Partnership Company Registration In Philippines

Detailed Overview of Partnership company registration in Philippines

The projection of a 5.9% rise in the Philippines economy by the end of the year 2024 has started alarming the increase in Partnership company registration in Philippines. The foremost requirement of every entrepreneur in the Philippines must be to identify and decide from the most common forms of business structures in the Philippines, namely, sole proprietorship, partnership, corporation, or cooperative society. Business planning is a crucial step required by every entrepreneur willing to partner with company registration in the Philippines, which is situated in the Western Pacific Ocean and is attracted by most investors due to enticing corporate and flexible investment opportunities. The fastest economic growth rate of 7.6% has been observed in the Philippines for the year 2022 since 1976.

What does Partnership business in the Philippines mean?

Title IX, containing 4 chapters, provides for the articles 1767 to 1867 under the Republic Act no. 386, i.e., the Civil Code of Philippines enacted in 1949 defines the partnership business in the Philippines as an 'a contract among 2 or more persons agreeing for the contribution of the money, property, or industry to a particular shared fund splitting the profits among themselves.  Simply put, a partnership business in the Philippines is a separate legal form of business entity forming contractual relations between 2 or more individuals to share and manage the profits and losses of the business formation. The insights of the partnership business are similar to those of the corporation providing separate juridical personnel and the business entities willing to register their business in the Philippines. The partnership businesses in the Philippines are owned by 2 or more individuals called partners, having certain rights that can be classified into the following:

1. A general partner must contribute capital and actively participate in the control and management of the partnership business in the Philippines. The general partners must have unlimited legal liability for the acts and obligations arising in the course of carrying out the operations of the partnership business in the Philippines;
2. Limited Partner must be one who only contributes capital and has only limited legal liability up to the extent of their contribution in the partnership company registration in Philippines;
3. An Industrial Partner must be an individual who is capable of contributing and furnishing the labour or associated industry;
4. Capitalist Partners must be individuals who only contribute to the capital of the partnership firm.

Forms of Partnership Business Registration in the Philippines

The entrepreneurs willing to establish their business in the Philippines are free to choose among 2 different forms of partnership business in the Philippines depending upon certain factors essential for finding the best fit for fulfilling the business requirement. The formation of a partnership in the Philippines can be classified into two diverse forms of partnership structures as provided below:

General Partnership

It is considered to be the cheapest form of Partnership company registration in Philippines. All the members are accountable for holding equal responsibility in running the operations of the General Partnership business, also known as GP. Equal responsibility is categorized as sharing the liabilities (unlimited personal liability) or debts among the partners of the partnership business in the Philippines. The partners are severally and jointly liable for owing, managing, and controlling all the operations and decisions of the business entity registered in the Philippines. The formation and disclosure of a general partnership business is comparatively easier.

Limited Partnership

A limited partnership, also known as LP, is a form of Partnership company registration in the Philippines that consists of silent investors that limit the personal liability of the partners up to the extent of their capital contribution during the formation of a partnership in the Philippines. In a limited liability partnership structure, there exists at least 1 general partner having unlimited legal liability essential for the formation of a partnership agreement in written form, which is a contract establishing the terms for governing the relation among the partners of the partnership business in the Philippines.

Why form a Partnership business in the Philippines?

Generally, partnership company registration in Philippines is considered to be the most strategic move of the entrepreneurs while registering the form of business entities in the Philippines. The basic reasons that must be reviewed by the entrepreneurs before Partnership company registration in Philippines include the following:

1. Business-friendly legislation for attracting more investment opportunities;
2. The low investment cost for the formation of a partnership in the Philippines;
3. Various programs of the government offer incentives to new startups;
4. Acquires easy process for the Partnership company registration in Philippines;
5. Easy to change the legal structure of the business (upon requirement);
6. The losses of the firm are distributed among the partners (the entire liability is not on a sole partner);
7. Equality in managing and controlling the operations of the partnership business;
8. Easy to extend bigger loans from financial institutions;
9. The operations of the business are flexible and efficiently managed (depending upon the phrase, two heads are better than one).

Step-by-Step Guide for Partnership Company Registration in Philippines

The process for Partnership company registration in Philippines is governed by the size and structure of the business setup. The registration of partnership companies in the Philippines must be carried out in accordance with the regulations governing the nation's business setup. The entire process for Partnership company registration in Philippines must be accompanied by 4 different government agencies of the Philippines, namely:

1. The Department of Trade and Industry for applying for the reservation of the business name;
2. The Securities and Exchange Commission for partnership the registration of the in the Philippines;
3. The Bureau of Internal Revenue for formalizing and ensuring business compliance in accordance with the local tax laws and regulations of the Philippines;
4. The Business Permit and Licensing Office in the City or the Municipal Office of the Philippines.

