BIR Registration Requirements for Small Retail Stores in the Philippines

A practitioner’s guide for sole proprietors, partnerships, and corporations engaged in retail trade

1) Why BIR registration matters

Any person or entity “engaged in trade or business” in the Philippines must register with the Bureau of Internal Revenue (BIR) before commencing operations. Registration enables you to (i) secure a Taxpayer Identification Number (TIN); (ii) enroll in applicable tax types (income tax, VAT or percentage tax, withholding taxes); (iii) register books of accounts; and (iv) issue BIR-registered invoices/receipts or use an accredited POS/CRM. Failure to register can trigger surcharges, compromise penalties, and closure under the Oplan Kandado program.

2) Who must register

Sole proprietors (e.g., sari-sari stores, convenience kiosks, boutiques)
Partnerships and corporations (e.g., mini-mart, pharmacy chain outlet)
Franchisees and branch outlets of national brands
Online/omni-channel retailers with sales via marketplaces, social media, or own sites (same rules as physical stores)

Note: Employees earning purely compensation income do not register a business; this article is for those engaging in retail trade as a business.

3) When to register

Before you start selling or within 30 days from securing your DTI/SEC registration—whichever occurs first.
For additional branches or changes (name, address, tax type), file updates promptly (generally within 30 calendar days) with your Revenue District Office (RDO).

4) Where to register

Sole proprietor: RDO having jurisdiction over the business address (or home address if home-based).
Partnership/Corporation: RDO of the principal place of business as per Articles of Incorporation/Partnership.
Branches: Register each branch at the RDO where the branch is located.

5) Pre-BIR steps you usually complete

Name registration
- Sole proprietor: DTI Business Name
- Partnership/Corporation: SEC registration (including Articles/By-Laws)
Local government permits
- Barangay Clearance and Mayor’s/Business Permit (or application proof if permit is pending)
Proof of business address
- Lease contract (if rented) or title/tax declaration (if owned); for home-based, an owner’s consent letter plus proof of address.

6) BIR registration forms & what they’re for

BIR Form 1901 – Registration of sole proprietors (self-employed individuals)
BIR Form 1903 – Registration of partnerships/corporations
BIR Form 1905 – Updates (transfer RDO, add/cancel tax types, close business, change trade name/address)
BIR Form 1906 – Authority to Print (ATP) invoices/receipts (if printing)
BIR Form 0605 – Miscellaneous payments (Annual Registration Fee has been repealed; keep 0605 for other payments if assessed)

The “Annual Registration Fee” previously paid via Form 0605 is no longer imposed under the Ease of Paying Taxes (EOPT) amendments to the NIRC.

7) Documentary requirements (typical sets)

For sole proprietors (Form 1901):

DTI Business Name Certificate
Government-issued ID with photo and signature
Proof of business address (lease, title, utility bill + consent)
Barangay/Mayer’s permit or application receipts
Books of accounts (for registration—see §9)
Invoices/receipts plan: either (a) apply for ATP (Form 1906) to print invoices/receipts; or (b) register an accredited POS/CRM
If applicable: franchise agreement; BMBE Certificate of Authority (see §14)

For partnerships/corporations (Form 1903):

SEC Certificate and Articles (and By-Laws if corporation)
Mayor’s/Business Permit (or application proofs)
Proof of address (lease/title/consent)
Board/Partners’ resolution naming the authorized representative
IDs of authorized signatories
Books of accounts and invoices/receipts/POS plan as above

For each branch:

Parent BIR Certificate of Registration (COR) copy
Proof of branch address; POS/CRM details; books for the branch

RDOs may ask for additional items in practice (e.g., sketch map or photos). Bring originals and photocopies.

8) Tax types you must choose at registration

A) Income Tax

Sole proprietors: Graduated individual income tax rates; if qualified, you may opt for the 8% tax on gross sales (excess over ₱250,000) in lieu of percentage tax and graduated rates (check current eligibility, gross thresholds, and interaction with VAT status).
Corporations/partnerships: Corporate income tax rates under CREATE; minimum corporate income tax and other rules may apply depending on incentives.

