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Numerous Filipinos are venturing into the world of business. However, there are steps set in place by the Philippine national government for business owners to abide by. This process ensures that the national government recognizes the business and complies with the necessary regulations and requirements to be recognized as a legitimate business. This process includes procuring a business permit in the Philippines.
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What is a Business Permit?
A business permit is a certificate issued by the local government units (LGUs) stating that your business is legitimate and underwent the necessary procedure to operate in the city or municipality in which you are registered. This permit is also called the “mayor’s permit” since the local government unit issues it with jurisdiction over the business.
What is a Business Permit For?
An issued business permit by the local government unit ensures that the enrolled business pays taxes and follows local business regulations for safety, security, health, and sanitation. This certification is new, and seasoned entrepreneurs must ensure a seamless business operation.
Without the appropriate permits and certifications, venturing into a business can lead to legal repercussions and fines. These consequences apply to all kinds of businesses, no matter the size. A good example is when Makati’s local government unit shut down Smart Communications headquarters in February last year for failing to comply with the necessary business documents to operate.
Do You Need a Permit for a Small Business?
As previously mentioned, all sizes of businesses require business permits in the Philippines. This permit is legally necessary to operate a business from sole proprietorship to large organizations and enterprises. Moreover, a business permit is required for an enterprise to apply for a business loan, financial government assistance, registration for the Bureau of Internal Revenue, and more. Even e-commerce businesses require a permit to operate.
What is a DTI Business Permit?
Every business must register its business name (BN) with the Department of Trade and Industry (DTI). Registering their business name serves as their permit from the government agency. However, business owners must be aware that registering a business name with the DTI is not a license to operate. Enterprise owners can register their BN online and pay online at bnrs.dti.gov.ph. Here is a step-by-step guide to complete the registration:
- Click on “New Registration”
- Fill out the necessary information for “Owner’s Information,” click proceed once completed, and check that all details are correct and true.
- Complete the necessary fields regarding Business Scope and Business Name.
- Registering business owners are given a reference code, which should be taken note of since this will be used in all BNRS transactions.
- Fill out the following information:
- Business Address
- Personal Information
- Residence Address
- Other Details
- Review the submitted information and ensure that it is all correct and true.
- Confirm the Undertaking by clicking “Proceed” and download the Undertaking for your necessary business files.
- Select the desired payment method offered by the system. Business owners can choose from:
- DTI Teller
- Credit/Debit Card
Business owners must pay the registration fee within seven days of registration; otherwise, the application will be nullified. A Certificate of Business Name will be sent to the listed email address if the transaction is complete.
- Confirm payment and click “Register New Business”
How Much Does a Business Permit Cost in the Philippines?
Various costs contribute to the overall expense of registering a business permit in the Philippines. A business permit or “mayor’s permit” typically costs around one thousand to five thousand Philippine pesos. This price depends on the business location, type of business, and size.
On the other hand, DTI’s business name registration expenses range from two hundred to two thousand Philippines pesos. This fee depends on the business’ territorial scope. While barangay business registration fees depend on the barangay but usually amount to five hundred Philippine pesos.
What are the Business Permit Requirements?
Registering individuals must prepare the following documents as business permit requirements:
- Fire Safety Inspection Certificate
- Sanitary Permit
- Building Permit and Electrical Inspection Installment
- Certificate of Occupancy
- Locational Clearance
- Electricity Utility Connection
Other business permit requirements may vary depending on the nature of the business. New business owners may visit their local government units to inquire about their necessary permits.
Steps to Register Your Business
For businesses to acquire their business registration, they must adhere to the following national government regulations to complete their registration:
- Business Name Registration. Sole proprietors must register with the Department of Trade and Industry (DTI) while partnerships and corporations must register with the Securities and Exchange Commission (SEC).
- Barangay Clearance. Get a clearance from the barangay you intend to operate your enterprise in.
- Mayor’s Permit. Apply for a city business or “mayor’s permit” from the local government unit.
- Tax Identification Number (TIN). Register your business with the Bureau of Internal Revenue by acquiring a tax identification number specifically for your business and abide by tax requirements.
- Business Bank Account. New enterprises must open their own bank accounts. The minimum amount to open a business bank account varies per bank.
- Other permits. Other permits may also be required, depending on the industry the business is in. These other requirements may include certifications from the Food and Drug Administration (FDA), the Department of Health (DOH), the Department of Environment and Natural Resources (DENR), or more.
Why Do I Need to Register My Business?
It is essential to register businesses, no matter the size to comply with government regulations. These government guidelines were originally set in place to make sure that all businesses pay the appropriate government fees. Operating a business without the appropriate registrations may lead to grave repercussions. These repercussions may be in penalties, fines, or even jail time.
The BIR states that not registering your business with their government agency will lead to a penalty or “fine of not less than PHP 5,000 but not more than PHP 20,000, and imprisonment of not less than six months but no more than two years.” Moreover, the penalty will depend on where your business is located. Here are the corresponding fines depending on the location:
- City: PHP 20,000
- First Class Municipality: PHP 10,000
- Second Class Municipality: PHP 5,000
- Third Class Municipality: PHP 2,000
Business permit requirements in the Philippines may be extensive and require significant money. These are essential certifications to operate an enterprise seamlessly. Moreover, acquiring the licenses relevant to your business ensures customers are partnering with a reputable business that went through the necessary procedure to operate legally.