.

e. Municipal Health for Sanitary Permit and Health Card Certificate of the owner and employees of the business.

i) To get Sanitary Permit, Municipal Health Officer will take water sample from your business establishment.

Prepare a Map/Sketch of your Business Location so that your business can be easily find by the Sanitary Officer.

ii) To Get Health Card Certificate, the owners and all employees must go to a third party Diagnostic Laboratory to undergo:

1. X-Ray (Chest), 2. Urinalysis, 3. Hepatitis B, 4. Stool, and 5. Drug Test.

While waiting for the results, the Health Officer will give you a promissory note so that you can proceed to getting your business permit for renewal done.

After the test, you need to go back to the Municipal Health Officer and give him/her the results.

4. Pay your fees and wait for the release of permit

Fees and requirements varies per municipality. There are additional requirements for certain type of business establishments. This will also depends on the size and nature of your business.

After completing these steps, you should already have a Mayor’s Business Permit, Business’ Plate Number and other licenses like Health Clearance, Sanitary Permit, Fire and Safety Inspection Certificate (FSIC), Zoning Permit, Certificate of Occupancy, etc.

Most of them are required to be posted in your business establishment where they can easily be seen.

You can now proceed to Bureau of Internal Revenue (BIR) where your business is located.

Register your business with the Bureau of Internal Revenue (BIR)

1. Fill up BIR Form 1901 and pay your P500 Annual Registration Fee to Authorized Agent Bank (AAB) using BIR Form 0605.

2. Prepare and submit a copy of:

a. Any identification that shows the name, address and birth date of the applicant. (e.g. Birth Certificate, Passport, Driver’s License, Community Tax Certificate)

b. DTI Certificate of Business Registration,

c. Mayor’s Business Permit (for single proprietor)

e. Professional Tax Receipt/Occupational Tax Receipt (for professionals)

f. Application of Authority to Print (BIR Form 1906)

g. Final & Clear Sample of Principal Receipts/Invoices.

h. Books of Account purchased in the Office Supplies Store. You need to register all your books in the BIR.

i. Special Power of Attorney (SPA) and ID of authorized person, in case of authorized representative who will transact with the Bureau.

j. Franchise Documents (e.g Certificate of Public Convenience)(for Common Carrier)

There are additional requirements for certain type of business establishments.

3. Attend the free tax briefing/seminar in the BIR.

In the free tax briefing, the speaker will tell you what you need to know in order to prevent penalties and future headaches. You can ask the speaker anything you don’t understand.

After you completed these steps, you will now have your:

a. BIR Certificate of Registration (BIR Form 2303),

b. Notice to the Public “Ask for a Receipt” Signage, and

c. Stamped Annual Registration Fee for the current year (BIR Form 0605).

Be sure to display these in your business establishment where they can be easily seen. Failure to do so will penalized you at least P1,000 per document.

You also need to pay P30 documentary stamp tax for your BIR Certificate of Registration (BIR Form 2303) to BIR.

Sole proprietors that are earning more than P1,000, are required to register in SSS, PhilHealth, and HDMF as self-employed.

If you don’t have employees, Congratulations! You are already finish in registering your sole proprietor business in the Philippines.

If you have employees, make sure to register them with:

I will discuss them in my future post.

Important Reminder

1. It’s illegal to construct a building without a building permit. Please get zoning permit and building permit first to avoid all the hassles, penalties, and other unnecessary fees.

2. After you got your Mayor’s/Municipal Business Permit, you need to continue and finish your registration all the way to BIR within 30 days to avoid getting penalized from the BIR.

3. After you register to the BIR, you need to file your taxes even if your business didn’t earn or didn’t operate.

4. It is very important to renew your business every year to not incur penalties. Deadline of business renewal in Municipal Office is every 20th of January. Deadline of paying the BIR Annual Registration fee is every 31st of January.

These are some of the common mistakes of budding entrepreneurs. Failure to comply will make you liable for tax penalties.

After registering your sole proprietor business in the Philippines, you can now go back in operating and growing your business.

You already know the basic of what you need to do. Just in case you don’t have time and patience to do-it-yourself (DIY), you may check our business registration service and outsourced it to us.

Whichever path you take, I hope that these guide really helps you. Good luck to your business.

If you have questions regarding tax, accounting, and business registrations, you can contact us here.

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