Starting a business in the Philippines is an exciting venture, but it can seem daunting when you’re unfamiliar with the legal requirements. Whether you’re a seasoned entrepreneur or just getting started, understanding how to register your corporation is crucial. In this article, I’ll walk you through the entire process, including choosing between a One Person Corporation (OPC) and a Standard Corporation.
Why Register a Corporation in the Philippines?
You might be wondering, why should I register as a corporation instead of a sole proprietorship? The answer lies in limited liability. With a corporation, your personal assets are separate from your business, giving you protection against liabilities your company may face.
I once worked with a client who wanted to launch her living room furniture business. She was concerned about potential liabilities and wanted to protect her personal assets. Registering as a corporation gave her the peace of mind she needed. This is just one example of why many entrepreneurs choose the corporate route.
Now, let’s explore the two main types of corporations and the steps to get your business registered.
One Person Corporation (OPC) vs. Standard Corporation
There are two primary types of corporations you can register in the Philippines:
1. One-Person Corporation (OPC): This type of corporation allows a single person to form a business without the need for other shareholders. It’s ideal for solo entrepreneurs who want the benefits of a corporation but don’t have partners or investors yet.
2. Standard Corporation: Requires at least five shareholders and is often chosen by businesses looking to grow with investors or partners.
Step-by-Step Guide to Registering a Corporation
Here’s a detailed breakdown of the steps required to register your corporation in the Philippines:
Step 1: Name Registration
Start by reserving your business name with the Securities and Exchange Commission (SEC). Visit their website at [sec.gov.ph](https://sec.gov.ph) and navigate to the “Name Reservation and Registration” section. Enter your preferred business name, and the system will check its availability. Be sure to have a few backup names in case your first choice is already taken.
Step 2: Prepare Articles of Incorporation and By-laws
Next, you’ll need to prepare two crucial documents:
– Articles of Incorporation: This outlines key information such as your corporation’s name, purpose, and shareholders’ details.
– By-laws: These dictate how your corporation will operate, including rules for meetings and decision-making.
These documents form the foundation of your corporation and are required for registration.
Step 3: Understand Capital Structure
When filling out the SEC registration form, you’ll encounter three terms related to your corporation’s capital:
– Authorized Capital: The maximum amount your corporation can raise through shareholders.
– Subscribed Capital: The portion of the authorized capital shareholders have committed to buying.
– Paid-up Capital: The amount shareholders have already paid in.
The minimum paid-up capital in the Philippines is ₱5,000, but depending on your business, you may want to invest more to strengthen your financial standing.
Step 4: Board of Directors
For a Standard Corporation, you’ll need at least two and no more than 15 directors to oversee the business. You’ll also need to appoint key officers like the Corporate Secretary, Treasurer, and President.
If you’re forming an OPC, you can serve in all of these roles yourself. However, for a Standard Corporation, these positions need to be filled by different individuals.
Step 5: Filing with SEC
Once you have your documents ready, submit them via the SEC’s online e-filing system, eSPARC. After submission, you’ll need to pay a registration fee. In a few days or weeks, you’ll receive your Certificate of Incorporation.
Registering with Other Government Agencies
After registering with the SEC, there are a few more steps to ensure your business is fully compliant.
Step 6: Open a Corporate Bank Account
With your Certificate of Incorporation in hand, head to your bank of choice to open a corporate account. Don’t forget to bring the necessary documents such as your Articles of Incorporation and By-laws. Each bank has different requirements, so check beforehand.
Step 7: Obtain Barangay, BIR, and Mayor’s Permits
You’ll also need the following permits to operate legally:
– Barangay Clearance: Confirms your business operates within the local barangay.
– BIR Certificate of Registration: Allows your business to issue official receipts and pay taxes. Visit [bir.gov.ph](https://bir.gov.ph) for details.
– Mayor’s Permit: Obtain this from your local city or municipal hall. Some industries may require additional permits, so ensure you check for any industry-specific requirements.
Step 8: Government-Mandated Contributions
Finally, you need to register your employees for SSS, PhilHealth, and Pag-IBIG. Even if you’re a one-person corporation now, these registrations are mandatory if you hire employees in the future.
Conclusion
That’s it! By following these steps, you’ll be well on your way to registering your corporation in the Philippines. While it may seem like a lot, breaking the process down into manageable steps makes it easier to navigate.
Have questions about registering your corporation? Get professional help and ensure your business is set up for success. Visit dennismhilario.com and book a free call for expert guidance.