HOW TO REGISTER A BUSINESS IN THE PHILIPPINES | Sole Proprietorship, Partnership or Corporation?
Summary
TLDRIn this video, Charm from Reddit Adult Philippines outlines the process and benefits of registering a business in the Philippines. She discusses the importance of distinguishing between a business name and a brand name, and the different business structures including sole proprietorship, partnerships, and corporations. Charm explains the registration process with agencies like DTI, SEC, and IPO, and the costs involved. She also highlights the necessity of obtaining a mayor's permit and a BIR permit, providing insights into the advantages of being a registered business, such as the ability to cater to larger clients and orders.
Takeaways
- đ Registering a business is crucial for legal operations and to avoid illegal activities.
- đą The video is divided into three parts: business name registration, mayor's permit, and BIR permit.
- đ The difference between business name and brand name is clarified, with the latter requiring registration with the Intellectual Property Office (IPO).
- đ©âđŒ Business structures discussed include sole proprietorship, partnerships, and corporations, each with varying levels of control, liability, and investment opportunities.
- đŒ Sole proprietorships are the simplest but carry the highest risk, while corporations offer the most protection and are attractive to investors.
- đŒ Partnerships offer a middle ground with the possibility of foreign ownership and limited liability for some partners.
- đŠ The process for registering businesses with the DTI (for sole proprietorships) and SEC (for partnerships and corporations) is outlined, including online and in-person steps.
- đ” Costs for business registration vary widely, from a few hundred for DTI registration to potentially thousands for SEC and IPO registrations.
- đ Business permits are required within 30 days of business name registration and involve various requirements depending on the city and type of business.
- đŒ The BIR permit is essential for tax purposes, and businesses must maintain specific financial records and books.
- đ° The total cost of registering a business can range from around ten thousand to thirty-five thousand pesos, depending on the business type and location.
Q & A
What are the three major parts of business registration discussed in the video?
-The three major parts of business registration discussed are business name registration, mayor's permit or business permit, and BIR permit.
What is the difference between a business name and a brand name?
-A business name is the trade name registered for legal purposes, while a brand name is the name associated with a product or service and must be registered with the Intellectual Property Office (IPO) to secure it.
What are the three types of business structures mentioned in the video?
-The three types of business structures mentioned are sole proprietorship, partnerships, and corporations.
Why is registering as a corporation advantageous for liability protection?
-Registering as a corporation is advantageous for liability protection because the business is treated as a separate legal entity, meaning personal assets of shareholders are protected and cannot be seized for business debts.
What is the minimum number of people required to register a corporation in the Philippines as of 2019?
-As of 2019, the minimum number of people required to register a corporation in the Philippines is one, allowing for one-person corporations.
What are the two types of corporations mentioned in the video?
-The two types of corporations mentioned are stock corporations, which issue shares and may distribute dividends, and non-stock corporations, which do not issue shares and often operate for charitable, educational, or similar purposes.
How long is the validity of a DTI business name registration?
-The validity of a DTI business name registration is five years, after which it must be renewed.
What is the penalty for not registering a business permit within 30 days of registering a business name?
-The penalty for not registering a business permit within 30 days of registering a business name is a penalty fee, as it is assumed that the business has been operating without proper permits.
What are the general requirements for obtaining a mayor's permit or business permit?
-General requirements for a mayor's permit or business permit include a DTI or SEC certificate, barangay clearance, and possibly a lease contract or proof of ownership for the business location.
Why is it beneficial for a business to be registered and legal?
-Being registered and legal allows a business to cater to bigger orders and sales, as companies often require official receipts for significant transactions, which are only issued by registered businesses.
Outlines
đ Introduction to Business Registration
Charm from Reddit Adult Philippines introduces the video's focus on the process and reasons for registering a business. The video is divided into three parts: business name registration, mayor's permit or business permit, and BIR permit. Charm emphasizes the importance of registering a business name, distinguishing it from a brand name, and explains that while registering a brand name is not mandatory, it is for a business name. The video also briefly touches on different business structures, including sole proprietorship, partnerships, and corporations, highlighting the differences in control, liability, and investment opportunities.
đą Business Structures and Liability
This paragraph delves deeper into the three types of business structures: sole proprietorship, partnerships, and corporations. It discusses the differences in liability and exposure, with sole proprietorships carrying the highest risk as the owner is personally liable for all business debts. Partnerships offer a middle ground with general and limited liability options, while corporations provide the most protection, treating the business as a separate entity from the shareholders. The paragraph also addresses the attractiveness of each structure to investors, with corporations being the most appealing due to their professional appearance and stability.
