What's more annoying is that there is no policy on "online business" in the country. There is no online anything business classification in this country. If Facebook had been built in the Philippines, they would have had no idea how to classify it. On hindsight, I don't regret going through the registration process. Being equipped with permits and official receipts make what I'm doing more credible and "real" to my individual and corporate clients.
The process for single proprietorship involves four institutions in the following order: Department of Trade and Imdustry (DTI), Barangay Hall, City Hall, Bureau of Internal Revenue (BIR). Here's the breakdown of what I did in each institution, the forms, and the fees.
Venue: Department of Trade and Industry
Time Spent: less than one hour
- Registered my business name. I did it online but I still had to go there for payment. They asked for 2 valid IDs.
- Paid fees:
Php 15 - Documentary Stamp Tax
Total: Php 2,015
3. Claimed DTI Certificate of Registration
Note: I registered in DTI in December 2011, but only registered in BIR in 2013 because the business didn't operate in 2012. It didn't matter to BIR that the business was not functioning yet, I got fined Php1,000 by BIR for every year I didn't register with BIR. Apparently, a business name can't just be "parked."
Venue: Barangay Hall
Time Spent: less than one hour
- Submitted copy of DTI certificate
- Paid fees:
Php 150 - Plate fee
Php 15 - Documentary Stamp Tax
Total: Php 365
3. Claimed plate and Barangay Business Clearance
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| Mandaluyong City Hall Business registration filing |
Time Spent: 3 days (I had to go back once for the photos and twice for my apartment's permit)
1. Submitted copy of DTI certificate
2. Submitted copy of Barangay Business Clearance
3. Submitted pictures of the "establishment"
Since my business is online-based, I gave them a photo of my desk, the corridor of my floor, the apartment, and the left and right neighbors of my apartment. The photos had to be printed on photopaper.
4. Submitted copy of lease contract*
5. Showed current year cedula (available from city hall too)
6. Submitted a duly accomplished "Application Form for Business"
5. Paid Fees:
Php 1,000 - Insurance (I contested this because it's not included in the list of requirements. The "officers of the day" just pushed it on us. I only paid because I didn't want the headache of complaining straight to the Mayor's office.)
Php 20 - Cedula (for voluntary payors)
Php 50 - Notary (This is the only application fee that had to be notarized.)
Php 3,076.30 - Mayor's permit, utilities, tax based on capitalization (I said it was just 5,000 because there aren't a lot of capitalization for online businesses, but the pesky officers wouldn't believe it, and instead put in 250,000 as capitalization. The know-it-alls insisted on that huge amount. They said that's the base value anyway. This sheer ignorance worsened by arrogance is why I think there should be a clear policy on how to go about classifying and charging online businesses.)
Php 198.10 - Fire fee (paid to the Fire Department)
Total: Php 4,344.4
6. Claimed Business plate and Mayor's Permit (which is not a certificate, but a receipt)
* Note about the lease contract: The contract had to be current and notarized. The apartment also had to have a current mayor's permit. If not, they would not release the permit. I would still be able to operate, but I wouldn't have a certificate and a plate. The whole thing was crazy because the Certificate of Mayor's Permit was what I needed to show that my business is legitimate. Companies ask for that!
The problem was that city hall's system could not see my apartment's registration. I had to ask my landlord for her copy of the apartment's mayor's permit which she promptly gave me. I brought the permit to city hall. The staff there asked me to give them a day to verify it because it was not showing up in their system. When I returned the next day, they still did some double-checking before finally admitting that the system was messed up. That was the only time I got my permit.
Venue: Bureau of Internal Revenue in Mandaluyong
Time Spent: 3 days (I had to go back once because i missed the bank's 2pm cut off, one more because they ran out of paper for the certificate, another day to get the official receipts)
1. Submitted the following copies to the officer receiving business registration applications:
a. DTI certificate
b. Barangay Business Clearance
c. Notarized Application for Mayor's Permit (it should've been the mayor's permit but mine was delayed because the city system couldn't find my lessor's permit)
2. Accomplished the following forms and submitted them to the Officer in Charge:
a. BIR form No. 1905 - Application for Registration Information Update (I had to move my RDO from Makati where I previously worked to Mandaluyong)
b. BIR form No. 1901 - Application for Registration
c. BIR form No. 0605 - Payment Form (for tax dues and penalties like non-BIR registration within 60 days of getting the DTI certificate and missing the January deadline for filing taxes; in BIR, ignorance of deadlines is not an excuse)
d. BIR form No. 2000 - Documentary Stamp Tax/Declaration Return
3. Went to a BIR accredited bank to pay the amounts indicated in BIR form No. 0605 and 2000
Total: Php 2,251.97
Note: BIR payments have a 2pm cut-off in BIR accredited banks.
4. Submitted copies of the following:
a. bank receipt of BIR form No. 0605
b. bank receipt of BIR form No. 2000
5. Bought and submitted for stamping the following accounting records also known as "books" (bookstores have these):
a. Columnar Notebook 14 columns (2 pieces)
b. Ledger
c. Journal
6. Claimed BIR Certificate; an officer also returned the "books" that have already been approved, and paid Php 15 for Documentary Stamp
7. Requested for Official Receipts
a. Submit BIR form No. 1906 - Authority to Print Invoices and Receipts
b. Submit copy of BIR Certificate
c. Paid Php 1,000 for the printing of 10 pads of receipts (that's already the minimum)
d. Claimed the official receipts after 2 weeks
GRAND TOTAL for fees of Business Registration of Single Proprietorship: Php9991.37
I'm not sure if the fees you will pay are similar to mine. I regret not having fought the Php1,000 business insurance fee in city hall harder. I hope you get it cheaper and finish faster than I did.
This is just the initial cost for doing business in the real world. Spending almost 10,000 pesos might be discouraging for some online entrepreneurs, but I think it will pay off because it will help us win more clients. I've convinced managers and CEOs to consider the services I offer only to be frowned at by their accountants and finance personnel. It's not fun when that happens. NOW though, when I'm asked for documentation, I present my legally acquired permits with a flourish :)
