How to Register a Corporation in the Philippines?

What is a Corporation?

A corporation is a legal entity that is separate and distinct from its owner or incorporators. It has legal rights and obligations similar to an individual. It can enter into contracts, loan, hire employees, pay taxes, etc. It is formed by at least five (5) individual called 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 or stockholders, of the corporation.

Advantages of a Corporation

• The risk and liability is limited only to the corporation. Owners are not personally liable.

• It is easy to increase capital through issuance of stocks to investors

• It can be pass on to different owners

• It can exist indefinitely

• It has the capacity to act independently similar to individual

• The management or decision making is shared by the board of directors, not sole individual.

Disadvantages of a Corporation

• More costly to set-up than a sole proprietor

• It is mandated by more government reportorial requirements and laws

• Higher capital requirement and operating cost

• Higher tax rates

Where to Register a Corporation?

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

• Securities and Exchange Commission

• Local Government Units where your business is located:

• Barangay

• Mayor’s Office

• Bureau of Internal Revenue

• If you have employees, you need to register to the following:

• Social Security System

• Philippine Health Insurance Corporation

• Home Development Mutual Fund

Basic Requirements and Procedure in Registering a Corporation

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

1. Reserve and Register Your Business Name in Securities and Exchange Commission (SEC), as follows:

• Check if your desired business name is available via SEC online website or at SEC Office in Mandaluyong

• If available, register/reserve your business name via SEC online website or at SEC Name Verification Unit – SEC Office in Mandaluyong

• Prepare, sign and notarize the following:

• Articles of Incorporation;

• 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).

• Submit notarized documents to SEC Office in Mandaluyong City

• Claim your SEC Certificate of Registration

Processing Time: At least one (1) week upon submission of complete documents

2. 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.

Here are the basic steps:

• Go to the barangay 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

• 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.

3. Acquire Business Permit from the Mayor’s Office

Once you have a Barangay Clearance Certificate, the next step is to acquire a Business Permit in the municipality where your business is located.

Here are the basic steps and requirements:

• Go to the municipal 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. But It can take longer depending on the permit requirements based on the industry.

4. Register with the Bureau of Internal Revenue (BIR)

Once you have the Mayor’s Business Permit, you can now register with the BIR.

Here are the basic steps and requirements:

• Go to the Regional District Office (RDO) where your business is located

• Fill-up registration form as follows:

• 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)

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Disclaimer: This article or blog is only for general knowledge and guidance and is not a substitute for an expert opinion. For technical advice, please consult your tax / legal advisor for your specific business concerns. For comments, suggestions, and feedback, feel free to email us at consult@upcloudaccounting.com

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