Streamlining Business Permit Registration and Renewal for 2024
In the dynamic business environment of the Philippines, the complexities of registering and renewing a business permit is not to be taken lightly as this is fundamental for entrepreneurs and established businesses. This guide offers insights and steps that will help you have smoother operations in the growing land of the Philippine market.
Whether you are an emerging enterprise striving to establish your commercial presence through business permit registering, or a seasoned company seeking to renew your permits, it is important to be equipped with knowledge needed in navigating the Philippine business sector. The goal this 2024 is to explore the latest updates and revisions in regulations that can simplify the process of permit acquisition and renewal through understanding its requirements, processes, and benefits.
WHAT IS A BUSINESS PERMIT?
Business Permit, also known as the ‘Mayor’s Permit’, is an official document issued by government authorities that allows either an individual or an entity to conduct business operations within a specified jurisdiction. It is considered as a legal requirement to operate business activities while ensuring adherence to the safety standards, local legal requirements, and ordinances.
It is an individual or a company’s license to legally operate in the business market without the risk of paying for penalty fines or worse, business closure orders. Upon securing a business permit, one must be prepared to submit an application with the necessary documents and payment or fee requirements which depend on the business’ scale and nature.
WHY IS OBTAINING A BUSINESS PERMIT NECESSARY?
Getting a business permit is vital for several purposes:
- Compliance with the law – operating any type of business without a permit is considered to be illegal. This can result in (1) fines that depend on the location of your business operations. A fine of P2,000 will be collected if your business is located in a third-class municipality, P5,000 if your business is situated in a second-class municipality, P10,000 if your business is positioned in a first-class municipality, and P20,000 if your business is located within the city. Aside from fines, business with no permit can also result in various penalties such as (2) closure orders and (3) imprisonment.
- Revenue Generation – permitted businesses typically require payment of fees and taxes. Permits are also used to ensure that businesses settle their tax obligations on time. These taxes and funds are utilized in supporting local services that will benefit a community and other local budgetary demands.
- Consumer Protection – permits are important in ensuring the safety of the consumers especially in food businesses. It is considered as proof that the business complied with the regulations relating to the product/service’s quality, safety, and ethical standards. In addition, permits serve as a foundation for legal action for consumers in the event of complaints.
- Public Safety – obtaining a permit is a verification that a business operates because they complied with the required safety standards in a way that lessens the risks of harming the customers, employees, and the community as a whole.
WHO IS OBLIGATED TO ACQUIRE A BUSINESS PERMIT?
In the Philippines, all businesses, including online ventures, regardless of size or industry, are required to secure a business permit to operate legally. This is applicable to both local and foreign-owned businesses. Whether it’s a restaurant, a sari-sari store, a service-based business, or other types of enterprises, it is mandatory to secure permits from the Local Government Unit (LGU) where your business is established and positioned. Even though requirements might depend on the nature of one’s business, the primary rule remains the same: any business in the Philippine market is mandated to acquire the appropriate business permit.
REGISTERING A BUSINESS
Before operating a business, registering it is necessary. Listed below are the requirements necessary for registering a business in the Philippines:
✅ Application form – filing an application form in registering a business serves as the primary document that carries all the essential information about the enterprise. This form will consist of the business’ name, structure, ownership information, address, and nature of operations. This form acts as the formal declaration of intent and commitment in operating a business lawfully and responsibly.
✅ Certificate of Registration – aside from the application form, a certificate of registration also stands as a proof of the establishment’s existence. This document is issued by the appropriate government agencies such as the Securities and Exchange Commission (SEC), the Department of Trade and Industry (DTI), and the Cooperative Development Authority (CDA). This form usually contains information such as the business name, date of registration, and registration number.
✅ Barangay Clearance – this is issued by the Barangay on where the business is taking over. This clearance serves as proof that the planned business acquired the approval from the barangay authorities in terms of local zoning and land use regulations. An application form is to be submitted to the barangay office along with the required documents.
