Whether you are a sole proprietor or a corporate business owner in the Philippines, there are certain rules and regulations that you have to strictly follow.
After registering your business to Department of Trade and Industry (if you are a sole proprietor) or Securities and Exchange Commission Certificate (for Partnership/ Corporation), the next step is to process your business’ registration.
Step 1: Securing business permit from the Local Government Units
Step 2: Bureau of Internal Revenue registration
Step 3: Department of Labor and Employment registration
Step 4: Employer registration to government-mandated employee benefits:
- Social Security System (SSS)
- Philippine Health Insurance Corporation (PhilHealth)
- Pag-IBIG Fund/ Home Development Mutual Fund (HDMF)
You will be dealing with a number of government units and agencies all throughout your business preparation and operation, as mentioned above. Here are some of the important ones along with the registration process and important notes that you have to be familiar with.
Local Government Unit
Upon securing your registration Securities and Exchange Commission, Department of Trade and Industry, or Cooperative Development Authority – depending on the type of business you will operate – the next part is getting a business permit from the Local Government Unit (LGU) of where your business will be based/located.
The two LGUs that you will get clearances from are:
1.Barangay Hall
Just proceed to the barangay center where your business will be located.Present the following documents to the barangay officer (if applicable):
- Department of Trade and Industry Business Name Certificate (for Sole Proprietorship) or Securities and Exchange Commission Certificate (for Partnership/ Corporation)
- Articles of Partnership
- Articles of Corporation
- By-Laws
- Certificate of Incorporation
- Lease Agreement
2. Municipal/City Hall
When applying for business clearance, here are some of the requirements that you would need to present:
- Accomplished business permit application form
- Conformance Certificate
- SEC/DTI/CDA Certificate
- Barangay Business Clearance
- Community Tax Certificate (sédula)
- Residence Certificate
- Certificate of No Renovation
- Building Permit
- Occupancy Permit
- Location Clearance
- Contract of Lease/ Proof of Ownership
- Location Sketch of the Business
- Site photos
- Photo of owner
- Fire Clearance/ Fire Safety Inspection Certificate
- Health and Sanitary Permit
Take note that Clearance Fees apply. The procedure, requirements, and fees may vary per city or municipality and nature of the business.
How often are LGU permits and Local Business Tax (LBT) renewed and paid?
The business could choose whether to pay annually, semiannually, or quarterly. The LBT should be renewed and paid not later than the dates of every year:
- Annually – 20th of January
- Semiannually – 20th of January; 20th of July
- Quarterly – 20th of January; 20th of April; 20th of July; 20th of October
Bureau of Internal Revenue (https://www.bir.gov.ph/)
After successfully securing your business permits from the Local Government Unit, the next step is to register your business with Bureau of Internal Revenue (BIR). BIR is the branch of the government that monitors the company’s’ financial standing, transactions, and compliance with the Philippine Tax Code and other special laws. Failure to register with BIR will lead to paying fines, imprisonment, or even foreclosure of your business.
Each business is under the jurisdiction of a Revenue District Office (RDO) depending on where the business is located. Check the list and details of RDOs here. (https://www.bir.gov.ph/index.php/contact-us/directory/revenue-district-offices.html)
Proceed to your designated Revenue District Office and prepare the following documents for your BIR business registration:
- Trilpicate copies of accomplished BIR Form 1901 (https://www.bir.gov.ph/images/bir_files/old_files/pdf/20361901pg1.pdf) for sole proprietors, or BIR Form 1903 for partnerships/corporations (https://www.bir.gov.ph/images/bir_files/old_files/pdf/21151903.pdf)
- Authorization Letter and Board Resolution or Special Power of Attorney
- Copy of SEC Registration and Articles of Incorporation, if applicable
- Copy of Business Permit and paid assessment fee
- Lease contract, if applicable
- Payment of annual registration fee
- Payment of documentary stamp tax on lease and original issuance of shares
Aside from getting your Certificate of Registration, you are also required to process the following:
- Registration of the Books of Accounts
Submit duly accomplished BIR Form 1905 (https://www.bir.gov.ph/images/bir_files/old_files/pdf/21351905.pdf) and the books of account. For VAT-registered business, there are normally six books that you have to register:
- Journal
- Ledger
- Cash Receipt
- Cash Disbursement
- Subsidiary Sales Journal
- Subsidiary Purchase Journal
Application for the Authority to Print Receipts (ATP)
- Duly accomplished BIR Form 1906 (https://www.bir.gov.ph/images/bir_files/old_files/pdf/21411906%20mar%202013%20encs.pdf)
- Photocopy of Certificate of Registration
- Photocopy of Payment Form (BIR Form 0605)
Click here for the downloadable BIR forms. (https://www.bir.gov.ph/index.php/bir-forms.html)
Department of Labor and Employment (DOLE) (https://www.dole.gov.ph/ )
DOLE is the branch of government that upholds and protects Filipino workers including their rights, benefits, and welfare. It is important for the businesses with at least five employees to register with DOLE mainly for the employees’ protection and for the avoidance of labor-related complications as well. In case of noncompliance with the Labor Code, workers could file a complaint with National Labor Relations Commission (NLRC) — a part of DOLE that investigates and deal with any conflict between the employee and employer.
