Why choose Sole Proprietorship Registration in Philippines?

Generally, an entrepreneur can conduct corporate or business operations under several heads providing a structure for a sole proprietorship, partnership firm, corporation, or a one-person company registered with the governing authorities (like, the Department of Trade and Industry; the Securities Exchange Commission) of the Philippines.

We at Enterslice assist and answer the basic questions of the entrepreneurs who accumulate the reason or benefits why they must choose Sole Proprietorship Registration in Philippines? A sole proprietorship business in the Philippines is considered to have the simplest form of business structure without lengthy formalities compared to the registration and regulation of corporation and partnership firms in the Philippines. The entrepreneurs of the Philippines widely carry out this form of business structure for several reasons, as provided below:

Attracts a simple procedure for sole proprietorship registration in Philippines;
The cost of setting up a sole proprietorship business is minimally low in comparison to other forms of business structure registered in the Philippines;
The entrepreneurs of the Philippines solely enjoy and acquire all the share in the profit and the assets of a sole proprietorship business in the Philippines, respectively;
The size of the legal formalities for documentation, conducting board meetings, and formation of committees is considerably minimal in comparison to other forms of business structure registered in the Philippines;
No requirement for minimum share capital for Sole Proprietorship Registration in Philippines;
Possess nominal cost for sole proprietorship registration in Philippines;
Bare requirements of government formalities in comparison to other forms of business structures registered in the Philippines;
The control and management of the sole proprietorship business in the Philippines are solely in the hands of the single owner;
Enjoys several tax benefits and incentives granted for sole proprietorship startups in the Philippines;
Flexibility in hiring the employees and expanding the business structure;
Simplified regulation for filing the income tax return of the sole proprietorship firm and the sole proprietors having similar Tax Identification Number (TIN) for taxation purposes;
More streamlined option for entrepreneurs willing to register a startup company in the Philippines.

What is a Sole Proprietorship business in the Philippines?

The observation of the market research conducted in 2015 defines a sole proprietorship business in the Philippines as a form of business structure that is commonly followed by approx. 40% of the firms that are registered in the Philippines. The regulatory definition of sole proprietorship business, as provided under the laws of the Philippines, expresses it as the simplest form of business structure that must be owned by a sole entrepreneur holding the responsibility to possess and acquire all the assets and profit of the business. The sole entrepreneur responsible for sole proprietorship registration in Philippines is commonly known as the sole proprietor or sole owner of the business and is hence considered a single entity. Any Debt, liability, or losses that arise during the conduct of business operations of a sole proprietorship business in the Philippines are equivalent to the liability of the sole proprietor of the proprietorship firm.

A sole proprietorship business registered in the Philippines must possess the following features: the sole proprietors must hold final control over the financial, strategic, and marketing decisions of the proprietorship business. Entrepreneurs are not restricted from using their names as the names of sole proprietorship businesses. The sole proprietorship registration in the Philippines can also borrow a fictitious name for the business enterprise employed under the aegis of the Department of Trade and Industry of the Philippines. The sole proprietorship registration in Philippines is not an artificial being created in consonance with the laws of Philippines.

Types of Sole Proprietorship Registration in Philippines

There always exists confusion in the mind of the sole proprietors willing to register a sole proprietorship business in the Philippines with respect to the choice of the right structure for incorporating a business of proprietorship in the Philippines. The most common types of Sole proprietorship registration in Philippines are:

1. Unincorporated Sole Proprietorship Registration in Philippines

Here, the sole proprietorship business carries business operations under the name of the sole owner and, hence, does not require any paperwork to complete the registration process. The unincorporated sole proprietorship does not distinguish itself from the owners. There is no legal mandate for sole proprietorship registration in Philippines.

2. Professional Sole Proprietorship Registration in Philippines

The structure of sole proprietorship is a business form widely practised by most accountants, consultants, lawyers, doctors, and other professionals and requires duly compliance with the guidelines issued by the regulatory authority for specific licensing of the business and many more.

