Business registration of a Sole proprietorship/ Professionals

By Milky P. Sanchez, CPA

What is a Sole Proprietorship?

Sole proprietorship is a form of business in which the ownership belongs to an individual. It has the simplest requirements as to registration and compliance compared to partnership and corporation.

Why the need to register?

A sole proprietorship business to be started in the Philippines is required to secure necessary permits and licenses from the government in order to operate legally. By being registered, it will have the trust and confidence from other businesses it deal with and it can avoid sanctions resulting from non-registration such as monetary penalties and forced closure.

In your initial registration, it is definitely time and money saving if you have your documents ready before transacting to government offices.

A step by step procedure below will help you in your registration. This should be followed one after another because a certificate or clearance will be asked from the next agency you go.

1. Register your business name at the Department of Trade and Industry (DTI)

DTI is the government agency to register business names. By registering your business name with DTI, you secure your trade name and no other business can use it in the Philippines. You may get your certificate within the day and this will cost you P200-2,000 depending on the scope of your business name. If you are a professional who have PRC license or registration, you can skip this step unless you want to use a different name other than your name.

• Prepare at least 3 trade names for your business.
• You may do a business name search in the DTI to ensure you have no similar trade name
• Fill up BN Application Form
• Submit your application form to DTI office near you
• Get your certificate of registration

Once you get your certificate, you may now proceed to barangay hall where your business is located.

2. Get barangay clearance in the Barangay hall.

You may get it within the day and will cost you a hundred or more depending on your business type.

• Fill up application form
• Present DTI certificate copy and bring the original
• Present 2 valid IDs
• Prepare copy of contract of lease if rented or certificate of land title if owned
• Get your barangay clearance

Once you get your barangay clearance, you may now proceed to the municipal hall.

3. Get Mayor’s Permit in the Municipal Hall

Different municipalities have different registration procedures. Listed below are the general procedures and requirements in getting a mayor’s permit.

• Fill up application form
• Present the following requirements together with the original:
Copy of Barangay clearance
Copy of DTI Certificate of Registration
2 valid IDs
Copy of contract of lease if rented or certificate of land title if owned
• Pay permit fees at the cashier. This will cost you around P3,300 in total depending on your capital and includes the sanitary, garbage, business plate, cnc/ecc/pga, and fire and safety inspection fee.
• Claim your business permit. Depending on the municipality, the usual turn-around time is at least 3 days to get your business permit.

Once you have your business permit, you may now proceed to the Revenue District Office (RDO) of the BIR which covers your business location. If you are a professional and do not use a different name other than your name, you may just get a professional tax receipt in the municipal hall instead of mayor’s permit.

4. Register at the RDO of the BIR covering your business location.

Before going to the RDO, you can download the forms in the website and print it to fill out.

• Fill up BIR Form 1901 – Application for Registration.
• Fill up form 0605 for registration fee. Pay in the authorized agent bank of your RDO and get your copy of the form. Registration fee cost is P500.
• Fill up form 1906 – Authority to Print Receipts and Invoices. In your initial registration, the BIR may assign you an accredited printer to print your receipts.
• Pay documentary stamps for the certificate of registration. This is available in the BIR. This will cost P30.
• Submit the forms together with the following:
DTI Certificate
Barangay clearance
Mayor’s Permit / Professional Tax Receipt
Copy of contract of lease if rented or certificate of land title if owned
Copy of Valid ID
Books of accounts – there are manual journals available in the BIR but you can also bring your own.

• Claim your Certificate of Registration at the schedule given by the RDO.

If you have employees you should also register at the SSS, Philhealth, and Pag-ibig.

Now that you have registered, you can start operating. However, you also need to comply with monthly tax requirements and bookkeeping. You may outsource our bookkeeping and tax filing services to help you as you start up your business.