A Simple Guide To Registering A Corporation in the Philippines

Step 1: Verify the availability of the company name

Done with the Securities and Exchange Commission (SEC). Takes 1 day to complete. Once verified and
approved, you will pay P40 to have the name reserved for a month. You must then file the application for
incorporation to the SEC within one month or pay another P40 to extend the deadline for another month.

Step 2: Obtain a bank certificate of deposit for the paid-in capital

Done at the bank. Takes 1 day to complete. Fees vary from bank to bank.

Step 3: Prepare and register incorporation papers

Done with the SEC. Takes at least 3 days to complete. Fees will add up to around P3,000. You need to submit
the verification slip (from Step 1), bank certificate of deposit (from Step 2), articles of incorporation and by-
laws, treasurer’s affidavit and many other documents. Forms and check list available at the SEC.

Step 4: Obtain a company Community Tax Certificate (CTC)

Obtained at the barangay office or city hall. Takes only 1 day. Fee will be P500 minimum.

Step 5: Apply for a Barangay or District clearance

Done with the barangay office. Takes 2 days. Fees will be around P1,000.

Step 6: Obtain a mayor’s business permit

Done at the City Hall Business Licensing Office. Takes around 2 weeks to complete. Your biggest expense in
terms of fees as it will depend on your declared capital. Prepare at least P10,000. Aside from documents
obtained in the previous step, you will be required to file other forms and requirements. Ask the licensing office
for the check list.

Step 7: Register for taxes

Done at the Bureau of Internal Revenue (BIR) office. Takes around 4 days. Registration fees may add up to
around P750 plus additional fees for documentary stamp taxes which depends on your declared capital. You will
obtain your company Tax Identification Number (TIN), authority to print receipt/invoices and other documents.

Step 8: Buy accounting books

Buy from any bookstore. Takes 1 day. You’ll be spending around P500 for a cash receipts account, a
disbursements account, a ledger and the general journal. Consult your local BIR office for specific requirements
on the books.

Step 9: Print your receipts

Done with any print shop accredited by the BIR. Takes around 1 week. Fees vary but it’s usually around P5,000
for 25 booklets.

Step 10: Have your receipts and books stamped

Done at the BIR office. Takes 1 day at no cost. At this point, you can now legally operate your business.

Step 11: Register your employees

Done at various offices. Takes around 2 weeks to process everything. As required by law, you will need to enroll
your employees (which may include yourself) with the Social Security System (SSS), Department of Labor and
Employment (DOLE), Home Development Mutual Fund (HDMF) and Philippine Health Insurance Corp.
(PhilHealth).
This step-by-step guide is just a simplified summary and other steps may be required, specially for businesses
which require special permits and clearances (ie, real estate, pawnshops, schools, etc.).

Lastly, the filing duration and fees mentioned are based from personal experience. If you’ve recently registered a
corporation in the country and have a different experience than what I’ve written above, then please share it
below as a comment so I may add it here. Thank you.

What is a Corporation?
Our definition earlier states that a Corporation is, “A separate, legal entity guided by a group of officers known
as the board of directors.”
To fully grasp its meaning, we have to understand what “legal entity” means first. From the same site:
A legal entity has legal capacity to enter into agreements or contracts, assume obligations, incur and pay debts,
sue and be sued in its own right, and to be held responsible for its actions.
That last line made me chuckle. “Be held responsible for its actions”.
It almost sounds like “legal entity” is an actual person.
 But if you think about it, it actually does make sense to compare a corporation to an actual person to better
understand its meaning. Why?
Because this line of thought gives us a glimpse of why corporations are created in the first place: Limited
Liability.
Put simply, “Limited Liability” states that the owners and shareholders of the corporation are not responsible for
all its debts if the company fails. The company itself, as a legal entity, is liable for the rest.
It’s as if there’s another person who can be held liable in the event the business goes bankrupt.
It allows shareholders to protect their personal assets in the event that the business fails. Or if somebody sues the
company, all damages will be limited to the assets that are within the company. The suing party can’t go after the
shareholders’ personal assets like their cars, homes, and other belongings.
The same cannot be said for a sole-proprietorship type of business because it does not separate the business
entity from its owner. In the event the company gets sued or goes into debt, the owner is responsible for it. The
creditors or suing party can go after the owner’s personal assets.
Which is why while it’s more costly and complicated to set-up, bigger businesses choose to establish a
corporation in order to have this kind of protection. Let’s take a closer look at the Pros and Cons of running a
corporation:

