To do business in the Philippines, you must know the various types of structures available and allowed to operate by the government. Currently, there are three legal entities popularly established by business owners within the territory namely corporation, Partnership, and Sole proprietorship. While the latter must be registered with the Department of Trade and Industry (DTI), partnerships and corporations must be registered with the Securities and Exchange Commission.
If you are planning to start a business, this guide offers you easy steps to registering a corporation in any part of the country.
What it is
A business structure is separate from its owner, which possesses legal rights and obligations like an individual. It may acquire contracts, take loans from banks, employ workers, pay taxes, etc. The minimum number of partners is five incorporators. The shares of stock of a corporation are issued to persons or other firms, who automatically become owners or stockholders of the corporation. It may have up to 100% foreign ownership and a minimum foreign investment of US$200,000 or US$100,000 if the business involves the use of advanced technology and hires at least 50 workers. It can have a minimum paid-in capital of only P 5, 000, if at least 60 percent of its products are exported.
Cons of a Corporation
- liability is restricted to the corporation alone.
- Increase of capital through the issuance of stocks to investors
- Easily transferable
- Indefinite existence
- Acts independently
- The board of directors manages and makes all decisions
Procedure for Registering a corporation
Here are the procedures for incorporating this structure within the territory:
Reserve and Register Your Corporation Name
Confirm if the desired company name is available via Securities and Exchange Commission (SEC) online website or at the SEC Office in Mandaluyong. If available, you can register or reserve the name via the SEC website or at SEC Name Verification Unit.
Prepare, Sign and Notarize Documents
Ensure the following required documents are available, Articles of Incorporation and Treasurer’s Affidavit. Submit the notarized documents to the Office in Mandaluyong City and obtain the SEC Certificate of Registration. This process takes a minimum of one week to complete.
Acquire Barangay Clearance
After registration, the next step is to get a barangay clearance where the business is located. Get and fill up the application form at the barangay. Submit alongside the Certificate of Business Registration, two valid IDs, proof of address such as a ‘Contract of Lease’ (if rented), or Certificate of Land Title. Takes 1 day upon submission to complete.
Acquire Business Permit from the Mayor’s Office
Once one has the Barangay Clearance Certificate, acquiring a business permit where the business is located comes next. File an application form attached with the Certificate of Business Registration at the municipal office where the company is. It takes at least a week after submission to process the application. However, depending on the type of industry, it can take longer than a week.
Register at the Bureau of Internal Revenue (BIR)
With the business permit from the office of the mayor, you may register with the bureau. Simply visit the Regional District Office (RDO) where your business is located, then fill out the registration form; BIR Form 1903, Application for Registration (For Partnership/Corporation). Submit the duly filled form with the following documents:
- Certificate of Registration
- Barangay Clearance
- Business license from the Mayor’s Office
- Proof of a legal address, such as a lease or land title.
- Valid IDs (if applicable)
- Registration (BIR Form 0605) and document stamp tax (BIR Form 2000) receipts (only if applicable)