How to register?
Fill out the Registry of Establishment IP Form 3 (http://ncr.dole.gov.ph/fndr/mis/files/rule%201020%20New%20Establishment%20Registration%20(1).pdf)in triplicate copies, attach the detailed layout plan of the office/establishment and submit the documents to the nearest DOLE regional office.
How much is the DOLE registration fee and how often does it have to be renewed?
DOLE Registration is free of charge and is valid for a lifetime, except when there are changes with the location, ownership, business name, and other legalities.
Source and Useful Links:
DOLE Wage FAQs (http://bwc.dole.gov.ph/faqs-on-wage-and-wage-related-benefits)
Labor Code of the Philippines (http://bwc.dole.gov.ph/images/Downloads/LaborCodeofthePhilippines2017.pdf)
DOLE Downloadable Forms (http://ncr.dole.gov.ph/default.php?retsamlakygee=23&resource=617a4046ef07a0d9851942247a994cf9)
Social Security System (SSS) (https://www.sss.gov.ph/)
SSS is important in making sure that your employees are protected in case of situations that might result in temporary or permanent loss of income. All SSS members are entitled to cash benefits and loan programs which could be of great help in case of unwanted situations.
Generally, as an employer, you will be required to handle the monthly SSS contributions of your employees until the last day of his/her employment with you. It will be your responsibility to make sure that their monthly contributions are paid accordingly.
How much is the monthly SSS contribution per employee?
Each employee’s contribution is equivalent to 11% of the employee’s salary per month for based on the basic salary not exceeding PHP16,000.00, part of which will be deducted from the employee’s monthly pay (3.63%) while the rest will be paid by the employer.
Monthly contributions should be payed lot later that the 10th of every month.
Read more about the employers’ duties and responsibilities in SSS contributions here. (https://www.sss.gov.ph/sss/appmanager/pages.jsp?page=employerduties)
How to Register with SSS as an Employer?
You have to accomplish Employer Registration (SS Form R-1) (https://www.sss.gov.ph/sss/DownloadContent?fileName=SSSForms_ER_Registration.pdf) and Employment Report (SS Form R-1A) (https://www.sss.gov.ph/sss/DownloadContent?fileName=SSSForms_Employment_Report.pdf) forms along with other documents required depending on the type of business that you will register:
- Sole Proprietorship
– Photocopy of an Authority to Operate such as (but not limited to):
- Registration of Business Name
- Business Permit
- Any proof of business operations
– Photocopy of the approved Articles of Partnership
- Domestic/ Foreign Corporation
– Photocopy of Approved Articles of Incorporation
Other regular compliance required:
- Monthly contribution
- Monthly/Quarterly submission of contributions list (SSS Form R3)
- Submission of SSS Form R-1A for new and separated employees
For employers’ SSS registration, click here.
(https://www.sss.gov.ph/sss/registrationPages/employerR1.jsp)
Sources and Useful Links:
SSS Compulsory Coverage of Employers (https://www.sss.gov.ph/sss/appmanager/pages.jsp?page=employerscoverage)
SSS Downloadable Forms (https://www.sss.gov.ph/sss/appmanager/sss_downloads.jsp?type=forms)
Employees Compensation FAQs (https://www.sss.gov.ph/sss/appmanager/pages.jsp?page=employeescompensation)
SSS FAQs (https://www.sss.gov.ph/sss/appmanager/pages.jsp?page=faqsmembership)
Philippine Health Insurance Corporation (PhilHealth) (https://www.philhealth.gov.ph/)
PhilHealth is part of the mandatory employee membership and contribution to make them eligible for the health insurance benefits that PhilHealth members enjoy.
The purpose of PhilHealth is to make medical care more affordable by providing comprehensive health insurance policies to Filipinos.