Pros of a Corporation:
 Risk and liability is limited to the corporation.
 Owners are not liable themselves.
 Founders can raise capital through issuance of stocks to shareholders
 Ownership can be transferred to different owners
 Existence of a corporation has no limits
 Acting as a legal entity means it can take legal actions like person
 A board of directors handles management of the corporation

Cons of a Corporation:
 More expensive to set up versus single proprietorship
 Requires more legal paperwork to accomplish
 Operating costs are higher
 Taxes incurred are higher
 Subject to more Government requirements and laws

Steps on How to Register a Corporation

1. Reserve and register business name in SEC (Security and Exchange Commission)
 Visit SEC website or make a personal appearance at their office in Mandaluyong.
 Complete and sign all required documents: Articles of Incorporation, By-Laws, Treasurer’s Affidavit, Joint
Affidavit of Two Incorporators. All documents need to be notarized (more on this below).
2. Acquire Barangay Clearance
 Visit the Barangay where your business is located and request for clearance.
 Submit the following together with your Barangay clearance: Certificate of Business Registration from SEC,
Two (2) Valid IDs, Proof of Address (Contract of Lease or Certificate of Land Title)
3. Acquire Business Permit from Mayor’s Office
 Visit the municipal office where your business is located and request for a business permit form.
 Submit the following together with your completed Business Permit: Certificate of Business Registration from
SEC, Two (2) Valid IDs, Proof of Address (Contract of Lease or Certificate of Land Title), Barangay Clearance.
4. Register with BIR (Bureau of Internal Revenue)
 Visit the Regional District Office that covers your business location
 Request for a copy of BIR Form 1903 — Application for Registration of Partnership or Corporation
 Submit the following together with your completed Business Permit: Certificate of Business Registration from
SEC, Two (2) Valid IDs, Proof of Address (Contract of Lease or Certificate of Land Title), Barangay Clearance,
Business Permit from Mayor’s office
 Pay all applicable fees and register your book of accounts and receipts
 Claim your Certificate of Registration
Full List of Requirements & Documents needed for SEC
The incorporation process is lodged with the Securities & Exchange Commission (SEC).
The following requirements/documents must be submitted with the SEC:
1. Name Reservation/Verification Slip
2. Cover Sheet
3. Articles of Incorporation
4. Corporate By-laws
5. Registration Data Sheet
6. Registration Data Sheet (CAPITAL STOCK / INCORPORATORS /DIRECTORS / OFFICERS
INFORMATION)
7. Affidavit of Undertaking to Change Corporate Name
 8. Treasurer’s Affidavit stating the amount of the shares of stock subscribed and the amount of the subscription
price which has been paid-in to him as Treasurer-in-Trust of the proposed corporation. He should likewise
certify that at least twenty-five percent (25%) of the authorized capital stock has been subscribed, and at least
twenty-five percent (25%) of the amount subscribed has been paid-in to him for the benefit and to the credit of
the corporation.
9. Bank Certificate
Also Read: 38 Business Documents & Letters [with samples and templates]
Anent the documents, the following information must be supplied to adequately fill out the necessary documents
for submission with the SEC:
1. Corporate Name (The last part must end with Inc., Incorporated, Corporation or Corp.)
2. Purpose of the Corporation
3. Address of the Corporation
4. Telephone Number
5. Value of each share (This is usually P100.00 for 1 share)
6. Authorized capital (Total number of shares of the Corporation)
7. Subscribed capital (Number of shares to be subscribed by the incorporators. This cannot be less than 25% of
the authorized capital)
8. Paid-up capital (Number of shares paid by the incorporators. This cannot be less than 25% of the paid-up
capital)
9. Name and Branch of Bank where the paid-up capital amount will be deposited
10. Incorporators (Name, nationality, address, birthday, Tax Identification Number, Community Tax Certificate
Number or Passport Number)
11. Shares of the Incorporators (number of subscribed shares, number of shares paid and percentage of
ownership)
12. Number of Directors and their names (Must be an incorporator. Not less than 5 and not more than 15
directors)
13. Name of the Chairman of the Board
14. Name of President
15. Name of Corporate Secretary
16. Name of Treasurer
17. Term of the Corporation
18. Date of annual meeting of the corporation
19. Accounting Year (Calendar Year or Fiscal Year. Calendar Year is recommended since this is used by most
government agencies)
The government fees for the incorporation of a domestic corporation are as follows:
 Basic Filing Fee for the Articles of Incorporation – 1/5 of 1% of the authorized capital stock or the subscription
price of the subscribed capital stock
 Legal Research– 1% of the filing fee
 Examining and Filing Fee for the By-Laws
The first step would be to reserve your corporate name either online or personally with the SEC. Once the name
is reserved, you may proceed to SEC to submit the documents listed above.
A faster way to procure the listed documents is to buy the “Green Lane Forms” from the SEC. Said forms cost
Five Hundred Pesos (P500.00) and takes one to two days to process.
Other Legal Documents to consider when establishing your business:
Data Privacy – your customers are providing you with their data and using your service.
 Are you up to date in terms of implications of the recent amendment to the Privacy Act?
 Is your company compliant and operating within Philippine Law?
 And what about your Terms and Conditions of Use, does it indemnify you against misuse of your services?
 Could your company be doing more to better protect its intellectual property?
 Or could you be extracting more value from your IP?
Employment Agreement – you’ll be looking to bring on staff in the short to medium term and you’ll need an
employment agreement that best protects your business.
Shareholders agreement – You need this agreement to protect your shares which are just entrusted to other
shareholders.
Related: How to Start a Business in the Philipines