đ Registration Agencies and Processes
Charm explains the agencies responsible for registering different business types in the Philippines. Sole proprietorships are registered with the DTI, which offers an easy and cost-effective online registration process. Partnerships and corporations, on the other hand, are registered with the SEC, which requires more documentation and a higher fee. The paragraph also mentions the IPO for brand name registration and provides a brief overview of the registration process, validity periods, and the necessary documents for each type of business structure.
đ Business Permit and BIR Permit Requirements
The paragraph discusses the requirements and processes for obtaining a business permit and a BIR permit. After registering a business name, one must secure a business permit within 30 days. The permit is valid for one year and requires various documents, including a DTI or SEC certificate and barangay clearance. The BIR permit is necessary for tax purposes and allows businesses to issue official receipts. The paragraph outlines the different requirements for sole proprietors, partnerships, and corporations, and mentions the additional costs associated with these permits, such as fees for the authority to print receipts and maintaining business books.
đŒ Recap and Encouragement for Legal Business Operations
In the final paragraph, Charm recaps the fees associated with registering a business, ranging from around 10,000 to 35,000 pesos, depending on the business type and location. The video concludes with an emphasis on the advantages of being a legally registered business, such as the ability to cater to larger orders and sales, and the credibility it lends to a company. Charm offers to recommend a trusted bookkeeper to viewers in Cebu who need assistance with business registration and encourages viewers to like, subscribe, and share the video with others who might find it helpful.
Mindmap
Keywords
đĄBusiness Registration
đĄBusiness Name vs. Brand Name
đĄSole Proprietorship
đĄPartnership
đĄCorporation
đĄMayor's Permit
đĄBIR Permit
đĄIntellectual Property Office (IPO)
đĄDTI (Department of Trade and Industry)
đĄSEC (Securities and Exchange Commission)
đĄBusiness Structures
Highlights
Discusses the advantages of registering a business, including legality and credibility.
Introduces the three major parts of business registration: business name, mayor's permit, and BIR permit.
Explains the difference between a business name and a brand name, and the importance of registering both.
Outlines the three business structures: sole proprietorship, partnership, and corporation, detailing their features.
Describes the risks and benefits associated with each business structure, focusing on liability and control.
Provides a step-by-step guide on how to register a business name with the DTI or SEC.
Discusses the process of securing a brand name with the Intellectual Property Office (IPO).
Explains the requirement of obtaining a mayor's permit within 30 days of business name registration.
Covers the general requirements for a business permit, including barangay clearance and lease contracts.
Mentions the fees associated with various permits and registrations, giving a range for each.
Advises on the necessity of a BIR permit and the process of obtaining an Authority to Print receipts.
Recommends hiring a bookkeeper for partnership and corporation registrations due to the complexity.
Provides practical advice for startups, suggesting starting with a sole proprietorship due to ease of application.
Discusses the benefits of being a registered business, such as the ability to cater to larger orders and sales.
Offers to recommend a trusted bookkeeper for viewers in Cebu who need help with business registration.
Encourages viewers to subscribe and like the video for more content on personal finance and entrepreneurship.
Transcripts
okay one advantage that i want to point
out
when you are registered as a business um
other than the fact that
you are not doing anything illegal
[Music]
hi everyone it's charm again from reddit
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adult ph
so i've already touched on this topic on
my how to start a business video
and if you haven't decided on a business
yet then you might want to
check that out but if you've already
decided on pursuing your business
and you're looking to register it then
this video is for you
so let's discuss the process of
registering your business and the
reasons behind it okay so let's jump
right into the video
i'm gonna be dividing the video into
three parts
and these are basically the three major
parts of your registration
so for the first that's for the business
name registration
for the second part that's where we
discuss the
mayor's permit or business permit and
for the third we're going to be
discussing the bir permit
i won't be going through each and every
requirement in this video i will be
putting them in the description box down
below
because i just really want to explain to
you guys the process
and the highlights so first let's talk
about name registration
this is the very first step you need to
do when you are registering your
business
before we talk about the different
agencies let's talk about first the
difference between
business name and brand name so for the
business name this is
the trade name or this is what you
register for
you to be able to register your business
okay
so your brand name is different and for
you to secure your brand name you have
to register it with the ipo
or the intellectual property office all
right
so it's not a requirement to register
your brand name
but it is a requirement to register a
business name
okay so for example for us our business
name
is subo mercado food bazaar inc but our
brand name is jasobu mercado
or my other business is district events
and the brand name of the event is pop
district bazaar
so for example you're an online business
so the online business brand name
doesn't have to be the same with the
business name
okay so now let's talk about the
business structures so we have the sole
proprietorship
we have the partnerships and the
corporations
okay so individually let's talk about