✅ Community Tax Certificate – CTC or cedula is issued by the LGU to the business who have paid the community tax. This can be obtained at the Treasurer’s Office in the city. This serves as a verification of the business’ compliance with local tax obligations.
✅ Sketch of the Business Location – this is the visual representation that outlines the business’ exact location. This usually involves information such as landmarks, building number, neighboring establishments, and other necessary details. This provides the authorities the convenience of locating the business accurately.
✅ Locational Clearance – this is a document issued by the LGU that certifies that the business’ location compiles with the zoning regulations, building codes and other ordinances. This is necessary in terms of the business activity’s compatibility in the environment where it’s located.
✅ Building Permit and Electrical Inspection Certificate – the Building Permit certifies that the local authority has granted the business a permission for the business construction and renovation. As for the Electrical Inspection Certificate, this is issued by a licensed electrician after the electrical wiring and installations within the building/structure are inspected.
✅ Sanitary Permit – this certifies that the business establishment has passed the government’s sanitary and hygiene standards. This is to ensure the business location’s cleanliness and proper sanitation on a regular basis.
✅ Fire Safety Inspection Certificate – this is issued by the Bureau of Fire Protection (BFP) department. The purpose of this inspection is to make sure that the business premises have complied with fire safety standards and regulations. The inspection usually includes electrical safety inspections and fire exits inspections.
HOW TO GET A BUSINESS PERMIT?
After completing the required documents, individuals can now proceed to the Business Permit’s application process.
| ➡ Prepare the required documents
➡ Submit the application form together with the necessary documents to the Business Permit and Licensing Office of the LGU ➡ Pay the necessary fees to the cashier’s office. For your reference: it can range from P200 – P2000 depending on the scope of your business. ➡ Inspections will be conducted ➡ Release of the Business Permit |
STEPS TO REGISTER A SOLE PROPRIETORSHIP BUSINESS AFTER OBTAINING THE NECESSARY BUSINESS PERMIT:
A Sole Proprietorship is one of the simplest and common forms of business organization. In this business model, sole ownership and operation rest with a single individual, resulting in the owner bearing full responsibility for all obligations. This structure grants the owner absolute control over the business’s operations and decisions, but also entails sole liability for its commitments.
Below are the steps and requirements involved in registering a Sole Proprietorship business:
✅ Valid government-issued identification such as driver’s license, PRC license, SSS ID, or any other recognized form of identification
✅ Tax Identification Number (TIN) issued by the Bureau of Internal Revenue (BIR)
✅ Minimum capital requirement
✅ Business permit (please refer to the steps and requirements outlined above)
✅ Clearances from relevant government agencies, which may vary depending on specific circumstances
| ➡ Register the business name with the Department of Trade and Industry (DTI)
➡ Submit proof of minimum capital payment from the local bank ➡ Obtain a business permit ➡ Register the business’ Bureau of Internal Revenue (BIR) for taxation ➡ Register the business’ Social Security System (SSS) and PhilHealth for social security benefits |
STEPS FOR REGISTERING A PARTNERSHIP COMPANY BUSINESS UPON OBTAINING THE ESSENTIAL BUSINESS PERMIT:
A Partnership Company is a business structure where partners (two or more individuals) collaborate to run a business. In contrast to sole proprietorship, this model entails partners sharing both the responsibilities and liabilities of the business. Partnership companies encompass various types, including General Partnership, Limited Partnership, and Limited Liability Partnership.
