What are the usual permits and licenses required for start-up business in the Philippines?
For your business to be feasible and last for years, business registration is a must for you not to be chased by the government. To register your business, you must secure a series of permits and licenses from various government agencies and local government units (LGUs). The cost and specific requirements may vary depending on the business structure, nature of business, and its location.
Below are the usual permits and licenses required to establish your business legally:
1. Business Name Registration
The first step to legally establish your business is to have its name registered with the authorized government agency.
Below are the authorized agencies where you should register your business name, depending on your business structure:
Department of Trade and Industry (DTI): For sole proprietorships.
Securities and Exchange Commission (SEC): For partnerships and corporations.
Cooperative Development Authority (CDA): For cooperatives.
2. Local Government Unit (LGU) Permits
These permits are issued by the city or municipality where your business will operate and are essential for legal operation within the local jurisdiction.
Barangay Clearance: A certification from your barangay that your business is compliant with its community regulations. This is a prerequisite for the Mayor’s Permit.
Mayor’s Permit (Business Permit): This is the primary permit issued by the city or municipal government’s Business Permits and Licensing Office (BPLO). It authorizes your business to operate within that city or municipality. This usually requires various permits like: sanitary permit, fire safety inspection certificate, etc.
3. Bureau of Internal Revenue (BIR) Registration
Every business in the Philippines must be registered with the Bureau of Internal Revenue (BIR) for taxation purposes. This process involves:
Securing a Tax Identification Number (TIN) for your business.
Registering your books of accounts.
Obtaining an Authority to Print (ATP) official receipts and invoices.
Securing your Certificate of Registration (BIR Form 2303), which details your tax obligations (e.g., income tax, VAT, or percentage tax).
4. Employee-Related Registrations
If your business plans to hire employees, you are legally required to register with the following government agencies to provide mandated social security, health, and housing benefits:
Social Security System (SSS): For retirement, disability, and other social security benefits.
Philippine Health Insurance Corporation (PhilHealth): For health insurance coverage.
Home Development Mutual Fund (Pag-IBIG Fund): For housing loans and savings programs.
5. Industry-Specific and Special Permits
Depending on the nature of your business, you may need additional permits from specific national government agencies. These are crucial for regulated industries to ensure compliance with specialized standards. Examples include:
Food and Drug Administration (FDA): Required for businesses involved in the manufacturing, trading, or distribution of food, drugs, cosmetics, and medical devices. This may include a License to Operate (LTO) and a Certificate of Product Registration (CPR).
Philippine Contractors Accreditation Board (PCAB): A mandatory license for construction companies.
Bangko Sentral ng Pilipinas (BSP): For financial institutions like banks, pawnshops, and money service businesses.
Department of Labor and Employment (DOLE): Required for businesses with a certain number of employees to ensure compliance with labor standards.
How much is the cost per permit, and where can I find the fee schedule?
Business registration fees are not fixed and may vary from one business to another. Fees for local permits vary significantly by LGU, business type, and even your business’s capitalization.
Below are the typical costs for each permit, and where you can find the schedule of fees:
DTI Business Name Registration: This is one of the more straightforward costs. Fees are based on the territorial scope of your business name.
- Cost: ₱200 (Barangay) to ₱2,000 (National) + ₱30 Documentary Stamp Tax (DST).
- Where to Find Fees: The DTI’s official Business Name Registration System (BNRS) website has a clear list of fees.
SEC Registration (for Corporations/Partnerships):The fees here are not flat. They are often a percentage of your authorized capital stock.
- Cost: The filing fee is typically 1/5 or 1% of the authorized capital stock, with a minimum of ₱2,000. Notarial fees, books of accounts, and other related expenses can add up.
- Where to Find Fees: The SEC website has an official Fee Calculator that allows you to input your proposed capital and get a precise cost breakdown. This tool is invaluable for your study.
BIR Registration: Please note this crucial update: the ₱500 Annual Registration Fee has been abolished as of January 22, 2024, under the Ease of Paying Taxes Act.
However, there are still one-time costs associated with registration, such as the Documentary Stamp Tax (DST) on your Articles of Incorporation and lease contract. The cost of printing your official receipts and invoices must also be factored in.
- Where to Find Fees: The BIR website is your primary source for tax-related information. For updated forms and notices, always check the official BIR publications.
Barangay and Mayor’s Permit: This is the most variable and location-dependent cost. Fees are based on your business’s registered capital, gross sales, and the nature of your business. A sari-sari store will have a vastly different fee than a manufacturing plant.
- Cost: Barangay clearances can range from ₱200 to ₱2,000 depending on the barangay’s local ordinance and the size of your business. Mayor’s Permit fees are far more complex and can run from a few hundred pesos to tens of thousands.
- Where to Find Fees: The most reliable source is the Business Permits and Licensing Office (BPLO) in the City/Municipal Hall where your business will be located. Many LGUs now have their local tax ordinances and fee schedules posted on their official websites, often under a “Business One-Stop Shop (BOSS)” section. This is where you’ll find the detailed breakdown for your specific business type.
Social Security System (SSS): The initial employer registration fee is a one-time payment of ₱165 for the Employer Registration Plate.
Philippine Health Insurance Corporation (PhilHealth): Employer registration is typically free of charge.
Home Development Mutual Fund (Pag-IBIG Fund): Employer registration is also generally free of charge.
Food and Drug Administration (FDA): The fees for an LTO and CPR vary significantly based on the product classification (food, drug, cosmetics, etc.) and the nature of the business (manufacturer, trader, or distributor).
Where to Find Fees: The most reliable source is the official FDA website. The fee schedules are often published in PDF documents or advisories, such as the FDA’s Administrative Orders, which detail specific fees for initial applications, renewals, and product variations.
Philippine Contractors Accreditation Board (PCAB): Fees for a PCAB license depend on the license category, which is determined by your firm’s financial capacity and track record.
Where to Find Fees: The official Construction Industry Authority of the Philippines (CIAP) website, particularly the section for the PCAB, provides the detailed licensing fee structure, including the initial application, renewal, and categorization fees.
