A quick guide to starting a business in the Philippines

Over the past few years we have helped many expats set up their business in Cebu: this is intended as a basic guide for those who wish to do it for themselves.

If, after reading this you wish us to do it for you, we would charge the following:-

To set you up as a Sole Trader – 7,500p

To set up your Corporation with SEC – 30,000p to 35,000p plus SEC fees and all incidental costs, normally between 6,000p and 7,000p.

To obtain your Mayor’s Business Permit – 30,000p plus all fees, normally between 15,000p and 25,000p depending on such things as the floor area of your office and the number of employees.

It is not hard to do yourself but there are some negative aspects that you will encounter:-

  • It will involve many hours of waiting in queues often to be told you are in the wrong one!
  • It will involve revisiting offices several times because of some piece of lacking information which you were never told to bring!
  • You will never be told the whole process, or even the next few steps unless you ask detailed questions.
  • Things need to be done in a specific order.
  • Some government offices will accept photocopies while others need to view the original.
  • Although the laws regarding setting up a business are uniform throughout the Philippines, each Municipality will have a slightly different interpretation of those laws.
  • Things will not happen at the same pace as they do in your own country – if you are not patient, don’t even bother.
One last word of caution; the types of business that may be set up and run by foreigners in the Philippines is strictly regulated.  To check if your business idea is allowable under Philippines Law, click on this LINK.
Apart from some very small scale, local operations where you may only need a Barangay Permit, you can set up your business here as either a Sole Trader, a Partnership or as a Corporation.  After having done so, you will need to obtain a Mayor’s Business Permit to operate within a given Municipality.
SOLE TRADER
  • You can apply to register your business name with the Department of Trade and Industry, (DTI).
  • You can choose to register and protect your business name at  4 different levels – Barangay, Municipality, Regional or National.
  • The cost varies according to the level you choose but ranges from 200p for Barangay to 2000p for National registration.
  • You now need to obtain a Mayor’s Permit.
PARTNERSHIP
  • I have never done a Partnership set up so don’t know any of the costs.
  • You will need to apply to the Securities and Exchange Commission, SEC, for forms and requirements.
  • Once finished with registration at SEC, you now need to obtain a Mayor’s Permit.
CORPORATION
  • Buy the Incorporation papers from SEC – 600p
  • Fill out the forms which needs to be done by typewriter or computer – hand-written applications are not accepted.
  • You will need a minimum of 5 Incorporators, but can have a maximum of 15.  The number of Filipinos required depends on the type of business you will be running.
  • Open a Bank Account and obtain a Bank Certification of your deposit.
  • Prepare 4 copies of all the forms and have them notarised.
  • Obtain Documentary Stamps for the notarised forms.
  • Submit the completed forms to SEC
  • SEC costs vary again according to the type of Corporation being set up, but typically a Domestic Stock Corporation will cost 2750p and a Foreign BPO Export Corporation will cost 5100p
  • Buy a Stock and transfer Book from SEC 350p
  • Go back, and if no corrections are needed – highly unlikely even if you know what you’re doing – pick up your Registration Certificate.
  • You now need to obtain a Mayor’s Permit.
MAYOR”S BUSINESS PERMIT
Every Municipality had slightly different rules for the granting of this Permit so don’t be surprised if some additional requirements are asked for or some of the procedures are slightly different.
  • Go to the City Hall in the Municipality in which your business will operate and apply for a Mayor’s Permit. Take along your DTI or SEC certificates
  • The fees charged will depend on the type of business you are setting up and the amount of your paid up capital – it should range between 4000p and 6000p for small operations.
  • You will be granted a temporary permit and you have 60 days to comply with all of their requirements which are detailed below.
  • Contact their Special Inspection Team to arrange a time for them to visit your business premises.  3-4 people will come to check out the building for fire safety, sanitary and environmental compliance and they will leave a list of things you need to do and the permits you need to get.
  • Obtain a Sanitary Permit.
  • Obtain a Fire Safety Permit – you will probably be required to buy a fire extinguisher.
  • Obtain a Health Permit –  you will probably need to have chest X-ray.
  • Visit the Environmental Officer to check his concerns and get his stamp of approval
  • Visit the Treasury Officer at City hall to check if your capital is sufficient.
  • Register yourself or your Corporation with the Bureau of Internal revenue (BIR) – you will need to attend a 3 hour seminar and will need to have a set of Official Receipts printed. Registration with the BIR costs 500p and the printing of the Official Receipts will cost you around 2,500p.
  • Register your business and any employees with Philhealth.
  • Register your business and any employees with Pag-Ibig.
  • Register your business and any employees with SSS.
  • Take all your permits, registrations and compliances to City Hall to obtain your Mayor’s Permit.
Lastly, lay down, relax, perform some yoga and repeat the following mantra  ”I wish I’d had someone else do this for me!”

{ 2 comments… read them below or add one }

Devin Brown September 13, 2012 at 4:37 pm

So what is the aprox total cost for setting up a corporation? I will be starting a business in Cebu next year. Please email me back thank you!

Reply

Paul September 14, 2012 at 2:18 am

Hi Devin,

Most of the costs are on the website at http://www.cebuexpatservices.com/?page_id=593&preview=true but a rough guide is

21,000p to register a corporation with SEC
27,000p to obtain a Mayor’s Business Permit which includes registration of the corporation with SSS, Pag-ibig, Philhealth and the Tax Dept (BIR).

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