the difference between the three of
these
so for sole proprietorship it's the
simplest
and the least formal type of business
structure
but you have full control of your
business
and in terms of the process of paperwork
and application
sole proprietorship is the easiest to
apply among the three structures
but in terms of liability and exposure
sole proprietorship has the highest risk
okay what that means is as a sole
proprietor
you are your business you are under 110
number
so whatever your business owes for
example you're taking out a loan for
your business
and your business cannot pay that loan
for example it has to shut down you
will need to pay for those liabilities
and loans
okay so your car your house they can
possibly be taken away
if you have a lot of liabilities in your
business
and in terms of investment opportunities
you have a lower advantage compared to
the other structures
because a sole proprietorship business
is not as attractive
of a business structure compared to the
other ones
because the investors cannot have
ownership in the business
so for partnership it's under the sec or
the sec
and you need at least two people to
register under
partnerships the partnership structure
is the in between of the sole
proprietorship and the corporation
okay so it's the first structure that
you can see
um the possibility of having foreign
ownership
of up to 40 percent and also
the business has its own judicial
personality
that means that the business is like a
person created by law
it has its own identity it has its own
10 number
it's in a way treated separate from the
individual partners
so for the control you have lesser
control with the partnership structure
because you have your other partners as
compared to the sole proprietorship
where
you're your own boss and you're the
owner of the business okay
so you have a low control when it comes
to this
for the paperwork or application process
i would say it's a medium
it's not as easy as a sole
proprietorship but it's also not as hard
as a corporation
okay so next let's discuss the liability
or the exposure to liability
so for partnerships there are usually
two types so we have the general
liability and the limited liability
so most of the time the main partner has
general liability that means that it's
kind of similar to the sole
proprietorship or you have unlimited
liability as well
so there are also some partners that may
have limited liability
and these partners their only liability
is limited to
the capital that they put up so most of
the time their personal assets would be
safe
and last is for the investment
opportunity so it's definitely more
attractive than the sole proprietorship
but it's not as attractive as
corporations so for partnerships there
are some businesses that need to
register as
partnerships like law firms or
accounting firms okay so for corporate
funds
it's also under sec and before it used
to be minimum of five people
but early last year 2019 they already
allowed two to four person corporations
and also one person corporations okay
for corporations
it's similar to partnership in the way
that
you can also have foreign ownership up
to 40 percent
and it also has its own judicial
personality
again meaning your business is treated
as an entirely different person created
by the law
and also it's similar in a way that you
don't have as much control over it
as compared to sole proprietorships
again similar to partnerships you have
other partners or shareholders and in
terms of the business application
or the paperwork it's definitely the
hardest to apply for
as compared to partnerships and sole
proprietorships
in terms of exposure and liability it
has the lowest exposure
okay so if for the sole proprietorship
you
are your business and everything that
the business owes
you also owe okay so for the
partnerships
you can have a general liability and a
limited liability so it's a mix of both
but for the corporation since the
business is really completely
detached from the shareholders then
any liability that your business might
have if you have
loans and you decide to close your
business your personal assets all the
shareholders personal assets will be
protected
the bank cannot go after your car your
house your jewelry etc okay
so that's why a lot of big businesses in
the philippines go for the corporate
structure
because it's the most ideal really for
big companies
so for corporations we have two types
you have the stock or the non-stock
basically for the stock you issue shares
or stocks to your investors and if ever
there are surplus profits or extra
profits
then you can divide that to your
investors and that's what we call
dividends
okay so these terms are familiar to you
if you've seen my stock market video
and that's how it works okay but for the
corporations we also have non-stock
and non-stocks doesn't issue shares
so basically non-stock operations exist
for charitable educational
cultural or other similar purposes okay
so you might hear it together with the
phrase non-stock non-profit
so yeah and lastly about the investment
opportunity
you have a high chance of getting
investors when you are a corporation
you definitely look more stable you look
more professional
when you are registered as a corporation
so if you're
someone who might be looking for
investors in the future
registering as a corporation is
definitely
an option for you okay so just to give
you a brief background
i actually have businesses registered
under sole proprietorship
partnership and corporation okay
i already closed my partnership business
down
but i've tried all three for the sole
proprietorship
i was the one who did all the paperwork
all the process
okay so from name registration to
business permit and the bir permit i was
the one
to process it but for the partnership
and corporation
i already hired a bookkeeper to do those
for me
okay so it's definitely more tedious
of a process when you are under sec as
compared to dti
but i know if you're starting out it
might be costly for you to do so
so that's why majority of startups start
with
sole proprietorship because it's also
the easiest to apply for
and there's very little paperwork okay
so let's talk about the agencies where