B) VAT vs. Non-VAT (Percentage Tax)

VAT if you exceed or expect to exceed the statutory VAT threshold (commonly ₱3,000,000 annual gross sales).
Non-VAT if below the threshold: subject to percentage tax on gross sales (rate historically 3%; a temporary reduction applied in prior years and may have sunset—confirm the rate in effect for your period).
Voluntary VAT registration is allowed even if below the threshold (binding for at least three years).

C) Withholding Taxes

On compensation if you have employees.
Expanded/creditable withholding if you are designated a withholding agent (e.g., as a Top Withholding Agent) or if specific transactions require it.

Choose carefully. An incorrect VAT/non-VAT choice impacts pricing, margins, and compliance workload.

9) Books of accounts (how to register and keep them)

Every retail store must maintain registered books of accounts showing daily sales and expenses. Acceptable modes:

Manual books (e.g., bound columnar notebooks titled Sales Journal, Cash Receipts, Purchases, Cash Disbursements, General Ledger).
Loose-leaf or Computerized Accounting System (CAS/CBA) (requires BIR acknowledgment/permit before use; retention/archiving rules apply).

Tips:

Record daily transactions; keep supporting documents (purchase invoices, delivery receipts, deposit slips).
Retain books and source documents for at least ten (10) years counted from the deadline for filing or from the last entry, whichever is later.

10) Invoicing/receipting & POS/CRM

Retailers must issue a BIR-registered proof of sale for every sale, whether printed or system-generated:

Sales Invoice (SI) for sale of goods/merchandise; for retailers, this is typically the POS receipt.
How to comply:
1. Print SI through a BIR-authorized printer after securing ATP (Form 1906); or
2. Use a BIR-accredited POS/CRM. Register your machine/software with the RDO, keep the Permit to Use (or acknowledgment), and comply with periodic Z-reading/report retention.
Mandatory invoice contents include TIN, registered name and address, branch code (if any), date/time, description/quantity, unit price and amount, VAT or percentage tax details, and serial numbers.
Lost/damaged booklets or POS breakdowns: document the incident, report to the RDO when required, and use contingency invoices properly.

Large taxpayers and exporters are under the government e-Invoicing System (EIS) mandate. Small retailers are generally outside the mandatory scope unless later designated.

11) Step-by-step: registering a small retail store

Prepare DTI/SEC papers, LGU permits (or proof of application), IDs, lease/title, and your books and invoicing/POS plan.
Fill out the correct BIR registration form (1901 for sole proprietor; 1903 for entities).
Go to your RDO (or use available BIR e-services where applicable) to submit requirements.
Enroll tax types (income tax, VAT or percentage tax, withholding taxes as needed).
Register books of accounts (manual/loose-leaf/CAS).
Secure either (a) ATP and print invoices; or (b) register POS/CRM and obtain the permit/acknowledgment.
Claim your Certificate of Registration (COR) and “Ask for Receipt” notice (or its updated equivalent for display).
Enroll in eBIRForms (or eFPS if required) and create your online account for returns and payments.

12) After-registration: ongoing compliance calendar

Income Tax
- Individuals (sole props): quarterly declarations and an annual return.
- Corporations/partnerships: quarterly/annual corporate returns.
VAT (if VAT-registered): quarterly VAT return; file summary lists/e-sales reports when required.
Percentage Tax (if non-VAT): generally quarterly.
Withholding Taxes (if applicable): monthly remittances and quarterly returns.
Books: write-ups daily; preserve Z-readings, tapes, and electronic records from POS.
Other reports: POS registration updates, inventory write-off notices, head-office/branch consolidations, etc., as they arise.

Deadlines and frequencies can change through BIR regulations. Always check the latest RMO/RR/RMCs applicable to your tax types and taxpayer class.

13) Special locations & setups

Home-based stores: Allowed; ensure zoning/LGU clearance, proof of address, and proper registration of books and invoices.
Pop-up/tiangge/market stalls: Register each fixed place of business/branch; carry copies of COR and invoices.
Mobile stores/delivery-only: Register the principal place of business; ensure your delivery receipts/invoices are BIR-registered; register additional facilities if they function as branches.
Online channels: Same registration; disclose URLs/marketplaces if the RDO requests. Platform payouts, COD, and e-wallet settlements must reconcile to your books.

