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Starting a Start-Up in the Philippines

Updated: Oct 6, 2021

Contrary to popular belief, the obstacles any entrepreneur faces when starting a business aren’t as daunting as they may seem. In fact the steps toward establishing yourself as a business owner are so simple that we’ve listed it all here in this one article.

Aside from the obvious — like knowing what your passions are or jotting down your goals — there’s some extra preparation you can do to ensure that your business not only survives, but also grows through the years. Given that the world won’t seem to fully recover from the ongoing pandemic any time soon either, taking some extra consideration into your plan will help a great deal.

Conduct a study of your proposed idea.

While a lot of well-known and self-made entrepreneurs might tell you to go with your gut, it may not be so simple. In order to minimize any potential risks and to get a better overall feel of your endeavors, take the time to conduct a project study. The most important things to keep in mind are the following:

  • Market Study — Determines your target market and whether or not a demand for the product exists.

  • Marketing Study — Provides the strategies to employ in order to reach your target market.

  • Feasibility Study — Ascertains whether the project can be carried out given the currently available input.

If you have a little extra to spend, consider hiring a market research professional so you can have a thorough understanding of how and where to begin. A professional accountant may help you produce a good feasibility study, too.

Prepare a business plan.

Just like any adventure, your business needs a guide. The business plan serves as the compass to helping your business reach your goals along every step of the way. A good business plan should include the following:

  • Executive Summary — This is the condensed version of the entire plan, and as such should be written last although it appears first.

  • Business Overview — This comes in three parts.

    • External Analysis — Contains the industry and economy overview

    • Internal Analysis — Contains the overview of the company including its organizational structure

    • SWOT Analysis — Abbreviated from Strengths, Weaknesses, Opportunities, and Threats, this part lists such as it relates to the company

  • Business Goals and Objectives

  • Courses of Action — Details strategies in order to achieve the aforementioned goals and objectives

  • Business Model/Framework — Defines the processes for operation

  • Summary of Products or Services — Lists what offerings can be availed of

  • Marketing Models — Details the plans for marketing the company and its offerings

  • Financial Projections — Details the plans for the company’s finances

Pool your funds.

As the saying goes, you have to spend money to make money. In order to get started, you need to allocate your funds into capital expenses, pre-operating expenses, and working capital. Capital expenses account for acquisition of assets like equipment. Pre-operating expenses cover deposits, permits, licenses, recruitment, and other things necessary to get started. Working capital should cover the cost of your operations for the time being until the business can support itself.

Determine the structure.

Depending on the size, resources, and goals of your business, you must choose whether to set it up as a sole-proprietorship, partnership, or corporation. Consult an accountant or lawyer to understand which would suit you best, since each structure has its own pros and cons.

Register your business.

The first thing to remember is that your business name should reflect your brand. That aside, be ready with around five options in case some have already been taken. Sole-proprietorships, corporations/partnerships, and cooperatives must register with the Department of Trade and Industry (DTI), Securities and Exchanges Commission, and Cooperative Development Authority respectively. Name registration would cost Php40 to Php120.

After that, you will need to secure the other most important documents.

  • Bureau of Internal Revenue (BIR) Clearance

    • Form 1901 for mixed-income and self-employed individuals.

    • Form 1902 for employees with full compensation, nonresidents, and resident aliens

    • Form 1903 for corporations and partnerships

    • Form 1904 for one-time taxpayers who just rendered business in the Philippines for a year

  • Barangay Clearance, which requires the following:

    • Community tax certificate or cedula,

    • Application form, and

    • Any valid government ID

  • Mayor’s Permit/Business Permit, which requires the following:

    • DTI Business Name Certificate for Self-Employed Individuals

    • SEC Registration Certificate for Corporations and Partnerships

    • Public liability insurance (only for establishments similar to cinemas, restaurants, malls, etc.)

    • Community tax certificate or cedula

    • Lease contract or tax declaration

    • Barangay clearance

  • SEC Registration Certificate for corporations/partnerships, which requires the following:

    • Name verification slip, which can be secured online or at SEC Name Verification Unit

    • Articles of incorporation and by-laws

    • Joint affidavit of two incorporators to change corporate name

    • For non-stock only: List of members certified by the corporate secretary and list of the names of contributors or donors and the amounts contributed or donated certified by the treasurer

    • Make sure to notarize all documents before filing with the SEC.

With registration to SEC, this should also automate your TIN. Moreover, for businesses with employees, make sure to obtain the following:

  • SSS Employer’s Registration

  • Pag-IBIG Employer’s Registration

  • Department of Labor and Employment

  • Department of Environment and Natural Resources (DENR)

It may seem like a lot, just remember that these permits were created in service to you and the customers you will be serving. They act as protection for your resources as well as your employees’ and customers’ rights.

When all of that is over, congratulations! Now the real fun can get started. If any of this feels a little overwhelming, don’t hesitate to contact us.

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