you have to register
these businesses okay so for sole
proprietorship again it's with the dti
it's so easy to register with the dti
right now
because other than walking into a dti
you can actually register online okay so
business name registration system bnrs
for the dpi
it is valid for five years so every five
years you have to renew your business
name
so the requirements are pretty easy you
just have to fill up an application form
online
maybe an id and you have to pay for it
that's basically it and they will send
you an
email and you can print it out okay so
for the cost
of the dti registration it depends on
the territorial coverage that you want
it can either be barangay which is 200
pesos municipal which is 500 pesos
regional which is 1000 pesos and for
national it's 2 000 pesos
okay and on top of that you have a
documentary stamp
of 30 pesos okay so if you want to go
national it's a total of 2030 pesos
and you can do it in 5 to 10 minutes in
a computer at home
okay so let's move on to the partnership
and corporations
these again are registered under the sec
or the securities and exchange
commission or sec and for this you can
kind of also do it online but not
fully you can verify the availability
of your business name online and then if
it's available then you can reserve it
but for it to be confirmed you have to
go to the sac
office within a few days after serving
it online i think it was four days
okay so for the partnerships the
validity of partnerships
is actually there's no limit it really
depends on the partners
and the important document that you need
to submit for
the application is the articles of
partnerships okay
so that's the agreement between you and
your partners
so for corporations its validity is 50
years
and the important requirement there is
the articles of incorporation
all right so this is why i mentioned
earlier that
it's harder to apply for corporate funds
because there are actually a lot of
requirements you need
to be able to apply okay so if you and
your business partners are looking
to register as a corporation i highly
suggest for you to get
someone services for them to be able to
help you out with registration
so if you guys are in cebu and you don't
know who to go to
i can recommend my guide to you and he
is really good i really trust him
okay so if you're in cebu you can dm me
on instagram and i can connect you to
him
and there's no catch okay i just know
that it's hard to look for people that
you can trust in terms of these
i have definitely been scammed before
in terms of getting someone to take care
of my taxes so
maybe that's for another video but yeah
so for the fees.com with registering
with sec
it really varies because it's actually
um dependent
on your capital so they actually have
a calculator online i'll put a
screenshot here and i will link it down
below
but you can calculate it based on the
capital that you will be putting up
okay but for the sec you can expect to
pay around 5 to fifteen thousand pesos
okay so now let's quickly talk about
the ipo that's where you register your
brand name so if you can see that our
logo that's where you do it with the
intellectual property office
and basically you can spend around eight
to nine
thousand pesos to register a brand name
and brand logo
okay so now let's move on from the name
registration
to the business permit okay so after
you've registered
with the dti or sec you have 30 days to
register for a business permit so for a
business permit you will need a dti
certificate or a sac
certificate you have to do this within
the 30 days
or else you will be charged with a
penalty fee and the reason behind the
penalty fee
is because when you already have your
business name permit
they are assuming that you are already
operating your business
and if you've delayed a few months or
even years
before you get your business permit they
will be thinking that you have been
operating
without proper permits so for the
business registration you will be doing
this
in the city or municipality where your
business is located
so if you are an online business or a
freelancer and you work at home
then your address will be your office as
well so you will be
registering in the city hall where your
office is located so for business
permits it's actually a wide spectrum of
requirements that you might
need depending on what business you are
engaging in
so you might need clearances and
different
agencies for example you are a travel
agency
so you will need a clearance from the
dot or department of tourism
if you are a pawn shop you need a
clearance from the bsp or banco central
lung filipinas
and etc okay so i'll put a list here for
possible clearances that you might need
but let's talk about the general
requirements and the things that you
need to know under
the mayor's permit or the business
permit okay okay first is the validity
is only one year you will need to renew
this every year
on january specifically so if you're
someone who is trying to register a
business
on november on december i would suggest
for you to hold getting your business
permit
until january because you will be paying
the fee
again if you register on november
december
okay so i will be putting here the
requirements so you can go
over that but basically one important
requirement there is the barangay
clearance
you will need a barangay clearance from
the barangay where your office is
located
so if you are renting your home or your
office
they will need a lease contract if you
are in a village
they need a certificate from your
village
home owners association saying that it
is okay
that you are using your home as an
office and if you own the house
you will need to submit um the real
estate tax that you paid for that year
as well
okay so these are just the common
requirements
that cities might have because usually
each city or municipality
have different um requirements when it
comes to
the business permit for the business
permit you would spend around
five to ten thousand pesos for
registration and that's just
for registration there are actually
other fees that might come with it
for example city health barangay
senro zoning oboe
and fire most of these require physical