The entire process of Partnership company registration in Philippines is divided into the following 3 categories as provided below:

Step 1: Pre- Registration procedure: Documentation

Initially, the step requires you to compile all the relevant documents and information necessary for the Partnership company registration in the Philippines with the SEC, i.e., the Securities Exchange Commission of the Philippines. The list of basic documentation that must be kept right for smoothly completing the process for the Partnership company registration in Philippines includes:

1. The facsimile of the name verification slip;
2. The true and duly proposed copy of the Articles of Partnership (AP);
3. The facsimile of the joint affidavit of 2 or more partners willing to change the name of the partnership business registered in the Philippines;
4. The facsimile of the certificate of bank deposit;
5. The facsimile of the registration of the data and cover sheet;
6. The facsimile of the alien certificate of registration, special investors resident visa, or other visas;
7. The facsimile containing the proof of the inward remittances (for non-resident aliens establishing a partnership business in the Philippines);

The facsimile of the FIA Form 105 (if having a foreign partner).Step 2: Registration Procedure

The next step allows for the smooth and hassle-free completion of the process of partnership registration under the aegis of the national government regulatory agency of the Philippines, i.e., SEC, which stands for the Securities Exchange Commission of Philippines, targeting the supervision and legalization of the corporate sector of the Philippines. All the forms of business entities registered with the Securities Exchange Commission of the Philippines, like stock corporations (including domestic and resident foreign corporations), non-stock corporations (including NGOs, foundations, associations, and religious organizations), and the general and limited liability partnership business must be controlled and supervised by the absolute jurisdiction of the commission.

Verify and Reserve the proposed name with the SEC.

In the next step, Enterslice assists in reserving the name of the partnership firm with the Securities Exchange Commission of the Philippines. We at Enterslice also ensure the name availability and verification of the name of the partnership firm under the aegis of the Department of Trade and Industry and submit all the relevant notarized documents at the office of the Securities Exchange Commission of the Philippines situated in the Mandaluyong City or through the Name reservation system of the Department of Trade Industry. The application for reserving the name of the partnership business must contain the following information:

1. The name of the partners willing for the formation of a partnership in the Philippines;
2. The residential or citizenship status of the partners willing for the partnership company registration in Philippines;
3. The date of birth of the partners willing for the partnership company registration in Philippines;
4. The civil status of the partners;
5. The gender of the partners;
6. The territorial scope of the partnership business;
7. The proposed domain name of the partnership business;
8. The description of the business name;
9. The proposed name of the partnership business.

Prepare and submit the Articles of Partnership with the SEC

In the next step, we will assist with the preparation of the Articles of Partnership, which acts as a written agreement governing the contractual relations among the partners and regulating the operations of the partnership business. The information that must be included in the articles of partnership includes:

1. The name of the partnership business;
2. The purpose of the partnership business;
3. The details of the principal place of business or the registered address of the partnership business;
4. The term of existence, i.e., the lifespan of the partnership business in the Philippines;
5. The amount of partners’ capital contribution (in Philippine currency)in the partnership business;
6. The name and nationality of all the partners;
7. The share of profits among the partners enrolled in the partnership business;
8. The details of the management structure of the partnership business in the Philippines;
9. The details of the TIN (Tax Identification Number) of the partners, etc.

The Articles of Partnership can be easily registered by signing and submitting the notarized documents under the aegis of the Securities Exchange Commission of the Philippines. The filing of the application for the formation of a partnership in the Philippines can be accompanied either directly to the office of the Securities Exchange Commission of the Philippines or through signing up the SEC online company registration system (CRS). After the successful login of the SEC online company registration system, the steps from the verification of the name of the company to the submission of the registration form in the selected secret office must be strictly followed. The online application also requests various information regarding the status of the partnership firm and partners, which must be mandatorily provided when receiving the system-generated cover letter and articles of partnership.

Payment of Legal Fees

The next step allows for the payment of legal fees upon issuance of the Certificate of Partnership, which shall be evidenced by proof of payment either online or offline. In general, the fees required to be paid during the formation of a partnership in the Philippines include the following:

100. The name reservation fee of 100.00 Philippines pesos is charged by every partnership business for business reserving the name for at least 30 days;
101. A filing fee of 1/5 of 1% of the Partnerships’ capital but not less than 2,000 Philippine pesos plus 1% of the amount as the legal research fees;
102. The BIR registration fees cost around 500 Philippine pesos for the registration and obtaining the Tax Identification Number (TIN) to ensure the smooth Partnership company registration in Philippines;
103. Any other charges (if applicable).

