PH Business Registration 101: A Complete Guide for New Entrepreneurs
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PH Business Registration 101: A Complete Guide for New Entrepreneurs
Starting a business in the Philippines can feel overwhelming, especially with the many government agencies and compliance steps involved. This guide simplifies the essentials—from choosing your business structure to understanding the agencies you need to register with—based on our latest training material on Philippine Business Registration.
Sole Proprietorship vs. Corporation: What’s Best for You?
One of the first major decisions when registering a business is choosing between a sole proprietorship (DTI) or a corporation (SEC).
DTI – Sole Proprietorship
The sole proprietorship is the simplest business structure. It is owned by one individual who has full control over operations. Registration is done through the Department of Trade and Industry (DTI). Example: Maple Leaf Consulting (registered as a single‑owner entity).
SEC – Corporation
A corporation provides separate legal personality and is ideal for businesses aiming for scalability, investor involvement, and protection of personal assets. Registration is handled by the Securities and Exchange Commission (SEC). Example: Maple Leaf Consulting Inc. (registered as a corporation).
Understanding Foreign Ownership Limits
Foreign investors are welcome in the Philippines, but certain industries have specific foreign equity restrictions. Depending on the type of activity, foreign ownership may be capped at 0%, 25%, 40%, or allowed up to 100%. Examples include:
0% – Practice of professions, cooperatives, security agencies.
40% – Ownership of private lands, educational institutions.
100% – Adjustment, lending, financing companies, investment houses.
Capital Requirements for Foreign Investors
Foreign‑owned enterprises must meet minimum capital requirements depending on business category:
Domestic Market Enterprises: Minimum US$200,000 paid‑in capital.
Tech‑based Startups or DOST‑endorsed businesses: May qualify for a reduced requirement of US$100,000, provided they employ at least 15 Filipinos.
Tax Overview for All Business Types
Whether you register as a DTI sole proprietor or SEC corporation, you will fall under standard tax categories administered by the Bureau of Internal Revenue (BIR):
VAT or Percentage Tax
Income Tax
Withholding Tax
Corporate Income Tax Rates
25% – Applicable to most domestic and resident foreign corporations
20% – For small corporations with:
Net taxable income ≤ ₱5M, and
Total assets ≤ ₱100M (excluding land)
The Full Compliance Journey: Agencies You Must Register With
To operate legally, Philippine businesses must comply with several agencies beyond DTI or SEC registration:
1. LGU – Local Government Unit: Securing your Mayor’s Permit and Business Permit through the city or municipality.
2. BIR – Bureau of Internal Revenue: Registration, Certificate of Registration (COR), receipts/invoices, and tax filing obligations.
3. DOLE – Department of Labor and Employment: Required for businesses with employees to ensure labor compliance.
4. SSS – Social Security System: Mandatory social protection program for employees.
5. PhilHealth – Philippine Health Insurance Corporation: Health insurance contributions for all employees.
6. HDMF – Pag‑IBIG Fund: Mandatory savings, loan, and housing fund for employees.
Why Compliance Matters
Registration is only the beginning. Ongoing compliance with permits, taxes, and employee‑related requirements protects your business from penalties and keeps operations running smoothly. It also builds credibility with clients, banks, and potential investors.
Final Thoughts
Starting a business is a major milestone—and understanding Philippine business registration helps entrepreneurs make smarter decisions from Day 1. Whether you're choosing your business structure, preparing requirements, or navigating taxes and labor laws, being informed is the key to a smooth and successful setup.
If you need professional assistance in business registration and compliance, our team is ready to guide you every step of the way.
Contact Us Today:
Email: consult@thinktankpros.com
Website: thinktankoutsourcing.com
Viber Number: +639611871515 Whatsapp Number: +63524788835
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