7 Steps on How to Start a Business in the Philippines

Really? Not working for a preview? Starting a business may it be big or small, is a huge commitment of time, effort and resources to nurture and grow a business. Every day business owners face a list of struggles and decisions in running their business. There is no secret formula or trick overnight to make a successful business.  

However, here are 7 steps on how to start a business in the Philippines and you will be on your way to a successful business: 

Step 1: Choose a Business Idea 

Start by thinking about which business you want to start. Concentrate on your current skills, experience, and follow your passion to choose the right business idea for you. The business idea must also fit your lifestyle. 

Step 2: Conduct market research 

Knowledge is power. Knowing what is in the current market and the competition of the kind of business you want to tackle on. Understanding your potential customers’ needs and habits furthermore you as a business can provide it to them. Make notes on the questions that you will ask must be beneficial information for your business. How to obtain the best answers through online research, groups/communities, and surveys.  

Step 3: Create your business plan and goals 

Starting your business plan early on because it will be your strong foundation for your new business. You will need it if you are intending on partner up with investors. In your business plan, you will write the details of your goals and how you plan to achieve them.

Step 4: Prepare your finances 

When starting a business here in the Philippines you need to have a capital. To finance your start-up costs to purchase pieces of equipment, supplies, tools, as well as to cover monthly ongoing costs for six to 12 months before you make a profit.

Step 5: Choose your business structure 

Determining your business structure is important since it will define the costing, tax, ownership, and jurisdiction requirements of your business. We would recommend seeking professional advice from an accountant or financial adviser.

• Sole proprietorship
  The sole proprietorship is the simplest type of business structure. It simply refers to a person who owns the business and is personally responsible for its debts. In other words, the owner and the business are the same entity.
  
  
• Partnership
  A partnership involves two or more people going into business together with a view to making a profit. There are two kinds of partnership: general and limited. In a general partnership, business partners share unlimited liability for the debts and obligations of the company. On the contrary, limited partnerships are called as such since some partners will have unlimited liability, while others will have liability equal only to the amount of their capital contribution.
  
  
• Corporation
  Corporations are owned by a minimum of five (5) and a maximum of 15 shareholders. Each of the incorporators must hold at least one share in the corporation, and their liability is limited only to the amount of their capital share.
  
  A corporation can either be stock or non-stock company regardless of nationality. Such a company, if 60% Filipino – 40% foreign-owned is considered a Filipino corporation; if more than 40% foreign-owned, it is considered a domestic foreign-owned corporation.
  
  Stock Corporation is a corporation with capital stock divided into shares and authorized to distribute to the holders of such shares dividends or allotments of the surplus profits based on the shares held.
  
  Non-Stock Corporation is a corporation organized principally for public purposes such as charitable, educational, cultural, or similar purposes and does not issue shares of stock to its members. 
  
  
  
  
  
  
  

Step 6: Apply for licenses and permits 

Being a business owner, you should recognize and be familiar with legal compliances because it is an integral part of any business. 

Here’s the list of government agencies that you need to register your business:

Sole Proprietor Business
a. Department of Trade and Industry (DTI)
b. Local Government Units – Barangay and Mayor’s Office
c. Bureau of Internal Revenue (BIR)
d. Social Security System (SSS)
e. Department of Labor and Employment (DOLE)
f. Home Development Mutual Fund (HDMF)
g. Philippine Health Insurance Corp. (PhilHealth)

Partnership and Corporation
a. Securities and Exchange Commission (SEC)
b. Local Government Units – Barangay and Mayor’s Office
c. Bureau of Internal Revenue (BIR)
d. Social Security System (SSS)
e. Department of Labor and Employment (DOLE)
f. Home Development Mutual Fund (HDMF)
g. Philippine Health Insurance Corp. (PhilHealth)

In addition, certain businesses are required to secure a special clearance, permit or license from selected government agencies. 

Registering your business legally in the Philippines may be complicated at first but there is always a help desk available.

Step 7: Build your team 

Hiring the right people for your startup business is crucial. You need to have a skillful, hardworking and trustworthy team to drive your business to success. Remember, employees, are the most valuable asset for your business. 

If hiring too many in-house employees is expensive for your startup business, you might want to consider outsourcing such as your accountant, bookkeeper or even your IT team.