3. Fictitious Business Name Sole Proprietorship Registration in Philippines

The registration of the fictitious business name sole proprietorship business in the Philippines allows to register and operate the sole proprietorship business under a fictitious name also known as ‘doing business as or DBA name’. The fictitious name of the sole proprietorship registered with the Department of Trade and Industry acts as a brand name securing the goodwill of the proprietorship firm in the Philippines.

Should you register a startup company as a sole Proprietor?

There exist ample advantages of sole proprietorship registration in the Philippines, which attract most startup companies to register their business as a sole proprietorship business in the Philippines. Startup companies willing to register as sole proprietorship businesses are free to incorporate the business even without filing an application for the registration of the name of the company. Many freelancers and self-employed professionals continuously hunt for sole proprietorship registration in Philippines. The startups aiming at sole proprietorship registration in Philippines must choose our services at Enterslice.com where we assure full compliance with the law while registering the business structure.

Documentation for Sole Proprietorship Registration in Philippines

Most of the entrepreneurs aiming the sole proprietorship registration in Philippines are not aware of the list of pre-registration requirements mandating the proper compliance of the documentation. The following documents are deemed necessary for compilation before the sole proprietorship registration in Philippines:

The application form for registration of business name;
The application form for employing foreign investors;
The nature of the business activities;
The complete information and citizenship status of the sole owner or proprietor;
The facsimile of the Tax Identification Number of the sole proprietor;
The facsimile of the passport or visa of the foreign investor or proprietor;
The facsimile of the Professional Regulation Commission ID;
The facsimile of the National Bureau of Investigation clearance certificate;
The facsimile of the police verification or clearance certificate;
The Social Security System ID of the sole proprietor;
The facsimile of the senior citizen Identification card of the sole proprietor (if applies);
The facsimile of the certificate authorizing to do business in the Philippines;
The proof of inward remittances (if any);
The facsimile of the certificate of bank deposit;
The facsimile of the Alien Certificate of Registration (if necessary);
The facsimile of the Certificate of Recognition issued for the recognition of the recognized refugees or stateless persons.

Where to register a Business of Sole Proprietorship

The answer to the question of where an entrepreneur must register their business of sole proprietorship requires more learning from the government agencies of the Philippines. The Department of Trade and Industry commonly known as DTI is the regulatory authority responsible for governing sole proprietorship registration in Philippines. The sole aim of the Department of Trade and Industry in facilitating sole proprietorship registration in Philippines is to get a legal identity for the business structure. The Department of Trade and Industry of the Philippines is liable to serve acts as a regulatory and facilitative authority responsible for managing the trade and other industries of Philippines. DTI aims to attain the specified agendas under its five major programs designed to facilitate opportunities for export, investment, Small and medium-scale business development, industry development, consumer education, and protection.

Also, the registration of a sole proprietorship business in the Philippines is regulated by several other government authorities, including the Local Government Unit, the Bureau of Internal Revenue, the Social Security System, and the Philippine Health Insurance Corporation.

Who can register a business of Sole Proprietorship?

Many self-employed entrepreneurs in Malaysia demand an answer after reviewing the above question of who is eligible for sole proprietorship registration in Philippines. The eligibility criteria for sole proprietorship registration in Philippines are somewhere different from the requirements of a partnership firm, corporation, or company registration in the Philippines. The eligibility criteria for sole proprietorship registration in Philippines are clarified below:

Must be a legal person;
Must possess a resident visa of the special investor;
Must act as the sole beneficiary of all the assets and profits of the business;
Must hold the citizenship status of the Philippines;
A foreign alien non-Philippine national can also register for a sole proprietorship under the aegis of the Department of Trade and Industry.

How do we register your Sole Proprietorship business in the Philippines?

The entrepreneurs willing to ensure a smooth and hassle-free process of sole proprietorship registration in Philippines are required to go through and hire Enterslice for its expertise in the services of registration of a business all over the world including the Philippines. We offer a simplified registration procedure under the guidance of professionals like Chartered Accountants and Lawyers registered with the Integrated Bar of the Philippines.

