How to Start a Business in The Philippines

With the continuous increase in the prices of basic commodities, it is understandable that most low to middle income families opt to explore their options in their own micro businesses to add a little extra income in the household.

Students and professionals alike also opt to have a micro business as a side hustle so they have more spending power for the things that they want, but not necessarily need.

But the question is, how do you start a business in the Philippines with zero business experience? Where do you start? You might think that it’s easy, but there is more to starting a business than just putting products on social media.

Types of Businesses in the Philippines

In the planning stages of your business, you’ll have to decide on what scale your business will operate. Businesses are categorized based on the number of employees and annual revenue. Other steps in starting a business will also depend on the type of business you will operate such as permits, registration, and employment.

Here are the types of businesses in the Philippines:

Micro Businesses: most businesses you’d find in the Philippines are micro businesses who employ 1 to 9 employees with an annual revenue of ₱3 million and below. Examples of this type of business are goods resellers, individual services like tutoring, freelance copywriting, and businesses who sell handmade products.
Small Businesses: these are businesses who employ 10 to 99 employees with annual revenues of ₱3 million to ₱15 million. Examples of small businesses in the Philippines are grocery stores, bakeries, medical supply stores, and small manufacturing units.
Medium Businesses: businesses with more than ₱15 million in annual revenues and employs 100 to 199 employees. Examples of these kinds of businesses includes franchise businesses such as gasoline stations and fast food restaurants, offshoring services, and transport companies.
Large Enterprise: examples of these types of businesses include San Miguel Corporation, Coca-Cola, banks, and other international companies with local operations. They employ around 200 people and above with over ₱100 million in total assets and annual revenues.

Another type of business that can fall into all these categories are Cooperatives where one or more persons have equal management rights and interests in the business.

Here are the steps in starting your own business in the Philippines

Step 1: Determine what type of goods you want to sell.

Before you start a business, you have to answer the questions: what are your goods and how much is your capital?

There are a wide range of options on what type of goods or services you can offer in your business depending on your capital. You can resell clothes and beauty products, get a food cart franchise, or sell your own creations.

Read: Be your own boss with Belle Ame Essentials

Whether you’re an artist who relies on commission or a freelancer offering short-term services to companies or individuals, determining the type of goods or services you wish to offer is definitely a first step.

This will also determine the scope of your business (e.g. regional level vs. national level) which you will need when you register your business in the Department of Trade and Industry, Barangay and Mayor’s Permit, and taxes.

Step 2: Set your capital.

In the most common sense, capital is usually in the form of money. This is the amount you spend to start creating, setting up your service, or marketing your products. It should also include the amount you spend on other operational costs such as packages,

But a business capital does not necessarily mean monetary capital.

If you will be selling food, handicrafts, or other items that will require your personal time to produce, the time you spend in creating that product can also be considered a capital.

Services such as writing, proofreading, and other service types of business may not also require monetary capital. Instead, you can monetize your time, as well as your skills.

In some cases where capital is scarce, potential businesses opt to apply for business or personal loans (depending on the amount).

While most people tend to borrow capital from banks, the long processing time and requirements are mostly the reasons others choose to borrow from online lending apps like UnaCash where processing can only take 24 hrs to 48 hrs that only requires 1 valid ID and 1 proof of income.

Step 3: Create your brand identity.

Regardless of the type of business you wish to have, it is important to establish a brand identity that is unique to your business. This would help your potential customers get easily familiar

Create a list of unique business names. It is important to have more than one (1) option for this in case another business has already registered a similar name in the Department of Trade and Industry.
Brand colors and fonts. Create a color palette that would suit your brand name or style. It’s important to choose these elements based on the overall “feel” of the products or services you will be selling. Brands that dabble into new age hobbies are usually along the darker shades, while collections, food, and other products usually lean towards pastel colors.
Logo. This may come in later once you’ve finalized your business name with DTI/SEC. The logo should reflect your brand identity (colors, fonts, name) in an easily recognizable way.

Step 4: Register your business.

All businesses operating in the Philippines are required to register their businesses accordingly. The requirements can be daunting and overwhelming for first timers so we created a comprehensive list of documents you will need to register your business accordingly.

