Quick answer
To open a business in the Philippines, register the business name or entity as applicable, register with the Bureau of Internal Revenue (BIR), and secure the permits required for your location and activity. A sole proprietor using a trade name generally registers it with the Department of Trade and Industry (DTI). Partnerships and corporations register with the Securities and Exchange Commission (SEC), and cooperatives register with the Cooperative Development Authority (CDA). A DTI certificate or SEC certificate covers only one part of the process. Most businesses also need a city or municipal business permit, and regulated activities may require a separate license before operations begin. Frequently Asked Questions
Register with the BIR before your first sale. Under BIR Revenue Memorandum Circular No. 91-2024, the registration deadline can arrive earlier if 30 calendar days have elapsed since issuance of an applicable DTI or SEC certificate, mayor’s permit, or professional or occupational tax receipt. Use the earlier trigger when planning your opening. The rule also matters if you sell through social media, operate from home, or plan to open a branch. bir-cdn.bir.gov.ph
Choose the business structure before registering
| Structure | Where to start | What it means for the owner |
|---|---|---|
| Sole proprietorship | DTI Business Name Registration System if you use a name other than your true name | You and the business are the same legal person. Business debts can expose your personal assets. |
| Partnership | SEC | A partnership has its own legal personality. Partners’ personal exposure depends on the type of partnership and the obligation involved. |
| One Person Corporation (OPC) | SEC | One eligible stockholder can form a corporation. Keep business funds, records, and contracts separate. The sole stockholder claiming limited liability must show that the OPC was adequately financed and that its property was kept separate from personal property. |
| Corporation with multiple stockholders | SEC | The corporation has its own legal personality. It must maintain corporate records and comply with governance and reporting requirements. |
| Cooperative | CDA | This structure is for an enterprise organized and governed by its members under cooperative law. |
An OPC generally has no minimum authorized capital stock unless a special law requires it. A licensed professional generally cannot organize an OPC to exercise that profession unless a special law allows it. If any owner is a foreign national or a foreign entity, check ownership restrictions, applicable capitalization rules, and sector-specific requirements before committing funds or signing a lease. The answer depends on the activity and ownership structure. lawphil.net
If you are going into business with someone else, put contributions, ownership, authority to sign contracts, profit sharing, and exit terms in writing before either of you spends money on behalf of the business. Use the same legal name on contracts, permit applications, invoices, and bank or platform records.
How to register and get ready to operate
- Check the location and activity with the LGU. Ask the city or municipal Business Permits and Licensing Office (BPLO) or Business One-Stop Shop (BOSS) for its current checklist. Describe what you will actually do at the address, including storage, customer visits, food preparation, or manufacturing. Ask which zoning, occupancy, sanitary, fire safety, and barangay requirements apply. For a home-based business, also check lease, condominium, or homeowners’ restrictions before committing to the address. chief.lawphil.net
- Register the name or entity. Use DTI’s Business Name Registration System for a sole proprietor’s trade name, or SEC eSPARC for supported company and partnership applications. A DTI business-name certificate is generally valid for five years. Keep the certificate and, where applicable, the signed articles and other organizing documents. bnrs.dti.gov.ph
- Register with the BIR on time. Use the appropriate Revenue District Office (RDO) or an available online channel, such as ORUS or NewBizReg, as applicable to your transaction. An individual who already has a TIN should use that TIN for the business registration. Check the tax types and filing obligations on your BIR Certificate of Registration, register the applicable books of accounts, and arrange for compliant invoices. The former ₱500 annual BIR registration fee has been abolished. bir-cdn.bir.gov.ph
- Complete local and sector-specific permits. Submit the LGU checklist and confirm which clearances it processes through its one-stop shop. Ask the relevant regulator whether the particular product, premises, or service needs separate approval. For example, food preparation at a restaurant and manufacturing or importing regulated food products can trigger different requirements. Start the BIR process in time to meet its own deadline even if local or sector approvals are pending. chief.lawphil.net
- Set up payroll and reporting before hiring. Register as an employer and report covered workers to SSS, PhilHealth, and Pag-IBIG. Check applicable DOLE establishment registration and occupational safety requirements. Set up payroll records, contributions, and compensation withholding, and check the current wage order for the work location and business category. sss.gov.ph