How much is the monthly PhilHealth contribution per employee?
Starting in January 2018, an employee’s monthly contribution should be 2.75% of his/her monthly basic salary. The amount will be equally shared by the employer and employee.
How to register with PhilHealth as an Employer
- All employers — both in public and private sectors — are required to register with PhilHealth through either of the following:
- Philippine Business Registry (PBR) (https://www.business.gov.ph/web/guest)
- Department of Trade and Industry (DTI) field offices
Additional documents have to be submitted depending on the nature of the business:
- Single Proprietorship: Department of Trade and Industry (DTI) Registration
- Partnership/ Corporation: Securities and Exchange Commission (SEC) Registration
- Foundation/ Non-Profit Organization: SEC Registration
- Cooperative: Cooperative Development Authority (CDA) Registration
- Backyard Industry/ Micro-business Enterprise: Barangay Certification and/or Mayor’s Permit
- Register all your employees to any PhilHealth Offices by submitting the following documents (in duplicate):
- Employer Data Record (ER1) – https://www.philhealth.gov.ph/downloads/employer/er1.pdf
- PhilHealth Membership Registration Form (PMRF) per employee – https://www.philhealth.gov.ph/downloads/membership/pmrf_revised.pdf
- Proof of business existence
- Upon completion, employers will receive PhilHealth Employer Number (PEN) and the Certificate of Registration, which is required to be displayed in a noticeable area of the office (except for household employers).
How Do Employers Pay for the Monthly PhilHealth Contribution?
- Upon computing the employee’s monthly contribution amount based on PhilHealth Premium Contributions Table (https://www.philhealth.gov.ph/partners/employers/PremiumContributionTable.pdf), deduct employee’s share from his/her basic salary per month.
- Next, the employers will pay and report the remittance of the employee’s premium contribution through Electronic Premium Remittance System (EPRS) (https://epoaf.philhealth.gov.ph/employer/) which is a secured web-based application that employers can utilize to check and access their employees’ information.
Make sure to remit your payment on or before your due dates. The payment schedule is as follows:
PENs ending in 0-4 : Every 11th-15th day of the month
PENs ending in 5-9 : Every 16th-20th day of the month
Other regular compliance required:
- Monthly contribution
- Monthly/Quarterly submission of contributions list (RF1)
- Submission of PhilHealth Membership Data Record for nre employees
- Updating RF1 for separated employees
Sources and Useful Links:
Duties and Responsibilities of an Employer (https://www.philhealth.gov.ph/partners/employers/duties_responsibilities.pdf)
Downloadable Forms and Documents (https://www.philhealth.gov.ph/downloads/)
Pag-IBIG/ Home Development Mutual Fund (HDMF) (http://www.pagibigfund.gov.ph/)
Another mandatory government contribution that employers have to adhere to is the Pag-IBIG or Home Development Mutual Fund. HDMF Members are eligible for a number of benefits that give opportunities for Filipino workers to own houses and properties by providing affordable loaning systems and housing programs. They offer educational and emergency loans as well.
The HDMF also serves as a savings scheme wherein the members can withdraw their total savings (TAV) plus the dividends accumulated after completing at least 240 monthly contributions.
How much is the monthly HDMF contribution per employee?
Like the other mandatory contributions, this also depends on the employee’s monthly basic salary.
- PHP 1,500 basic pay and below – 3% (1% – employee; 2% – employer)
- PHP 1,500 to PHP 5,000 basic pay – 4% (2% – employee; 2% – employer)
- Above PHP 5,000 basic pay – fixed to PHP 200 (PHP 100 – employee; PHP 100 – employer)
How to Register with HDMF as an Employer?
- New employers can register via DTI – Philippine Business Registry System (PBRS) https://www.business.gov.ph/web/guest
For old employers, however, you can go directly to the Pag-IBIG branch where your records are at.
You may check the list of branches here (http://www.pagibigfund.gov.ph/directory/ncr.html).
- Fill out Employer’s Data Form (http://www.pagibigfund.gov.ph/DLForms/providentrelated/PFF002_EmployersDataForm_V05.pdf)
- Fill out Specimen Signature Form (http://www.pagibigfund.gov.ph/DLForms/providentrelated/PFF003_SpecimenSignatureForm_V06.pdf)
- Present SSS Certificate and proof of business existence, such as:
- DTI/SEC Certificate
- Articles of Incorporation
- Business Permit
Source and Useful Links:
Downloadable Forms: http://www.pagibigfund.gov.ph/dlformsprovident.html