14) Incentives & special regimes relevant to small retailers

BMBE (RA 9178): Micro-enterprises that secure a BMBE Certificate of Authority from DTI/LGU may be exempt from income tax on operations meeting the law’s criteria. You still register with the BIR, maintain books, and comply with VAT/percentage tax and withholding obligations where applicable.
PEZA/BOI incentives: Rare for pure retail targeting the domestic market; incentives typically exclude domestic retail unless part of approved projects.

15) Common pitfalls (and how to avoid them)

Starting to sell before registration. → Register first; penalties for late registration can be significant.
Using unregistered invoices or an unregistered POS. → Apply for ATP or register POS/CRM before issuing any proof of sale.
Wrong VAT/non-VAT choice. → Project your annual sales realistically; voluntary VAT can lock you in for years.
Lapses in withholding. → If you have employees or are designated a withholding agent, withhold and remit on time.
Books not written daily / poor documentation. → Cash-heavy retail requires tight controls; reconcile sales, Z-readings, deposits, and inventory.
Missing updates. → File Form 1905 promptly for changes in address, trade name, branch openings/closures, or tax-type additions/cancellations.

16) Quick compliance checklist (print this)

DTI or SEC registration in hand
Barangay and Mayor’s/Business permits (or filed applications)
Lease/title/consent as proof of address
Government IDs of owner/authorized signatories
Filled-out BIR Form 1901/1903
Books of accounts ready for registration
ATP (Form 1906) filed or POS/CRM registered and acknowledged
Certificate of Registration received and displayed
Enrolled in eBIRForms/eFPS
Tax types verified: Income Tax + VAT or Percentage Tax; Withholding if needed
Calendar of quarterly/annual returns diarized

17) Frequently asked questions (retail-specific)

Q1: I’m a small sari-sari store under the VAT threshold. What do I issue? A: A BIR-registered sales invoice/POS receipt for every sale. If you’re non-VAT, your invoice should not show VAT but should reflect the applicable percentage tax as part of pricing.

Q2: Do I still pay the Annual Registration Fee? A: No. The ARF has been repealed; keep using Form 0605 only for other miscellaneous tax payments if assessed.

Q3: Can I start selling while my ATP is pending? A: Not with unregistered invoices. If you registered a POS/CRM and have the RDO’s permit/acknowledgment, you may issue system-generated receipts while awaiting printed backups (if you keep both).

Q4: I sell both online and in-store. Do I need a separate registration? A: Not if the online activity is operated by the same legal entity at the same principal place of business. Disclose additional trade names/URLs as required and register any additional branches (e.g., separate fulfillment hubs).

Q5: Percentage tax rate—1% or 3%? A: A temporary reduction applied in recent years; the default statutory rate is 3% for non-VAT taxpayers unless an extension is in force for your period. Verify the rate in effect when you file.

Q6: How long must I keep my records? A: Keep books, invoices, and e-records for at least ten (10) years.

18) Practical documentation standards for retailers

Daily cash count sheets tied to POS Z-readings
Deposit slips cross-referenced to daily sales
Supplier invoices matched to receiving reports and inventory logs
Price lists/barcodes aligned with POS item master
Void/return logs with manager approvals
Periodic inventory counts with variance explanations

19) Closing, transferring, or changing your store

Closure: File Form 1905 (cancellation of registration), settle outstanding returns, and surrender unused invoices and POS permits for cancellation.
Transfer of RDO or address change: Update within 30 days; re-register books and re-permit POS as required.
Change of tax type (e.g., non-VAT → VAT): File the update before exceeding the VAT threshold or immediately upon election; update invoices/POS programming.

20) Final notes

Laws and BIR issuances evolve (e.g., EOPT changes to invoicing terms, filing frequencies, and ARF repeal). Always align your compliance to the return period you’re filing for.
When in doubt about thresholds, rates, or whether a specific setup requires a branch registration or POS permit, consult your RDO or a Philippine tax professional and keep written advisories in your compliance file.

This article is intended as a comprehensive practitioner’s overview for Philippine small retail stores. It does not replace legal advice tailored to your specific facts.