Which legal structure can I choose?

For entrepreneurs in the Philippines, there are the following forms of companies:

Single/sole proprietorship

• Owned by the owner itself (1 person)
• No distinct existence from owner, so profit regarded as income of owner
• Owner is accountable for company’s debts and may affect properties of owner (personal possessions may be used as a guarantee in case of financial difficulty)
• Must apply for a Business name with the Department of Trade and Industry

Partnership

• Owned by two or more persons
• Company treated as a juridical person having a separate legal personality from its owner(s)
• A partnership must register with the Securities Exchange Commission (SEC)
• minimum capitalization of three thousand pesos (Php 3,000.00)

Corporation*

• Company treated as a juridical person having a separate legal personality from its stakeholders
• Consists of at least 5 to 15 incorporators each of whom must hold at least one share
• Must be registered with the Securities Exchange Commission (SEC)
• Minimum paid-up capital is five thousand pesos (Php 5,000.00)

Non-stock corporation

• For public purposes such as charitable, educational, cultural or similar purpose
• No issues of shares 

For more detailed information on the legal forms, please click here or please refer to the Corporation Code of the Philippines  

How do I set up a company in the Philippines?

Companies should first register with the appropriate government agency before starting a business in the Philippines. The Securities Exchange Commission (SEC) is the government agency responsible for registering, licensing, regulating, and supervising all corporations and partnerships organized in the Philippines. General procedure for registering with the Securities Exchange Commission (SEC):

1. Verify/reserve proposed name;
2. Draw up the Articles of Incorporation and By-Laws in accordance with Corporation Code;
3. If applicable, get endorsements from other government agencies;
4. Deposit paid-up capital / contribution (for foundations only) in the bank;
5. Pay the filing fees;
6. Claim the Certificate of Incorporation/License;
7. Buy and register Stocks and Transfer Book or Membership Book

To facilitate registering new corporations, the SEC operates an “express lane”, with application forms specially prepared for specific types of business. Filing normally takes one day, provided all necessary documents and prior clearances from other agencies are submitted in the morning. After registration with the SEC, all corporations organized under the Corporation Code are encouraged to register their business name with the Department of Trade and Industry (DTI). The DTI-National Capital Region (DTI- NCR) is one of the primary government agencies tasked with the promotion as well as the registration of the trade and industry sector in Metro Manila area. Among the services of the DTI-NCR is the registration of business names as provided under RA No. 3883. Business name registration involves the submission of copies of the corporation’s articles of incorporation , by-laws, and SEC certificate of registration to the DTI and the payment of a registration processing fee. A business name registration is valid for five years.

Below is a quick summary of steps of setting up a company in the Philippines, provided by Doing Business of World Bank:

1. Verify and reserve the company name with the Securities Exchange Commission (SEC)
2. Deposit the paid-in minimum capital at the bank (click here for a list of banks in the Philippines)
3. Notarize articles of incorporation and treasurer's affidavit at the notary
4. Register the company with the SEC and receive pre-registered Taxpayer Identification Number (TIN)
5. Obtain barangay clearance
6. Pay the annual community tax and obtain the community tax certificate (CTC) from the City Treasurer's Office (CTO)
7. Obtain the business permit to operate from the BPLO
8. Buy special books of account at bookstore
9. Apply for Certificate of Registration (COR) and TIN at the Bureau of Internal Revenue (BIR)
10. Pay the registration fee and documentary stamp taxes (DST) at the AAB
11. Obtain the authority to print receipts and invoices from the BIR
12. Print receipts and invoices at the print shop
13. Have books of accounts and Printer’s Certificate of Delivery (PCD) stamped by the BIR
14. Register with the Social Security System (SSS)
15. Register with the Philippine Health Insurance Company (PhilHealth)
16. Register with Home Development Mutual Fund (Pag-ibig)

For detailed information on the various steps, please click here. For a complete guide provided for businesses in the ASEAN region, please view this guide from Tilleke & Gibbins.