Why is it important to have a Business License?
Legal Protection.
To receive a business license, a business must comply with all requirements of the city granting the license.
Applying for a business license ensures that the new business owner’s infrastructure, plans and policies are in
line with city regulations.
In addition, most cities legally require businesses to be licensed, so possessing a business license protects the
owner from being shut down for having an illegal business.
Credibility.
Customers are often wary of new businesses. Prior to purchasing goods or services, particularly over the
Internet, customers want to ensure that the business is legitimate.
 If the entrepreneur displays her business license in her store or on her company website, it helps reassure
customers that they are dealing with a business and not a scam artist. Other businesses the entrepreneur deals
with also may need to see the business license prior to doing business.
Receiving Funds.
Many cities offer to fund to new businesses, particularly start-up businesses. To qualify for funds, a business
must possess a business license demonstrating that the city approves of the business venture.
Tax Compliance.
From the point of view of the city issuing a license, business licenses are important because they provide a
record of all businesses who may owe tax to the city.
Many cities require license holders to pay quarterly taxes on merchandise sold in order to keep the license
current. From entrepreneurs’ point of view, business licenses are equally important because they allow them to
easily keep up with taxes owed to the city, keeping them out of legal and financial trouble.
In addition, many businesses must pay federal and state taxes on a quarterly basis; paying city taxes to keep the
license current can help remind business owners to pay other taxes due.
Wholesale Benefits.
If an entrepreneur resells merchandise purchased elsewhere, he can get the merchandise at lower cost if he has a
license. Licenses allow entrepreneurs to purchase items at the wholesale cost–the cost of producing the item–
rather than at the price it sells for in stores. Entrepreneurs do not pay tax on items bought for resale; the customer
pays tax when the item is resold.
Many manufacturers require entrepreneurs to show them a license prior to selling items at discounted prices.
This ensures that the entrepreneur is legitimate rather than someone trying to buy items for personal use at lower
prices.
What are the legal matters a Corporation must take into consideration?
The main advantage of incorporating is the protection from personal liability, but these should not be taken for
granted.
Once a business is incorporated, the directors must ensure that it retains its legal status. You must keep detailed
financial records and ensure that tax returns are filed fully and on time, for starters.
A business that fails to perform these legal duties risks losing its corporate status (and the protections of
incorporation). A corporation that is delinquent on its taxes or otherwise out of compliance, for instance, may not
be able to file a civil lawsuit or secure capital until it resolves these issues.
Depending on the business form, the certain legal formalities must be followed in order to maintain the legal
status of a corporation. Once incorporated, a business’s ongoing obligations include the following:
1. First Board Meeting
You will need to call and conduct an initial meeting of the board of directors or shareholders as required in the
articles of incorporation. This will help set the tone and establish the direction of the new corporation.
2. Successive Board Meetings
Hold future meetings at least as often as required by applicable business laws.
3. Following the Articles of Incorporation
Conform all decisions and internal procedures to the outline set forth by the articles of incorporation.
4. Meeting Minutes
Record all the actions and decisions of the board of directors in the corporate minute book. Minutes typically
include the names of the board members and anyone else present at the meeting, with a record of reports by the
officers, actions taken, etc.
5. General Information Sheet
Maintain your GIS with the SEC, as required by law.
6. Renewal of Business Permit
Maintain your permit by renewing quarterly (for new business) and annually on the succeeding years provided
you have shifted the payment from quarter to annual.
7. Licensing and Professional Standards
Some businesses must comply with licensing requirements or professional standards to preserve their status.
These businesses may need to maintain further records or use special procedures or equipment based on rules for
their specific industries.
8. Taxes
Obtain tax identification numbers for the business, and file necessary tax returns annually.
9. Securities
Issue shares of stock as mandated by the articles of incorporation and securities laws.
10. Bookkeeping
Establish and maintain corporate books and records, including accounting ledgers, shareholder records, and
corporate minute books.
Failure to Follow Legal Procedures of a Corporation
A failure to honor these and other corporate obligations can result in personal liability for directors, officers, or
shareholders for business obligations and debts. Because of these harsh consequences and because the specific
legal requirements vary depending on the business’s location and form, businesses should seek professional legal
assistance.
In many states, this suspension or revocation of corporate status is referred to as a “loss of good standing.”
 Generally speaking, a company that fails to follow the legal corporate procedures may face the following
consequences:
 Personal liability for the acts of the company
 Inability to file a civil lawsuit
 Tax liens (nonpayment of tax obligations)
 Difficulty securing capital investments or loans (see: where to get loans)
 Fines and other penalties
Get Help Complying with Your Corporation’s Legal Requirements
Organizing your business as a corporation provides many advantages over other legal structures, mainly having
to do with taxes and protection from personal liability. But once you incorporate, it’s important that you follow
certain procedures in order to maintain these protections. Corporate officers are busy running their business.

