Registering your business in the Philippines: a plain map

People put off registering for years, and usually for the same reason: they have heard a number. Twenty thousand pesos. A month of queues. A fixer who knows someone.

Most of that is wrong. For a sole proprietor running a small store, food business, online shop or app, the path is three offices in a fixed order. This is the map we wish someone had handed us. It is not legal advice, fees change, and your city has its own rules, so treat it as the shape of the process and confirm the numbers at each office.

First, which kind of business are you?

• Sole proprietorship. You and the business are the same legal person. This is what most first businesses are, and it is what this guide covers. The business name is registered with DTI.
• Partnership, corporation or One Person Corporation. A separate legal entity, registered with the SEC through its online system (eSPARC). More paperwork, more ongoing filings, and usually worth it only once you have co-founders, investors or real liability to separate.

If you are not sure, start as a sole proprietor. You can incorporate later.

Step 1: DTI, for the business name

Register online at the DTI Business Name Registration System, bnrs.dti.gov.ph.

You are registering the right to trade under a name that is not your own legal name. If you sell as "Maria Santos", you do not strictly need this. If you sell as "Maria's Lutong Bahay", you do.

You will choose a territorial scope: barangay, city or municipality, regional, or national. The fee rises with scope. When we last checked for the Icreatechs course, it was roughly P230 for barangay scope up to about P2,030 for national, documentary stamp included, valid for five years. Check the current fee on the BNRS site before you pay.

Two things people get wrong:

1. Scope is not a selling limit. DTI's scope is about where your premises are, not where you may ship. A home-based online seller on barangay scope can still send parcels across the country.
2. DTI registration is not permission to operate. DTI says this in plain words: a business name registration gives the business a legal identity. To actually operate, you still need the mayor's permit.

Pay promptly after applying. Unpaid applications expire after a short window and you start again.

Step 2: City or municipal hall, for the permit

The mayor's permit (also called the business permit) is what actually lets you operate. You apply at your city or municipal Business Permits and Licensing Office (BPLO), and you will need your DTI certificate.

The barangay clearance is part of this step. Under the Ease of Doing Business law (RA 11032), many LGUs now process it through the city hall's one-stop shop rather than sending you to the barangay first. Ask how your LGU does it.

What you pay is a bundle, not one fee. It usually includes:

• the mayor's permit fee itself
• local business tax, based on your gross sales (or capital, for a new business)
• barangay clearance
• sanitary permit, plus health certificates for anyone handling food
• the fire safety inspection fee from the Bureau of Fire Protection
• a garbage fee

There is no national number for this. When we checked the actual ordinances of eleven LGUs for the course, the annual permit fee alone for a small retailer ranged from about P120 to about P1,500. Same kind of business, very different bills.

The one figure that is set nationally is the fire safety inspection fee: under the 2019 Revised IRR of the Fire Code it is 15% of your LGU fees, with a minimum of P500. For most micro businesses that means the P500 floor.

So do not budget from a blog, including this one. Ask for your LGU's Citizen's Charter. Every government office is required to publish one listing its services, requirements, fees and processing times.

Step 3: BIR, for the tax

Register with the Bureau of Internal Revenue so you can issue invoices and file taxes. You can do this online through ORUS (orus.bir.gov.ph) or at the Revenue District Office (RDO) that covers your business address. Self-employed individuals use BIR Form 1901.

You will come away with a Certificate of Registration (Form 2303), registered books of accounts, and authority to issue invoices.

Some recent changes worth knowing, because older guides still teach the old rules:

• The P500 annual registration fee was abolished under the Ease of Paying Taxes Act (RA 11976), effective January 2024.
• The invoice is now the primary sales document for both goods and services. Official receipts are supplementary.
• Micro taxpayers (under P3,000,000 gross sales a year) are non-VAT and pay 3% percentage tax, unless they elect the 8% option, which replaces both income tax and percentage tax. You choose it on your first quarterly return, and you have to choose it again each year.

Which option is better depends on your margins. Roughly: below P400,000 a year in gross sales, the 8% option comes out ahead for a purely self-employed person. Above that, high-cost businesses like sari-sari stores and carinderias often do better on graduated rates with itemized deductions. If the money matters, ask the RDO or a bookkeeper to run your numbers.

While you are at it: BMBE

If your total business assets are P3,000,000 or less (excluding land), ask about registering as a Barangay Micro Business Enterprise under RA 9178. The Certificate of Authority is free, applied for at a DTI Negosyo Center, and valid for two years.

It exempts the business from income tax. It does not exempt you from percentage tax, local taxes or the permit itself. Be wary of anyone who promises more than that.

If you are already late

Many people registered once, stopped filing, and are afraid to go back. Penalties for micro and small taxpayers were reduced under RA 11976, and the BIR periodically opens amnesty programs. If this is you, walk into your RDO and ask what applies to your situation. It is almost always cheaper than you fear.

Where to get help for free

DTI Negosyo Centers exist across the country to help with exactly this, at no cost. They can walk you through BNRS, BMBE and local requirements. Ask at your city hall or DTI provincial office where the nearest one is.

The short version

1. DTI business name (online, BNRS)
2. Barangay clearance and mayor's permit (city or municipal hall)
3. BIR registration (ORUS or your RDO)
4. Optional but worth it: BMBE at a Negosyo Center

Our Resources page links each of these. And if you get stuck on a step your city does differently, ask in the Discord. Odds are someone in the community has been through your exact BPLO.