Business Registration

The following are the different types of business entities available in the Philippines:

FOREIGN OWNED

 

SOLE PROPRIETORSHIP is a form of business owned by a single person, referred to as the “sole proprietor”. This form of business is registered with the Bureau of Trade Regulation and Consumer Protection (BTRCP) of the Department of Trade and Industry (DTI).

A common misnomer is that foreigners cannot register a business under a sole proprietorship in the Philippines. However, such is possible as long as the business meets the required minimum capitalization and the business activity is not among those listed in the Philippine Foreign Investments Negative List.

This form of business is best for suited for individuals who want full control over the business. Aside from this, sole proprietorship is one of the easiest form of business to set-up and manage as it has less compliance requirements as compared to a partnership or corporations.

The business formed under a sole proprietorship has no distinct and separate personality from its owner, unlike in partnerships or corporations. Hence, liabilities incurred by the business are considered as personal liabilities by the business owner. Also, the income realized by the business is considered as personal income by the business owner. Tax deductions available to partnerships and corporations to lessen their tax liability are often not available to sole proprietorship.

 

Registration Requirements:


 

Two (2) copies of completely filled-up business name registration form signed by the sole proprietor

Copy of two (2) valid government ID with specimen signature of the sole proprietor

Payment of registration fee and documentary stamp tax

DTI Business Name or Trade Name Registration Restrictions:

The business name or trade name submitted in DTI is subject for approval and are subject to the following restrictions

 

  1. Business name which nature are illegal, offensive, scandalous, or contrary to propriety
  2. Business name is the same with an existing registered business, company, partnership, corporation, cooperative name; or those that infringe on any trademark, service mark or tradename
  3. Business name that is too generic or geographic
  4. Business names which by law or regulation cannot be appropriated
  5. Business name that use words which designate or distinguish, or suggestive of quality of any class of goods, articles, merchandise or service
  6. Business names with abbreviation used by the government in its governmental functions
  7. Business names with abbreviation used by any nation, intergovernmental or international organization
  8. Business names which is misleading, deceptive, or misrepresent the real nature of the business

 

Post Registration Requirements:


 

  1. Registration of the business entity with the Local Government Unit where the corporate address is located to have your business permit
  2. Registration of the business entity with the Bureau of Internal Revenue (BIR), the taxing authority of the Philippines;
  3. Registration with the government mandated benefits providers for your employees, namely:
    1. Social Security Systems (SSS);
    2. PhilHealth;
    3. Pag-IBIG – Home Development Mutual Fund (HDMF).

ADD-ON SERVICES:

LEGAL RETAINER & COMPLIANCE

TAX COMPLIANCE

PAYROLL SERVICES

ACCOUNTING & BOOKKEEPING SERVICES


 

Domestic Corporation is a form of business entity created in accordance with laws of the Philippines. It is considered as a separate and distinct entity from its owners (shareholders), as such it has its own juridical personality. A corporation may enter into contracts and has the capacity to sue and be sued. The liability of the corporation is limited to the assets of the corporation. As such, shareholders are not personally liable for liabilities incurred by the corporation, except in cases of fraud.

 

There are three (3) classifications of foreign-owned domestic corporations in the Philippines, namely:

 

  1. More than forty (40%) percent foreign-owned domestic corporation engaged in domestic or local market;
  2. More than forty (40%) percent foreign-owned domestic corporation engaged in export market;
  3. Less than forty (40%) percent foreign-owned domestic corporation.

 

Under Republic Act 7042, otherwise known as the “Foreign Investments Act of 1991”, a domestic corporation may be fully foreign-owned. This, as long as the business activity of the corporation is not included in the Philippine Foreign Investments Negative List.

 

Basic Requirements for Incorporation

 

Incorporators/Board of Directors:

 

The Corporation Code of the Philippines requires at least five (5) and at most fifteen (15) natural persons to act as initial shareholders/incorporators of the corporation. Majority of whom, must be residents of the Philippines. The same rule applies to the Board of Directors of the corporation.

Corporate Officers:

The following officers are required upon incorporation:

 


 

President Treasurer Corporate Secretary
Shareholder Required Not Required Not Required
Member of the Board Required Not Required Not Required
Filipino Citizen Not Required Not Required Required
Resident of the Philippines Not Required Required Required

 


 

  1. President – must be a shareholder and a member of the Board of Directors. Need not be a Filipino citizen and not required to be a resident of the Philippines
  2. Treasurer – not required to be a shareholder and need not be a member of the Board of Directors. Need not be a Filipino citizen but must be a resident of the Philippines.
  3. Corporate Secretary – not required to be a shareholder and need not be a member of the Board of Directors. But must be a Filipino citizen and a resident of the Philippines.

 

Capitalization:

 

A domestic corporation, where more than forty (40%) percent of its capital is foreign-owned, is required to have a minimum capitalization of TWO HUNDRED THOUSAND US DOLLARS (USD 200,000). If less than forty (40%) of the capital of the corporation is owned by foreigners or if it is engaged in export market, then the required capitalization is FIVE THOUSAND PESOS (PHP 5,000).

