How to Register a Sole Proprietor Business in the Philippines?

You may have a great business idea that you want to implement as soon as possible yet you don’t have any idea how to start and register a business. This article aims to give you some pointers on how to register and start a Sole Proprietor business.

What is a Sole Proprietor?

Sole Proprietor is a type of business that is owned and managed by a single individual or person.
It also includes self-employed or freelancers and practicing professionals with PRC license such as doctors, lawyers, engineers, lawyers, architects, real estate brokers, accountants, etc.

Benefits of a Sole Proprietor Business

• ️√ Easier to set up and register
• ️√ Requires minimal amount of capital
• ️√ Lower cost in registering for government permits and licenses
• ️√ Minimal regulations and monitoring requirements
• ️√ You can register and run your business on your own
• ️√ You can enjoy the profits on your own

Disadvantages of a Sole Proprietor Business

• ️√ Risk and liability is shouldered by the owner (you) alone
• ️√ The loss is solely suffered by the owner (you)
• ️√ You manage and operate the business on your own which sometimes leads to exhaustion
• ️√ Shareholders, such as creditors or government agencies, can run after your own personal assets since the business is you.

Where to Register a Sole Proprietor Business?

Here are the government agencies where you may be required to register your Sole Proprietor business depending on what type of business:

• ️1. Department of Trade and Industry
• ️2. Bureau of Internal Revenue
• ️3.Local Government Units where your business is located
  ⦿ Barangay
  ⦿ Mayor's Office
• ️4. If you have employees, you need to register to the following:
  ⦿ Social Security System
  ⦿ Philippine Health Insurance Corporation
  ⦿ Home Development Mutual Fund

Basic Requirements and Procedure in Registering a Sole Proprietor Business

In this part of the article, we will guide you on how to register your business in many different government agencies.

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

As a business, we use a “Trade Name” as our brand that is easily remembered by our target customers. If you will use a “Trade Name” for your business, you may register it in the Department of Trade and Industry (DTI).
If you’re a self-employed, freelancer or professional who do not intend to use a “Trade Name”, you may skip this part.

To register in Department of Trade and Industry (DTI), follow these steps:

• ️• Visit DTI’s Business Name Registration System here:https://bnrs.dti.gov.ph/registration
• ️• Read the Terms and Conditions and click Accept
• ️• Fill-in your personal information
• ️• Choose the nature or industry of your business such as: Restaurant
• ️• Come-up with a business name such as: Shodo Japanese Restaurant
• ️• Search if business name is available or has passed the criteria
• ️• Once proposed name is passed, fill-in other required information
• ️• Pay registration fee
• ️• Print DTI Certificate of Registration (COR)

After acquiring a DTI Certificate of Registration (COR), you may now proceed and register with Bureau of Internal Revenue (BIR)

2. Register your business with the Bureau of Internal Revenue (BIR)

All sole proprietor are required to register with the Bureau of Internal Revenue (BIR). And last June 2020, the BIR has released Revenue Memorandum Circular (RMC) No 57-2020 to simplify the process of business registration by removing Local Government Unit (LGU) permits and license in their list of requirements.

However, just a quick note for those who have existing Tax Identification Number (TIN), before proceeding with the steps mentioned below, you must first submit update and/or transfer of records to your current BIR Regional District Office (RDO) prior to submission of new business application.

For first time applicants, meaning without existing TIN, you may proceed with the steps in registering a business in BIR as follows:

• ️• Fill-up the BIR Form 1901 – Application for Registration (for Sole Proprietor)
• ️• Prepare the list of requirements as follows:
  ⦿ Valid Government ID with Name/Address/Birthdate or PRC ID (if professional)
  ⦿ Filled-up and paid BIR Form 0605 – Annual Registration Fee of P500.00
  ⦿ Prepare the sample format of the receipts and/or invoices you will use for sales
  ⦿ Prepare the books of accounts, such as journals and ledgers, you will use for record-keeping
  ⦿ DTI Certificate of Registration, if you will use a “Trade Name”
• ️• Once you have completed all the requirement, submit to the Regional District Office (RDO) where your business is located
• ️• Register your book of accounts and receipts/invoices
• ️• Claim your BIR Form 2303 – Certificate of Registration (COR)

3. Registration with Barangay

Before you can legally operate your business, you must secure business clearance/permit from the Local Government Unit (LGU) starting with the Barangay. While processing your registration in BIR, you may also start processing in the Barangay.
However, if you are a freelancer, self-employed or practicing professional, you may skip this part.

Here are the steps in registering with Barangay:

• ️1. Go to the barangay where your business is located to secure and fill-up application form
• ️2. Submit your completed application form together with the following:
  √ Certificate of Business Registration from DTI
  √ Two (2) valid government IDs
  √ Proof of Address such as Contract of Lease (if rented) or Certificate of Land Title (if owned)
• ️3. Pay the Barangay Clearance Fee
• ️4. Claim your Barangay Certificate of Business Registration

4. Register your business in the Mayor’s Office

After claiming the barangay clearance/permit, the next step is to secure business clearance/permit from the Mayor or Municipal Office.
If you are a freelancer, self-employed or practicing professional, you may skip below steps. Instead, secure and pay either Occupational Tax Receipt (OTR), if non PRC licensed self-employed/freelancer, or Professional Tax Receipt (PTR), if PRC licensed self-employed/freelancer.

Here are the steps in registering with the Mayor’s or Municipal’s Office :

• ️1. Go to the municipal office where your business is located to secure and fill-up application form
• ️2. Submit your completed application form together with the following:
  √ Certificate of Business Registration from DTI
  √ Barangay Clearance Certificate
  √ Two (2) valid IDs
  √ Proof of Address such as Contract of Lease (if rented) or Certificate of Land Title (if owned)
• ️3. Pay the Mayor’s Permit Fee
• ️4. Claim you Mayor’s Business Permit and Licenses
• ️5. Process other permits, if needed, such as: Fire Permit, Sanitary Permit, Locational Clearance, etc.

After completing all the steps above, you can now focus in operating and growing your business.

Good luck