Get a Certificate of Registration from the SEC

After the completion of the filing of the online application form for Partnership company registration in the Philippines, the next step allows for physically visiting the SEC office for lodging the application along with the notarized copies of the Articles of Partnership, the Cover Sheet, and the proof of payment. The Certificate of Registration is received only upon the approval of the SEC, which legally authorizes the partnership business to carry out its operations in the Philippines.

Step 3: Post- Registration Formalities

The formalities that we cover after the completion of the Partnership company registration in Philippines include the following:

Obtain a Barangay Clearance Certificate

It is mandatory for all legal business entities in the Philippines to apply for obtaining a Barangay Clearance Certificate from the local Barangay office where the partnership business is located to ensure that the business is a community-friendly establishment and hence conforms to the local code of the Barangay. The registration of the Barangay Clearance Certificate is accompanied by the following documents: two valid ID proofs of the partners, the facsimile of the certificate of the partnership registration with the SEC, corporate or business address proof, etc.

Register the employees of the partnership with the Social Security System (SSS)

The next step requires the mandatory registration of the employees (temporary or provisional employees) of the partnership business with the Social Security System (SSS) for lawfully remitting the employer’s contribution for the benefit of the employees hired by the firm. The non-compliance of the registration of the employees within the next 30 days of their employment accounts for the violation of the Social Security Law of the Philippines. The registration with the SSS is completed only after the submission of the relevant forms, including:

1. The facsimile of the SS Form R-1 and R-1A;
2. The facsimile of the Securities Exchange Commission Articles of Partnership duly executed;
3. The roadmap of the location of the partnership business;
4. The Social Security Return, which is also termed the validated miscellaneous payment return;
5. The facsimile of the Form R-6 or the SS Form R-6 with a copy of the special bank receipt.

Register with other government agencies of the Philippines

Once the operations of the partnership business start, it is mandatory to register the employees of the business with other government agencies of the Philippines, such as:

1. According to the (new) National Health Insurance Act of the Philippines, the registration of all employees with the Philippines Health Insurance Corporation (Phi Health);
2. The Home Development Mutual Fund (HDMF) providing all the members earning at least 4,000 Philippine pesos must be registered with the agency providing for the Pag-IBIG Fund to provide sufficient loans for housing through the effective saving schemes passed by the agency;
3. The Department of Labour and Employment i.e., DOLE is necessary for the partnership businesses to carry out the operations of the business with at least or more than 5 employees.

Obtaining a Mayor’s or Business License or Permit

Obtaining a mayor’s or business license or permit is only secured after receiving the certificate of Partnership company registration in Philippines, the Barangay Clearance certificate, and the Registration with the Social Security System in the Philippines. The documents required for obtaining a mayor’s permit in the Philippines include the following:

1. The duly completed and signed copy of the application form for the business permit;
2. The Facsimile of the Barangay clearance certificate;
3. The facsimile of the certificate of SEC registration;
4. The facsimile of the public liability insurance;
5. The owner's authorization letter with their respective ID proofs;
6. The facsimile of the contract of a lease (if renting a space) and the land title deed or tax declaration (if you own the place of business);
7. The facsimile of the certificate of registration with the Social Security System;
8. The facsimile of the community tax certificate.

The business permit or license in the Philippines is required to be renewed annually to ensure that the partnership business is abiding by the local government, municipal, or city ordinances providing for the business requirements like proper sanitization, fire safety, and other clearances.

Register with the Bureau of Internal Revenue

The last step requires the issuance of the Bureau of Internal Revenue (BIR) Certificate of Registration through BIR Form no. 2302 for officially printing the receipts of the partnership business, maintaining and registering the books of accounts, and lastly, obtaining a separate tax identification number (TIN) for the partnership business in the Philippines. The documents required for completing the process of BIR registration in the Philippines include:

1. Bureau of Internal Revenue Form no. 1903;
2. Bureau of Internal Revenue Form no. 1906;
3. The facsimile of the SEC registration Certificate;
4. The partnership resolution to transact with the Bureau of Internal Revenue;
5. The facsimile of the payment of the BIR registration fees suing Form 0605.

Why contact us for assistance?

The formation of a partnership in the Philippines can be a herculean task for entrepreneurs willing to gather all the documents and complete the entire process on their own. In such a situation, the entrepreneurs are free to take assistance from Enterslice, where we provide a detailed blueprint of how the Partnership company registration in the Philippines is carried out. We also provide a specialized team of professionals with expertise and knowledge of company formation under diverse regulations.  Not only this, but Enterslice also provides the following services to ease the process of partnership company registration in Philippines:

1. Assists with drafting the Articles of partnership or the Partnership agreement;
2. Simplifies the process of partnership registration with the SEC;
3. Assists in acquiring business permits and other relevant licenses;
4. Aids in hiring workforce for the partnership business;
5. Assists in maintaining corporate compliance;

Assisted in maintaining the books of accounts for the partnership business, etc.