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.
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Frequently Asked Questions (FAQs)
How to start a business in the Philippines for foreigners?
To start a business in the Philippines as a foreigner, you must first register your company with the Securities and Exchange Commission (SEC), open your company’s bank account, obtain approval from the local barangay, get your company’s business permit, register your company with the BIR, and register as an employer with the Social Security System (SSS), PhilHealth, and Pag-IBIG.
How to register a company in the Philippines for foreigners?
To register a company in the Philippines as a foreigner, secure a name through the SEC’s online system or at their Mandaluyong office and submit necessary documents like articles of incorporation, treasurer’s affidavit, bylaws, and a joint affidavit from incorporators.
How to start a company in the Philippines with small capital?
To start a company in the Philippines with small capital, choose a business structure like sole proprietorship for lower costs, plan your business, register with the SEC or DTI, and comply with local government unit (LGU) regulations.
What is the minimum capital requirement for a corporation in the Philippines?
The minimum capital requirement for a corporation in the Philippines is ₱ 5,000 ($89.25).
Can foreigners own 100% of a company in the Philippines?
Yes, foreigners can own 100% of a company in the Philippines, except in industries where foreign ownership is restricted by law.
How long does company incorporation in the Philippines take?
Company incorporation in the Philippines takes about 8 – 12 weeks, including all necessary registrations and bank account setup.
Is company formation in the Philippines easy?
Company formation in the Philippines is relatively intricate due to regulatory requirements but is manageable with proper planning and understanding of the process.