Taxes, invoices, and recurring deadlines
Know which taxes apply
VAT. The general mandatory VAT registration threshold is ₱3 million. The test looks at sales over the preceding 12 months or reasonable grounds to expect sales above the threshold in the next 12 months, with statutory exclusions for specified exempt transactions. The law provides for periodic inflation adjustments. Review your status as you approach the threshold, especially if you sell through several branches or platforms. Use sales figures, since your profit or the amount deposited by a platform can be much lower. lawphil.net
Percentage tax and the 8% income tax option. A non-VAT business covered by Tax Code Section 116 generally pays 3% percentage tax. Eligible self-employed individuals and professionals within the VAT threshold may timely elect the 8% income tax option in lieu of graduated income tax on their business income and the Section 116 percentage tax. For someone earning purely from self-employment, the 8% generally applies to gross sales and other non-operating income above ₱250,000. A mixed-income earner who elects 8% for business income does not get a separate ₱250,000 reduction against that income. The option is for eligible individuals. A corporation, including an OPC, cannot use it. lawphil.net
Issue the right document and keep the books current
- Use a BIR-compliant invoice for sales of goods and services. An official receipt can document collection. Under the current invoicing rules, the invoice is the primary sales document. VAT-registered sellers issue an invoice regardless of amount. Non-VAT sellers generally issue one for transactions of at least ₱500 or whenever the buyer asks. For smaller sales without individual invoices, issue an aggregate invoice at day-end when those sales total at least ₱500. Supreme Court E-Library
- Check whether structured electronic invoicing applies. BIR Revenue Regulations No. 26-2025 gives covered taxpayers until December 31, 2026 to comply with electronic invoice issuance. Covered groups include small, medium, and large taxpayers engaged in e-commerce, as well as specified large taxpayers and users of covered invoicing systems. Micro taxpayers are exempt from the e-commerce category of that requirement. Ordinary invoicing duties still apply. bir-cdn.bir.gov.ph
- Preserve books and other accounting records for the statutory period. The general BIR rule is five years from the day after the filing deadline for the return for the year of the last entry, or from actual filing if the return was filed late. Keep relevant records beyond that period if an audit, protest, or case still requires them. Supreme Court E-Library
Put the deadlines on a calendar
| Obligation | Usual timing |
|---|---|
| Quarterly VAT or Section 116 percentage tax, if applicable | Within 25 days after the end of the taxable quarter |
| Individual quarterly income tax | May 15, August 15, and November 15 for the first three quarters, when required |
| Individual annual income tax | April 15 of the following year, when required |
| Corporate income tax | Quarterly returns within 60 days after each of the first three quarters. The annual return is generally due on the 15th day of the fourth month after the taxable year ends. |
| Local business taxes and charges | Generally within the first 20 days of January, or within the first 20 days of each subsequent quarter for applicable installments. Check the LGU’s permit renewal calendar and any valid extension. |
Check the BIR Interactive Tax Calendar and current issuances for withholding returns, attachments, filing channels, and applicable deadline adjustments. If an active tax type requires a return, a period with zero sales or zero tax due can still require filing. Companies should separately check the SEC’s current reportorial requirements for their entity type and fiscal year, including financial statements, the applicable General Information Sheet, and beneficial ownership reporting through HARBOR. OPCs should also check the SEC’s separate rules on appointments and other reportorial obligations. Supreme Court E-Library
Selling online, hiring, or changing the business
Online and home-based sellers. Regular commercial selling through a marketplace, social media page, or your own website can trigger business registration, tax, invoicing, and consumer obligations. Check the BIR rules on displaying proof of registration online. Give customers accurate product information, prices, contact details, and a way to raise complaints. If a marketplace withholds tax, reconcile its settlement reports and withholding certificates against your gross sales, fees, refunds, and returns. Protect customer information and limit access to what staff need for their work. bir-cdn.bir.gov.ph
Hiring people. Keep written terms, attendance and payroll records, proof of wage payments, and contribution remittances. Calling someone a freelancer in the contract does not settle their status if the actual working arrangement points to employment. Get advice before using contractor arrangements for people whose schedules and day-to-day work you direct. sss.gov.ph
