A sole proprietorship is the most basic form of business one can operate. It is a business structure owned by an individual who has all the authority in the company and full control over his/her assets. This allows the owner of the sole proprietorship business to enjoy all the profits as well as bear the losses and responsibilities for the debts and liabilities. Majority of the businessman is running a sole proprietorship business in the Philippines. The proprietor and their proprietorship business are considered as one taxpayer in the Philippines sharing a single TIN (Taxpayer Identification Number) for tax purposes. A sole proprietorship in the Philippines must apply for a business trade name and be registered with the Department of Trade and Industry.
Advantages of a Sole Proprietorship in the Philippines
- There is a little paperwork needed. The application of a sole proprietorship must be done with the DTI regional or provincial offices
- No minimum share capital requirement
- A sole proprietor will completely control the business
- Sole proprietor acquires all assets and profits of the business and can freely mix business and personal assets
How to Set Up a Sole Proprietorship in the Philippines?
Establishing a sole proprietorship in the Philippines is less complicated than setting up bigger companies and corporations. Before anything else, you must be a Filipino Citizen in order to register a sole proprietorship business. If you already possess this prerequisite then you may go ahead with the company registration in the Philippines.
1. Register Your Business Name at the Department of Trade & Industry (DTI)
First, search whether the name that you have decided is similar to the other existing businesses. If the name you want is available, fill out the business name application form and submit it to the DTI’s office. The DTI will then provide you with a Certificate of Registration after which you can move on to the next step.
2. Register with the Barangay
Once you receive the Certificate of Registration from the DTI, the next step is to go the Barangay where your business is located to fill out the application. You shall also submit a copy of the Certificate of Registration, two valid IDs, and a Proof of Residence. After a few days, you will receive the Barangay Certificate of Business Registration.
3. Register the Business with the Mayor’s Office
After you get the certificate from the Barangay, register your business at the municipal office in the city where your business is located. You will need to fill out an application, as well as submit your Certificate of Business Registration from the DTI, your Barangay Clearance Certificate, two valid forms of ID, and Proof of Residency.
4. Register with the Bureau of Internal Revenue (BIR)
The final step is to register your single proprietorship business in the Philippines with the BIR. To do this, you must visit your Regional Office in the city and fill the ‘BIR Form 1901’, which is an application to register your business. You must also submit your Certificate of Registration from DTI, your Barangay Clearance Certificate, and your Mayor’s Business Permit, Proof of Residency, and a valid ID. After this, you have to pay fees for the registration and at the same time register your book of accounts and provide any receipts or invoices you have for the business. After all of this has been completed, you will be able to claim your Certificate of Registration.
Note that the business permits in the Philippines have to be renewed every year. A renewal fee of P300 is required at the DTI, while renewal fees vary at the city and Barangay levels. If you renew after 90 days from the expiration of your permits, you will be required to pay a surcharge of P100.
After you have completed all the four steps, you can focus on strategies to succeed in your new venture. Also, make sure you have covered all additional clearances, permits, or license that you need to obtain before making your business public. If you are looking for a head start in starting your business in the Philippines, Business Setup Worldwide is here to help you with the requirements and procedures to ensure the quick processing of your application and precipitate the commencement of your business. Contact us today to avail these services.