Tips on Running Your Corporation

Here’s a rundown of who plays what roles in a corporation:
Board of directors:
The original directors are designated in the Articles of Incorporation, which is the document filed with the state
to legally form the entity.
Directors oversee the officers of the company and assure that it operates according to law and corporate
procedures. Directors have a fiduciary duty to the corporation to act in the corporation’s best interest, not to their
own best interest, among other legal duties.
These duties are to protect the shareholders’ investments in the corporation. Investors often want at least one
representative on the board of directors, since the board formally controls the decisions of the company.
However, sometimes investors avoid having any directors and arrange other contractual alternatives in order to
avoid the fiduciary duty requirements to act for the benefit of the corporation rather than themselves.
The board of directors appoints and may fire the corporation’s officers, who are responsible for the day-to-day
operations of the company.
Shareholders:
Shareholders are people who’ve been granted stock by the corporation in exchange for money paid or services
performed for the corporation.
The shareholders meet annually, at the corporation’s annual meeting, to elect the board of directors.
Shareholders are not financially liable for the debts of the corporation and are not legally liable for any
wrongdoing of the corporation.
Investors will be granted shares in exchange for their investment. Typically, they will want “preferred shares,
which means that if there are minimal dividends or other negative financial events, they will have priority in
getting their money over the “common stock” shareholders.
Officers:
Officers typically include at least a CEO and/or president, secretary and treasurer/CFO. Officers do not have the
same heightened level of fiduciary duties to the corporation that the board of directors has.
After You’ve Incorporated
Once you’re incorporated, be sure to follow the rules of incorporation. If you don’t, a court can pierce the
corporate veil and hold you and the other owners personally liable for the business’s debts.
It is important to follow all the rules required by state law. You should keep accurate financial records for the
corporation, showing a separation between the corporation’s income and expenses and that of the owners’.
The corporation should also issue stock, file annual reports and hold yearly meetings to elect officers and
directors, even if they’re the same people as the shareholders. Be sure to keep minutes of these meetings.
On all references to your business, make certain to identify it as a corporation, using Inc. or Corp., whichever
your state requires. You also want to make sure that whomever you deal with, such as your banker or clients,
knows that you are an officer of a corporation.
To make sure your corporation stays on the right side of the law, heed the following guidelines:
 Call the secretary of state each year to check your corporate status.
 Put the annual meetings (shareholders’ and directors’) on tickler cards.
 Check all contracts to ensure the proper name is used in each. The signature line should read “Juan de la Cruz,
President, XYZ Corp.,” never just “Juan de la Cruz.”
 Never use your name followed by “dba” (doing business as) on a contract. Renegotiate any old ones that do.
 Before undertaking any activity out of the normal course of business–like purchasing major assets–write a
corporate resolution permitting it. Keep all completed forms in the corporate book.
 Never use corporate checks for personal debts and vice versa.
 Get professional advice about continued retained earnings not needed for immediate operating expenses.
If you need help in starting a company, incorporating a corporation, and identifying and complying with the
legal procedures of a corporation in the Philippines, you may e-mail us at nvmaconsulting@gmail.com or
contact us at +639168556614.