Moving, adding a branch, or changing ownership. Check what must be updated with the BIR, the affected LGUs, the DTI or SEC, and any sector regulator. A branch may require its own registration and local permit. Moving across RDO boundaries can require a BIR transfer. If you move from a sole proprietorship to a corporation, account for the fact that the corporation is a separate taxpayer. Review who owns the assets, who is named in leases and contracts, and which entity can issue invoices after the change. bir-cdn.bir.gov.ph
Closing or retiring the business. File the applicable retirement or cancellation with the LGU and BIR, and complete any DTI cancellation or SEC dissolution that applies. BIR guidance provides for a closure application using Form 1905 with the required documents. The BIR may still audit the business and require settlement of tax liabilities before issuing tax clearance. Confirm which final returns, employer reports, or remittances are due and keep proof that each agency received and acted on your filing. bir-cdn.bir.gov.ph
Common mistakes and records to keep
| Common mistake | What to do and keep |
|---|---|
| Signing a lease before checking the proposed use | Get the LGU checklist and keep any written zoning or use confirmation, the signed lease, and the landlord’s approvals. |
| Waiting for a permit before starting BIR registration | Keep copies of the documents that trigger the BIR deadline, with their issue dates, and proof of when you submitted your registration. |
| Recording only what reaches your bank or e-wallet | Reconcile gross sales, discounts, refunds, platform fees, and tax withheld. Keep invoices, settlement reports, withholding certificates, and bank or e-wallet statements. |
| Assuming an uploaded return or a payment proves both steps are complete | Keep the filed return, submission acknowledgment, payment confirmation, and any required attachment acknowledgment together. |
| Letting an inactive business lapse without filing for closure | Keep the retirement and cancellation applications, proof of receipt, final returns, and written confirmation of closure or clearance when issued. |
When to get help urgently
Seek prompt help from a Philippine lawyer or qualified tax professional if you receive a formal tax assessment, a closure or suspension order, a subpoena, or a notice with a response deadline. Also act promptly if wages or employee contributions are overdue, a serious workplace incident occurs, or you discover that sales continued after a permit or registration problem arose.
Record the exact date and manner of receipt. Save the full notice, attachments, envelope, email headers, or portal acknowledgment. As examples, a formal BIR assessment generally has a 30-day administrative protest period from receipt. A local tax assessment under Section 195 of the Local Government Code generally has a 60-day written protest period from receipt. Identify the actual notice before counting days. Different documents can trigger different remedies and deadlines, and an informal inquiry may leave the deadline running. lawphil.net
Frequently asked questions
Can I use my existing TIN for a sole proprietorship?
Yes. Use your existing individual TIN and register or update your business activity with the BIR. If you form a corporation, the corporation registers as a separate taxpayer. bir-cdn.bir.gov.ph
Do I need a DTI certificate if I use only my true name?
DTI’s business-name rule generally applies when you use a name other than your true name in business. BIR registration and any local or professional requirements still depend on the activity. A professional subject to the local professional tax may have different LGU requirements from a retail or service establishment, particularly if the person also operates a separate commercial business. Frequently Asked Questions
Does low sales volume exempt a business from registration?
Low sales can affect tax classification and whether VAT applies. Registration depends on whether you are carrying on a business and the rules for your activity. An occasional sale of a personal item raises a different question from regularly buying, making, or offering goods for resale. bir-cdn.bir.gov.ph
Does BMBE status make all business income tax-free?
A qualifying Barangay Micro Business Enterprise can claim an income-tax exemption for income arising from its operations under the BMBE law. Eligibility generally includes a total asset ceiling of ₱3 million, excluding the land on which the plant and equipment are situated. Certain services rendered by licensed professionals are excluded. Apply for a Certificate of Authority through DTI’s Negosyo Center and confirm with the BIR how to report the exemption and comply with other applicable taxes and filing duties. The certificate is renewable every two years. lawphil.net
Official sources
- Business names and entity registration. DTI Business Name Registration System, SEC eSPARC, and Cooperative Development Authority.
- Local business permitting and taxation. Ease of Doing Business Act, RA 11032 and Local Government Code, RA 7160. For address-specific requirements, consult the relevant city or municipality’s BPLO or BOSS.
- BIR registration and invoicing. Ease of Paying Taxes Act, RA 11976, BIR RMC No. 91-2024, and BIR RR No. 26-2025.
- Corporate reporting and online sales. SEC reportorial requirements, SEC HARBOR, and Internet Transactions Act, RA 11967.
This article provides general Philippine legal and tax information. The requirements for a specific business depend on its activities, location, ownership, and documents. Sources checked on November 9, 2026.