Open a company in the Philippines: 7-Step guide

Starting a business in the Philippines for foreigners is an exciting opportunity to gain profit. The country offers a solid ground for entrepreneurs aiming to build a successful company. Whether you are a seasoned business owner or an entrepreneur, navigating the regulatory landscape and understanding the necessary steps to establish your business can be challenging. In this article, we will discuss the seven steps on how to open a company in the Philippines.

Step 1: Register your company with the SEC

You can register your company with the SEC by choosing a name using their online portal or in person at their Mandaluyong location. Important documents such as the articles of incorporation, the treasurer’s affidavit, the bylaws, and a joint affidavit from both incorporators must then be submitted. Your company’s registration certificate and application approval by the SEC will grant you the right to open a company in the Philippines.

Step 2: Open your company’s bank account

Pick the bank that best serves your company’s needs to open a business in the Philippines. Whether you want to open a business bank account, you should weigh the service charges and interest rates. Fill out the bank application after obtaining the required documentation. A deposit must be made upfront, usually between ₱ 40,000 ($714) and ₱ 100,000 ($1,785). If the bank authorizes your account, you can undertake financial and business transactions.

Step 3: Obtain approval from the local Barangay

To obtain barangay clearance, visit your barangay hall or local district with the application form, a legitimate ID, and evidence of domicile. Depending on why the clearance is needed, you may need to submit additional papers.

Step 4: Get your company’s business permit

Apply for a business permit at the Business Permit and Licensing Office (BPLO) in your city or municipal hall to open a company in the Philippines. The process typically takes 1-2 weeks to receive a business plate and sticker for display at your premises.

Step 5: Register your company with the BIR

Company registration in the Philippines is important for tax compliance with the BIR to obtain a Taxpayer Identification Number (TIN). Below are the steps on how to register a business in the Philippines:

• Fill out BIR form 1903.
• Attach the SEC Certificate of Registration, barangay clearance, business permit, address proof, and, if necessary, valid IDs.
• Pay for the registration form and Documentary Stamp Tax as required.
• Submit account books and invoices for the company registration in the Philippines.
• Await issuance of your BIR Certificate of Registration to open a business in the Philippines.

Step 6: Register as an employer with the SSS

After visiting www.sss.gov.ph and choosing “EMPLOYER” under portals, check your email for a link to Phase 2. Fill out the form for an employer-authorized signatory in Phase 2. Then, wait for the branch to authorize the business registration in the Philippines after it has been submitted.

Step 7: Register with PhilHealth and Pag-IBIG

Republic Act No. 7875 mandates that all workers must have a PhilHealth to receive health insurance to open a business in the Philippines. The company and the employee must make equal contributions. Employers must send the ER2 form to the local PhilHealth office to provide details of any new hires. They also need to make contributions to Pag-IBIG for housing benefits. Employers are required to electronically or physically submit the Member’s Contribution Remittance Form (MCRF) with the new hire’s information on their monthly contributions.

Can foreigners start a business in the Philippines?

Foreigners can open a company in the Philippines but need to navigate specific ownership and partnership regulations. Here are the restrictions and guidelines foreigners must follow to start a business in the Philippines:

• Business ownership regulations: Export-focused, technologically advanced, or high-capital businesses may be fully foreign-owned, while other sectors require Filipino equity participation to open a business in the Philippines.
• Selecting a business structure: Choices like sole proprietorship, partnership, corporation, or a foreign corporation branch each carry distinct ownership and liability implications for foreign investors.
• Registration and permit process: It is essential to obtain business registration in the Philippines, local permits, and licenses from authorities like the DTI and SEC.
• Employment of foreign nationals: To employ foreign workers, proper work visas and permits must be obtained in accordance with Philippine immigration and labor laws.

Requirements to open a company in the Philippines

Starting a business in the Philippines for foreigners entails meeting certain regulatory requirements. Here are the requirements to open a company in the Philippines:

Business composition

Your company needs to be structured with the following:

• Directors or incorporators: A team of 2 to 15 individuals, where the majority are Philippine residents.
• President: The primary authorized signatory is not required to be a Filipino citizen and a Philippine resident.
• Corporate secretary: Handles administrative responsibilities and must be a Filipino citizen and a Philippine resident.
• Treasurer: Takes care of financial operations and is not required to be a Filipino citizen but must be a Philippine resident.
• Compliance officer: Ensures the company complies with local laws and regulations.

Equity and ownership

Based on the percentage of foreign ownership, your business will fall under one of these categories:

• Over 40.01% foreign equity.
• Under 40% foreign equity.
• 0% foreign equity.

Investment requirements

Your startup capital to open a business in the Philippines will vary depending on the  company’s foreign ownership status:

• 0% foreign equity: ₱ 5,000 ($89.25).
• Under 40% foreign equity: ₱ 5,000 ($89.25).
• Over 40.01% foreign equity: ₱ 4.8 million ($85,680).

This initial capital amount can be lessened by:

• Employing at least 50 Filipino citizens reduces it to ₱ 2.4 million ($42,840).
• Showcasing advanced technology applications drops it to approximately ₱ 2.4 million ($42,840).
• If exporting at least 70% of your products, the capital needed is as low as ₱ 5,000 ($89.25).

How much does it cost to open a company in the Philippines?

The financial requirements to open a company in the Philippines vary depending on the type, size, and location of the enterprise. It is recommended that entrepreneurs set aside between ₱ 10,000 ($179) and ₱ 25,000 ($446) for business registration services in the Philippines. The price of specialist permissions and legal advice, which could raise the initial costs, is not included in the estimate of business registration services in the Philippines. For an exact and comprehensive budget, it is strongly advised to contact government agencies or business consultants.

Open your company in the Philippines with Own Property Abroad

Open a company in the Philippines with the assistance of our expert legal team, who will guide you through the complex legal landscapes involved in establishing your business. We provide comprehensive services tailored to the specific needs of your company, analyzing the legal framework, ensuring regulatory compliance, and aligning your business objectives with legal requirements. Our professionals are adept in handling all aspects of business setup, from incorporation to managing operational legalities.

To find out how our legal experts can help you launch your company in the Philippines, please provide your details below or contact us at [email protected].

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