After compliance with the pre-registration formalities, the entrepreneurs are mandated for sole proprietorship registration in Philippines processed under the following steps.

Step 1: Business Name Registration with DTI

The first step mandates the sole proprietors to decide and choose a name for the business. The business name chosen must contain the following attributes:

Must act as a fictitious name;
Must not be already registered or trademarked;
Must act as a brand name for the business;
Must be unique;
The availability of the business name must be checked.

The BTRCP application form no. 16A must be completed along with the necessary filing fees for registering the fictitious name of a sole proprietorship business in the Philippines. The application form for registering the business name is available at the official website of the Department of Trade and Industry. The information that is necessarily required to be recorded in the application form are:

The type of DTI registration, including the date of registration and the certificate number of the previous DTI registration (if any);
The location and address of the business;
The proposed name for the business;
The details of the owners of the business;
The nature and scope of business activities carried out;
The details of the Tax Identification Number of the tax agent.

Step 2: Submission of application form for Registration

In the next step, we ensure the submission of the completed application form for sole proprietorship registration in Philippines. The process of registration can be admitted in 3 different ways. The first way is to directly register the sole proprietorship at the field office of the Department of Trade and Industry. The second way admits online submission of the application at the official website of the Department of Trade and Industry. Lastly, the third way allows using the hybrid mode where the combination of the over-the-counter method and online method is practiced.

Step 3: Issuance of Certificate of Registration

In the next step, the Department of Trade and Industry verifies the documents and forms submitted. The Certificate to ensure sole proprietorship registration in Philippines is only issued after providing proof of the payment of the legal or registration fees for reserving the business name and the payment of the minimum capital from an authorized bank registered in the Philippines. The Certificate of Registration issued authorizes the entrepreneur to conduct or do business in the Philippines.

Step 4: Register for a Barangay Clearance Certificate

With the succeeding step, Enterslice ensures the issuance of a Barangay Clearance Certificate for the business. The local government unit or the Barangay Hall is the authority. The issuance of the following documents is necessary for obtaining a Barangay Clearance Certificate:

The facsimile of the DTI registration certificate is mandatory;
The facsimile of the contract of lease or deed of land title;
The facsimile of the tax declaration;
The facsimile of the certificate from the Association of Homeowners;
The facsimile of the payment slip of the Barangay registration fees;
The facsimile of two valid government IDs, etc.

Step 5: Issue BIR Certificate of Registration

Enterslice in the step ensures the registration of the BIR for obtaining a BIR registration certificate. BIR, which stands for Bureau of Internal Revenue, is a government agency of the Philippines that is responsible for issuing the tax identification number (i.e., TIN) for sole proprietorship and other forms of business registered and doing business in the Philippines. The process of BIR registration has been simplified after June 2020 by removing the issuance of permits and licenses by the local government units in the Philippines. The process of BIR registration requires the fulfilment of the following steps:

Complete the BIR application Form no 1901 for sole proprietorship registration in Philippines;
Gather relevant documents for BIR registration, including valid government ID, completed and paid form no 0605, books of accounts, sole proprietorship registration certificate, and also securing receipts and invoices for sales;
Submission of the application form at the office of the Regional District Office (RDO);
Issuance of the Certificate of BIR registration through Form no 2303.

Step 6: Issue the Mayor’s or other business permit

The next step mandates us to acquire business permits and licenses necessary for operating the sole proprietorship business in the local municipality. The municipal city hall is the authority responsible for the issuance of the mayor’s and other business permits. The list of other relevant permits for sole proprietorship registration in Philippines incorporates the following:

Local health department permit;
City business licenses;
State licenses for automotive mechanics, electricians, collections agencies, insurance agencies, etc.;
Sales tax collection permit;
Office occupancy permit.

The following documents are required for the issuance of the business permits for the sole proprietorship registered in the Philippines:

The facsimile of the certificate of sole proprietorship registration in Philippines;
The facsimile of the certificate for Barangay clearance;
The facsimile of the authorization letter of the sole proprietor;
The facsimile of the contract of lease;
The facsimile of the occupancy permit;
The facsimile of the locational clearance certificate from the office of the City Planning and Development.

