How to Register a Corporation in the Philippines?

by: Atty John Paul Maclang

This is the first in a series of articles on Business Development. I’ve always been asked by friends and acquaintances alike how to start a business and register a corporation in the Philippines hence we will first look into what is a corporation, the advantages and disadvantages of setting up a corporation and finally, how to register a corporation in the Philippines.

What is a Corporation?

A corporation is a legal entity separate and distinct from its owner or incorporators. It has legal rights and obligations similar to an individual. It can buy and own property, enter into contracts, loan, hire employees, pay taxes, etc. A corporation for the purpose of being registered in the Philippines needs at least five (5) incorporators. The ownership of a corporation is divided into shares of stock. A corporation issues the stock to individuals or other businesses, who then become owners of the corporation.

Advantages of a Corporation

  • Risk and liability is limited only to the corporation. Owners are not personally liable.
  • Easy to increase capital through issuance of stocks to investors
  • Ownership can be easily transferred through sale of stocks
  • It can exist indefinitely beyond the life of the incorporators
  • It has the capacity to act independently similar to individual
  • Management or decisions are made by the board of directors

Disadvantages of a Corporation

  • More costly to set-up than a sole proprietorship
  • Mandated by law with more reportorial requirements
  • Higher capital requirement and operating cost
  • Higher tax rates

Where to Register a Corporation?

Here are the government agencies where it is required to register a Corporation in the Philippines:

  • Securities and Exchange Commission
  • Local Government Units where the business is located (Barangay & Mayor’s Office)
  • Bureau of Internal Revenue

For businesses with employees, there is a need to register with the following:

  • Social Security System
  • Philippine Health Insurance Corporation
  • Home Development Mutual Fund

STEPS in Registering a Corporation in the Philippines

Here are STEPS and basic requirement and procedure in registering a corporation in the Philippines:

STEP 1. Reserve and Register Your Business Name in Securities and Exchange Commission (SEC), by checking if your desired business name is available via SEC online website. If available, register/reserve your business name via SEC online website

STEP 2. Prepare, sign and notarize the following documents:

  • Articles of Incorporation and By Laws
  • Treasurer’s Affidavit; and
  • Joint affidavit of two incorporators undertaking to change corporate name immediately upon receipt of notice or directive from the Securities and Exchange Commission that another corporation, partnership, or person has acquired a prior right to the use of that name or that name has been declared misleading, deceptive, confusingly similar to a registered name, or contrary to public morals, good customs or public policy. (Not required if the Articles of Incorporation have a provision on this commitment).

STEP 3. Submit documents to the Security and Exchange Commission

STEP 4. Claim your SEC Certificate of Registration from the Security and Exchange Commission

STEP 5. Acquire Barangay Clearance

Once the corporation is registered with SEC the next step is to get a barangay clearance in the barangay where your business is located and secure and fill-up application form. Submit your completed application form together with the following:

  • Certificate of Business Registration from SEC
  • Two (2) valid IDs
  • Proof of Address such as Contract of Lease (if rented) or Certificate of Land Title (if owned)

Processing Time: 1 day upon submission of complete documents.

STEP 6. Acquire Business Permit from the Mayor’s Office

Once you have the Barangay Clearance, you can now acquire a Business Permit in the municipality or city where your business is located. Go to the municipal/city office where your business is located to secure and fill-up application form. Submit your completed application form together with the following:

  • Certificate of Business Registration from SEC
  • Barangay Clearance Certificate
  • Two (2) valid IDs
  • Proof of Address such as Contract of Lease (if rented) or Certificate of Land Title (if owned)

Processing Time: At least one week upon submission of complete documents.

STEP 7. Register with the Bureau of Internal Revenue (BIR).

Once you have the Mayor’s Business Permit, you can now register with the BIR. Go to the Regional District Office (RDO) where your business is located and fill-up BIR Form 1903 – Application for Registration (For Partnership/Corporation). Submit completed registration form together with the following:

  • Certificate of Registration form SEC
  • Barangay Clearance
  • Business Permit From the Mayor’s Office
  • Proof of Address such as Contract of Lease (if rented) or Certificate of Land Title (if owned)
  • Valid IDs, if applicable.
  • Pay the Registration Form (BIR Form 0605) and Documentary Stamp Tax (BIR Form 2000), if applicable.
  • Register your book of accounts and receipts/invoices.
  • Claim your Certificate of Registration (BIR Form 2303)

 

Disclaimer: The content of this article may become outdated because of changes in the rules and regulations over time. It does not substitute the need for inquiring professional advice.

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