Requirements for starting a business

1. Department of Trade and Industry

This is the first thing you should do first because the DTI registration will be required in the succeeding permits and registrations. Here’s what you need:

Accomplished BNR Form No. 01-2018: Business Name Registration Sole Proprietorship Application Form. Download it from the DTI website.
1 valid government issued ID
Payment: depends on the type of business you are applying for. Lowest fee is for barangay level operations at ₱200.00 to ₱2,000.00 for businesses operating on a national level.

2. Barangay Clearance

Similar to a DTI permit, a barangay clearance is a permit that basically allows your business to operate in the local government you are located. You will need this document to apply for a Mayor’s Permit. Here are the documents you will need:

SEC/DTI Certificate of Registration
Notarized Contract of Lease (if you have a physical store)
Barangay permit fee: ₱500.00 (may vary depending on local barangay)

Full list here: Philippine Business Registration: Securing Permits and Clearances

3. Mayor’s Permit

Similar to a Barangay Clearance, the Mayor’s permit certifies that a business is compliant with the regulations of the city government. You will need this permit to register your business with the Bureau of Internal Revenue (BIR).

Here are the documents you will need to apply for a Mayor’s Permit:

Application Form
Certificate of Registration from Securities and Exchange Commission (SEC) for Corporations/Partnerships; Department of Trade and Industry (DTI) for Sole Proprietorships; or Cooperative Development Authority (CDA) for Cooperatives
Barangay Business Clearance
Community Tax Certificate (pay at the mayor’s office. Fees may vary per city so it would be best to call your City Mayor’s Office beforehand and inquire about the necessary fees you need to pay to acquire a permit)

Additional requirements if you have a physical store or leasing a business office/location.

Contract of Lease (if leased)/Transfer Certificate of Title (if owned)
Three (3) copies of a sketch/Pictures of the business location
Public Liability Insurance (for Restaurants, Cinemas, Malls, etc./exempted: Sari-sari Stores, Carinderias)
Locational/Zoning Clearance
Certificate of Occupancy (Building and Unit)
Building Permit and Electrical Inspection Certificate
Sanitary Permit
Fire Safety Inspection Permit

For businesses such as corporations or partnerships that involve investors, you will be required to apply for a Securities and Exchange Commission (SEC) Certificate of Registration in addition to the other permits mentioned above. Here are the things you will need to register for an SEC Certificate of Registration:

Unique business name from the SEC website
Accomplished Application Form from SEC
Articles of Incorporation and By-laws
Treasurer’s Affidavit
Deposit the minimum paid-up capital requirement

For cooperative businesses such as school canteens, you will not need to apply for a SEC registration but you will need to apply for a DTI registration. Here are the documents you will need to apply for a Cooperative Development Authority (CDA) Certificate of Registration:

Articles of Cooperation
By-Laws
Economic Survey
Treasurer’s Affidavit

For more relevant information, you can visit this website.

4. Bureau of Internal Revenue Certificate of Registration

This last step can be quite long and tedious due to the amount of steps and forms that need to be completed. But if you have completed the initial registrations, you won’t have to spend too much on registering your business in BIR.

Here are the documents you need to prepare and accomplish to register your business in BIR:

Accomplished BIR Form 1903 Application for Registration for Corporations/ Partnerships (Taxable/Nontaxable)
Mayor’s Permit
Contract of Lease or business address. If you’ll be doing your business at home, allocate a space at home that will serve as your office. Personnel from BIR will visit your business location to check the authenticity/correctness of your declared business address.
Annual Registration Fee of ₱500.00
Documentary Stamp Tax on Subscription and Lease (BIR Form 2000) (subscription will depend on your capital and lease will depend on your monthly business rental).

You will be notified when your BIR 2303 or Certificate of Registration is ready. After you have registered your business with BIR, you will need to submit or accomplish additional forms and requirements, such as:

Accomplished Official Receipts/Invoice (BIR Form 1906)
BIR 2303 or Certificate of Registration
Final and clear sample of receipts and invoices
BIR Certificate of Registration of Accredited Printer
BIR Annual Registration Fee of Accredited Partner (Form 0605)
Job order
Quarterly report of Accredited Partner

IMPORTANT: You have 30 days from the date of issuance of BIR Certificate of Registration 2303 to have your receipts/invoices printed. You can ask the Revenue District Office (RDO) where you registered your business for the nearest accredited printer and they will be happy to help. You will need:

Photocopy of BIR Certificate of Registration
Photocopy of BIR Form 0605 - Annual Registration Fee
Printing fee of ₱1,500.00 to ₱2,000.00 (for 10 booklets; amount depends on the type of receipts you want to be printed: duplicate or triplicate).