Step 7: Opening of a Bank Account

In the next step, we assist in opening a corporate bank account for the sole proprietorship business in the Philippines. The opening of a sole proprietorship bank account mainly aims to distinguish personal expenses from sole proprietorship business transactions. It also simplifies the procedure for business accounting and tracks the costs of the business.

Step 8: Issuance of Business Insurance

Enterslice, in the next step, assists the sole proprietors in protecting the personal assets of the business firm. The personal assets of the sole proprietorship are protected by buying a business insurance policy that insures the following liabilities:

The general liability of the sole proprietorship business;
The liability protection for property loss or damage;
The liability protection for damage to the other industrial equipment.

Step 9: Register Books of Accounts and manage finances

Registering the books of accounts for managing the finances of the firm is an optional task for the sole proprietors aiming for sole proprietorship registration in Philippines. Management of the business finances allows for keeping a detailed record of the expenses of the sole proprietorship, income accrued during the conduct of the business operations, and consulting a tax professional from the helpdesk of the Enterslice, which targets maximizing tax deductions for the registered sole proprietorship business in the Philippines.

Step 10: Hire and Register Employees

In the next step, entrepreneurs aiming to register a sole proprietorship business in the Philippines are free to hire employees for their business. The employees hired to assist in conducting the operations of the sole proprietorship business are mandatorily required to get registered under the following institutions:

The labour code of the Philippines mandates that employers must enrol the hired employees to enjoy the benefits ensured under the Social Security System (i.e., SSS);
The registration of the employees with the Philippine Health Insurance Corporation is mandatory;
The code also mandates the registration of the Home Development Mutual Fund or the Pag-IBIG Fund to remit the premium contribution of the employees hired to perform in the sole proprietorship business in the Philippines;
Mandatory registration with the Employees’ Compensation Commission (ECC) for the reimbursement of the cost of any work injuries or illnesses of the employees.

Cost of Sole Proprietorship Registration in Philippines

The Department of Trade and Industry issues a list of total charges for the process of sole proprietorship registration in Philippines:

An average tax of 8% on the gross income of at least 3,000,000 Philippine pesos;
The cost of the BIR registration fee is 500 Philippine pesos;
The cost for obtaining a Barangay Clearance certificate is approx. 200 Philippine pesos;
The cost of obtaining a City or Municipal license or permit is approx. 500 Philippine pesos;
The cost of sole proprietorship registration at the regional office is approx. 1000 Philippine pesos;
The business name registration cost at the national office of the Philippines is approx. 2000 Philippine pesos;
The stamp duty tax for maintaining the documentation of the sole proprietorship registration in Philippines costs nearly 20 Philippine Pesos;
The payment of proof from the registered bank of the Philippines is mandatorily required to be presented either in the online mode or the physical mode;
A surcharge of 50% on the registration fees is taxed for the renewal of sole proprietorship registration within the last 3 months.

Enterslice’s Guidance in Sole Proprietorship Registration in Philippines

Are you ready for sole proprietorship registration in Philippines? We at Enterslice provide different packages to ensure an effective and smooth procedure for sole proprietorship registration in compliance with the local laws of the Philippines. Enterslice is dedicated to simplifying the business registration procedure, investment policies, accounting methods, human resource management, finance management, etc., for issuing an approved certificate of Registration from the Department of Trade and Industry, authorizing the conduct of business activities in the Philippines.

The following services are offered by Enterslice for securing the process of sole proprietorship registration in Philippines:

Services in compliance with the annual corporate return filing;
Services in compliance with the booking and accounting standards;
Services in compliance with the Department of Trade and Industry registration;
Services for the name registration of the sole proprietorship business in the Philippines;
Services in compliance with the Human resource, retirement, and payroll standards;
Services for obtaining the necessary permits and licenses for the sole proprietorship business in the Philippines;
Services for opening a corporate bank account;
Services in compliance with both onshore and offshore business registration in the Philippines.

Sole Proprietorship Registration in Philippines