Outlined below are the steps and requirements for registering a Partnership Company:
✅ Name Verification Slip from the Security and Exchange Commission’s (SEC) website to ensure that the chosen business name is available
✅ Articles of Partnership that outlines the agreement between partners about the business operation and management
✅ Joint Affidavit to affirm the authenticity of the partnership
✅ Endorsement of Clearance from relevant government agencies
✅ FIA Form 105 if the partnership includes foreign partners, as required by the Foreign Investment Act
✅ Personal Information and Tax Identification Numbers (TIN) of all partners for identification and tax purposes
✅ SEC’s Certificate of Registration to formalize the legal existence of the partnership
✅ Barangay Clearance to ensure compliance with local community regulations
✅ SSS Certificate of Registration to provide social security benefits to employees, if applicable
✅ Business Permit from the local government to operate the partnership legally within the jurisdiction
✅ BIR Certificate of Registration to fulfill tax obligations and for taxation purposes
| ➡ Gather and prepare the necessary documents as outlined above
➡ Secure a certificate of registration from the Securities and Exchange Commission (SEC) ➡ Complete and obtain a Barangay Clearance for local compliance ➡ Register the business with the Social Security System (SSS) for employee benefits ➡ Obtain a business permit from the local government authority ➡ Register with the Bureau of Internal Revenue (BIR) for taxation purposes |
STEPS FOR REGISTERING A CORPORATION FOLLOWING THE ACQUISITION OF THE REQUIRED BUSINESS PERMIT
A Corporation is a distinct legal entity established under state or national laws. Ownership in this business structure is represented by shares of stock, and it is overseen by a board of directors. Unlike sole proprietorships and partnerships, a corporation has perpetual existence, meaning it can continue its operations regardless of changes in ownership, such as death or withdrawal of shareholders.
Below, you’ll find the steps and prerequisites for registering a corporation:
✅ BIR registration certificate to fulfill tax obligations
✅ Barangay Clearance to comply with the local community regulations
✅ Business permit from the local government authority
✅ Business name registration certificate from the Securities and Exchange Commission (SEC)
| ➡ Register the corporation’s name with the Securities and Exchange Commission (SEC), which typically involves submitting essential documents such as articles of incorporation, by-laws, treasurer’s affidavit, and joint affidavit.
➡ Obtain a barangay clearance from the locality where the business will operate. ➡ Secure a business permit from the municipality where the corporation is situated. ➡ Register with the Bureau of Internal Revenue (BIR) to fulfill tax obligations |
WHAT ARE THE REQUIREMENTS FOR BUSINESS PERMIT RENEWAL?
To avoid various penalties, renewing one’s business permit before the due date is required. Renewing a business permit is done annually from January 01-20, depending on the business owner’s surname. This renewal schedule applies to all, regardless of when the issuance of one’s business permit is. The following documents are the usual requirements when renewing a business permit:
✅ Updated Barangay Clearance
✅ Updated Community Tax Certificate/Cedula
✅ Updated Sanitary Permit (if applicable)
✅ Previous Business Permit
✅ Other documents required by the LGU
✅ Payment of the annual registration fee
The process of registering and renewing a business permit in the Philippines this 2024 may seem overwhelming, but with the provided guidance and enough preparation, it becomes manageable. Staying informed about the recent updates and changes in regulations is important and following the guidelines and preparing the right documents will result in smoother transactions.
References:
https://cloudcfo.ph/blog/corporate/business-permits-in-the-philippines-what-you-need-to-know
https://www.tripleiconsulting.com/business-permit-renewal-2024-philippines/
https://sprout.ph/blog/streamlining-2024-business-permit-renewal-an-in-depth-guide/
https://www.firstcircle.ph/blog/business-permit-renewal-guide
https://philippinesbusinessregistration.com/company-registration/requirements/mayors-permit-registration/
https://www.tripleiconsulting.com/sole-proprietorship/
https://thecompany.ph/sole-proprietorship-in-the-philippines/
https://loft.ph/register-partnership-company/
https://www.ykclaw.ph/how-to-register-a-partnership-business-in-the-philippines/
https://mpm.ph/how-to-register-a-corporation/#:~:text=Here%20are%20the%20basic%20steps%20and%20requirements%3A,-Go%20to%20the&text=Certificate%20of%20Registration%20form%20SEC,of%20Land%20Title%20(if%20owned)