inspection of the office if it is fit to
conduct business in
so some of these departments also have
another
um fee of around five to ten thousand
total
okay so it really depends 80 per city so
i can't really say
exactly and also it also depends with
your line of business
as i mentioned before okay so now let's
talk about the bir
permit or the bureau of internal revenue
permit
okay so you will be getting this at the
bir district office where your business
is located and other than the bir permit
this is where you will be getting your
authority to print
and your book of journals okay so i'll
explain more of that later
this is also valid for one year so
usually you renew this together with
your business permit
for the requirements it's different for
self-employed
or mixed income earners or usually
that's the sole proprietors
and the partnerships and corporations so
for the sole proprietors usually you
need a birth certificate or a valid id
you will need to fill up a form you will
need your dti certificate
and you used to need your mayor's permit
as well
but just recently they have allowed for
you
to register with the bir even before
your business permit
comes out as long as you can show them a
receipt that you're already processing
your business permit
so for partnerships and corporations you
will need
your sex certificate and your mayor's
permit
so like i mentioned for the sole
proprietorship
just as long as you can show the receipt
that you are processing it already
okay so bir is kind of easier already to
apply for
because the hardest part is really the
business permit it's the one that has
um the most requirements so other than
your bir permit i mentioned earlier that
you
also need to get an authority to print
and your books from the bir
okay so for the authority to print it's
basically
a form that you need to fill up because
you need to print out receipts
for your business to be able to give out
or
or official receipts to people okay so i
won't
dive too deep into taxes and everything
because
that can be a separate video but
basically
you will need an authority to print you
can either do internal and print with
the bir
or you can get the authority to print to
print somewhere else okay
so it's kind of known that when you
print with the bir it's kind of more
expensive
rather than going the external route
because of course they also offer
convenience
with for the bir if you print your
receipts there and everything
you would be paying around three to four
thousand pesos
and around 2500 of that are the receipts
okay so receipt booklets usually come
in at least 10 booklets so if you go
outside it's usually around 1200
to 1500 pesos for 10 booklets already
okay so as compared to the 2500 in bir
and also you'll be paying for
documentary stamps for the lease
contract if you are renting your office
okay so for this i will be putting the
formula here
it depends on how much you are renting
your office for
and you will also need to maintain four
books the
cash receipt the cash disbursement the
general ledger and the general journal
okay so again i can um discuss this in a
separate video
but basically these are used to uh
record the in and out of money from your
business
okay so that's it let's recap the fees
that you need to pay when you register
to um these agencies so for name
registration we have
dti which you can be paying from 230 to
2030 pesos
and for sec you can be paying from 5 000
to 15 000 pesos
and if you want to register your brand
name with the ipo
then that's another eight to nine
thousand pesos okay so for the business
permit
this really depends on each city or
municipality but you can be paying
from five thousand to ten thousand pesos
and for the
other departments that's another five to
ten thousand pesos again
and lastly for the bir um your bi permit
and your receipts
you will be paying from three to four or
five thousand pesos
okay so the total really depends on your
business
but it can be from around ten thousand
to thirty five thousand pesos
okay so of course the ten thousand is
usually for
sole proprietorships and the 35 000 is
usually for the corporations
and there's a whole spectrum of total
prices in between it depends
on your capitalization what type of
business you are gonna have
and etc okay so i hope this
video helped everyone who are
trying to start their own business and
don't really know
how to go about the process of
registering their business
to be a legal entity okay so it's really
a different
feeling when you are registered and you
are a legal entity
and you are operating a legal business
okay one advantage that i want to point
out when you are registered as a
business
other than the fact that you are not
doing anything illegal
is really that you can open up yourself
to catering
to bigger orders bigger sales
bigger work because usually companies
who
look for products and services really
ask for official receipts because
especially if they are spending a lot of
money
buying your products or getting you for
your services
they would need to reflect that in their
box
because if they don't it's like the
money just disappeared out of thin
air and they would be having troubles
with the bir
for that okay so that's definitely one
of the advantages
that being in a legal and registered
business
will have like i mentioned earlier if
you're in cebu and you need help with
your business registration
i can recommend my trusted bookkeeper to
you
and he can definitely help you with that
just dm me
on instagram and also if you like this
video and you have other friends that
may be starting their own business
even if it's online because online
businesses also really need to be
registered
um online freelancers also need to be
registered
so send this video to them and don't
forget to like this video and subscribe
to the channel
hit the notification bell if you want to
be notified every time i upload another
video
and i know that adulting's already hard
and also business is hard
so i wanna make it easier for you guys
by making videos like these
and this has been charm from reddish
adult philippines and i will see you on
my next video
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