Along with the receipts, you should also receive the following documents from the printer:

10 Official Receipt Booklets
BIR Form 1921 Authority to Print with BIR Stamp (You will need this ATP when you will print another receipts afterward)
BIR Form 1906 with BIR received stamp
Printer Certificate of Delivery of Receipts and/or Invoice

And lastly, register your book of accounts. You may have to hire or ask the assistance of accountants to accomplish this part. During the taxpayer’s initial briefing, an examiner will inform you of the types of books or taxes that are applicable to your business.

So make sure that you attend the briefing and take note of important information. This will help you avoid penalties in the long run.

Full list and other relevant information here: Philippine Business Registration: BIR Requirements

Once everything is approved and your licenses are finalized, you take a bit of rest and have a breather. Give yourself a pat on the back because all the hard stuff to start your own business is done!

With that in mind, you can now proceed to creating your social media accounts. Here are the things you need to prepare per social media account (you’ll thank us later).

Facebook:

A legitimate Facebook account
2048px by 2048px profile photo (better if this is your business logo to increase brand awareness)
A business page set-up on Meta
A list of your products and services with item prices in an excel file
Photos and images of your products and/or services

Instagram

A legitimate Facebook account
An instagram account connected to your Facebook business page
Set account to business page
2048px by 2048px profile photo (better if this is your business logo to increase brand awareness)
Images of your products or services
Post templates that are good for 2 weeks of posting (e.g. videos and images, quotes related to your products or services, etc.)
Highlight covers: there are tons of designs online that you can utilize

Tiktok

Before you start creating your account, prepare a minimum of 14 short videos.
Create an account
Post 2-3 videos per day for 2 weeks straight
Register your account as a content creator rather than business (business accounts are more restricted in terms of music and other types of content).
2048px by 2048px profile photo (better if this is your business logo to increase brand awareness)

Other supplementary social media accounts depend on where your target market is. The LinkedIn business page is mainly used for B2B marketing, YouTube for more informative content, and many others.

FAQs

How to start a small business at home?

Just choose the products you want to sell, make your own brand identity, register your business, and set-up a way to bring your products to your customers. It can be through e-commerce platforms like Lazada, Shopify, or through social media.

There are tons of businesses that you can explore while staying at home. While others began their business baking cookies in their own kitchen, there are others who do live-selling fashion items from their own living rooms.

How to start a business with small capital?

When you have a small monetary capital, you can always capitalize on your skills. You start a business on content creation, sell your hobby (painting, handmade cookies, earrings, etc.), or create high demand mobile game characters you can sell later on.

How to start a clothes business?

There are wholesale stores that sell premade clothes that you can sell online or sell in a rented place.

You can also explore an ukay-ukay business that starts around ₱10,000.00 as capital. The key here is to find a supplier that provides good quality items that you can sell competitively.

Or if you have the skills to sew, you can start by selecting fabric from wholesale stores and making your own designs.

What is a good business to start?

Check your market, always. Create a list of what products are in demand like clothes, food, etc. and explore your options based on your capital.

Reselling online or offline
Coffee shops and cafes
Baked goods and catering
Sari-sari store business
English tutoring
Other specialized freelancing (e.g. accounting, bookkeeping, writing, etc.)

Where can I find capital for my business?

While some businesses begin with small capital business and gradually expand based on income, others tend to start big and go bigger. They get big capital from banks or loans like UnaCash.

How to start an online selling business?

Choose an online platform where you want to post your business like Shopee, Lazada, UnaMarket, or solely sell your goods through social media marketplaces.

Conclusion

Starting your own business can be physically, mentally, and financially difficult in the beginning.

But having a business that’s legally operating has a lot of benefits. It protects you legally from fraud and other unregistered businesses, and being compliant to regulations provides legitimacy of your products and services.

If you have trouble thinking of a business or finding a capital, you can check out UnaCash Credit Line to get a quick cash loan or resell items from our partner stores like Belle Ame Essentials and pay in installments.

written by: Karla Maolen Visbal