 

Documentary Requirements:

 

  1. Articles of incorporation
  2. By-laws
  3. Name Verification Slip
  4. Undertaking to Change Name
  5. Treasurer’s Affidavit and Authorization to Verify Bank Accounts
  6. SEC Form F-100 (the Application to do Business under the Foreign Investments Act)

 

SEC Fees:

 

  1. Filing Fee: 1/5 of 1% of the authorized capital stock of the proposed company, but not less than PhP1,000
  2. SEC Form F-100: PhP2,000
  3. Legal Research Fee: 1% of filing fee

 

Registration Process:

 

  1. Open a Treasurer-in-Trust Bank Account
  2. Designate a principal office of the proposed corporation
  3. Choose a corporate name, this should not be similar to an established corporation / business entity already registered with the Securities and Exchange Commission (SEC)
  4. Preparation of the documentary requirements
  5. Submission of the documentary requirements with the Securities and Exchange Commission (SEC)
  6. Assessment of the application by the Securities and Exchange Commission (SEC)
  7. Release of the Certificate of Incorporation (COI)

 

Post Registration Requirements:

 

  1. Registration of the business entity with the Local Government Unit where the corporate address is located to have your business permit
  2. Registration of the business entity with the Bureau of Internal Revenue (BIR), the taxing authority of the Philippines;
  3. Registration with the government mandated benefits providers for your employees, namely:
    1. Social Security Systems (SSS);
    2. PhilHealth;
    3. Pag-IBIG – Home Development Mutual Fund (HDMF).

 

ADD-ON SERVICES:

CORPORATE GOVERNANCE & HOUSEKEEPING

CORPORATE SECRETARIAL SERVICES

TAX COMPLIANCE

PAYROLL SERVICES

ACCOUNTING & BOOKKEEPING SERVICES

 


Branch Office is considered as an extension of the parent company. Registration as a branch office in the Philippines entitles a foreign corporation to do business in the country without a need to create a separate entity from its parent company. As such, it is not required to have directors or officers separate and distinct from its parent company.

 

The minimum required capitalization for a branch office is TWO HUNDRED THOUSAND US DOLLARS (USD 200,000). As an exception, a branch office whose business is considered as export oriented, is only required to have a minimum capitalization of FIVE THOUSAND PESOS (PHP 5,000).

 

A branch office that is either (i) engaged in activities involving advance technology, or (ii) employs at least 50 direct employees, the required capitalization is reduced to ONE HUNDRED THOUSAND DOLLARS (USD100,000).

 

A resident agent is required to be appointed by the parent company in order to establish a branch office in the Philippines. The resident agent need not be a citizen of the Philippines but must be a resident of the Philippines. The main duty of the resident agent is to receive correspondence in behalf of the parent company, and be the designated person to receive summons and other legal processes served in all actions or legal proceedings against the parent foreign corporation.

 

Since a branch office is a wholly foreign-owned business entity, it cannot engage in any business activity listed under the Philippine Foreign Investments Negative List.

 

In addition to the capitalization required, a branch office is required to deposit at least ONE HUNDRED THOUSAND PESOS (PHP 100,000) worth of securities with the Securities and Exchange Commission (SEC). This should be done within sixty (60) days from issuance of its SEC license to do business in the Philippines.

 

Post Registration Requirements:

 

  1. Registration of the business entity with the Local Government Unit where the corporate address is located to have your business permit
  2. Registration of the business entity with the Bureau of Internal Revenue (BIR), the taxing authority of the Philippines;
  3. Registration with the government mandated benefits providers for your employees, namely:
    1. Social Security Systems (SSS);
    2. PhilHealth;
    3. Pag-IBIG – Home Development Mutual Fund (HDMF).

 

ADD-ON SERVICES:

LEGAL RETAINER & LEGAL COMPLIANCE

TAX COMPLIANCE

PAYROLL SERVICES

ACCOUNTING & BOOKKEEPING SERVICES


 

What is a Representative Office (RO)?

 

A representative office is a business structure of a foreign corporation that can do the following business activities:

 

  1. Information dissemination;
  2. Promotion of the products of the head office;
  3. Provide quality control of the products of the head office; and
  4. Act as a communication center.

 

A representative office cannot have income in the Philippines, as it can only be a cost center of the head office for it to provide for back office support services.

 

The inward remittance required to establish a representative office is USD 30,000.00. The same amount is required to be remitted annually to cover the operating expenses of the representative office.

 

 

Post Registration Requirements:

 

  1. Registration of the business entity with the Local Government Unit where the corporate address is located to have your business permit
  2. Registration of the business entity with the Bureau of Internal Revenue (BIR), the taxing authority of the Philippines;
  3. Registration with the government mandated benefits providers for your employees, namely:
    1. Social Security Systems (SSS);
    2. PhilHealth;
    3. Pag-IBIG – Home Development Mutual Fund (HDMF).

 

ADD-ON SERVICES:

LEGAL RETAINER & LEGAL COMPLIANCE

TAX COMPLIANCE

PAYROLL SERVICES

ACCOUNTING & BOOKKEEPING SERVICES

Contact Us

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