(02) 8477 5798 / 0948-961-2397

How to Start a Sole Proprietorship in the Philippines

Are you thinking of starting a business? There are many important decisions that you must make when conceptualizing your own business. A critical one you’ll have to make is which type of business entity it will be. Would you rather have full authority,  split the responsibilities between yourself and a few business partners, or have a board of directors by your side? If you choose to pursue this goal alone, you must be ready for the workload ahead of you. In this article, we’ll be discussing sole proprietorship.

What is a sole proprietorship?

A sole proprietorship is a business structure in which you, as the founder, have full control and authority over the business. You also own all of the assets of the business and get to enjoy the profit without having to split it with a partner or co-founder. However, the downside is that you alone will be liable for any debts or losses of the business.

Sole proprietorships are great for small-scale businesses since they’re the easiest to manage. For example, a small online bakeshop can be a sole proprietorship. 

How do you register a sole proprietorship?

Another advantage of starting a sole proprietorship is that it has the easiest and least complicated registration process. Here is a quick overview on how to register a sole proprietorship so you know what to expect. 

  1. Register your business name at the Department of Trade & Industry.

First, you’ll have to register your business name so that no one else will get to use it. The DTI eBNRS online portal provides you with the option to register your business name online. 

When registering at the DTI, it’s critical to ensure that your brand name is unique. You can use DTI’s Business Name Search to double-check if your brand name idea is already taken by an existing business. Once you have a unique business name, fill out the application form and pay the fee. You should receive your Certificate of Registration shortly afterwards.

  1. Register with the barangay.

To proceed with your business, you’ll need to register it with the Local Government Units. First, you’ll have to register with the barangay. To do so, you’ll need to prepare two (2) valid IDs, your Proof of Residency, and your DTI Certificate of Registration. Once you’ve paid the fee, you will soon receive your Barangay Certificate of Business Registration.

  1. Register the business with the Mayor’s Office.

The other Local Government Unit you must register your business in is with the Mayor’s Office. You’ll need two (2) valid IDs, your Proof of Residency, your DTI Certificate of Registration, and your Barangay Certificate of Business Registration. 

While you’re here, you can also process other permits that you may need, especially if your business will have a physical store. These include the Fire Permit, Sanitary Permit, Locational Clearance, etc. However, if you’re a freelancer or you’re running an online business, you can skip this step.

  1. Register with the Bureau of Internal Revenue.

Finally, it’s time to register your business with the BIR. Firstly, you’ll need to fill out the BIR Form 1901, which is the application to register a business for Sole Proprietors. You’ll also need to fill up and pay for the BIR Form 0605, as this form is how taxpayers pay any taxes and fees that do not require the use of a tax return. The requirements you’ll need to prepare are a valid government ID, your Proof of Residency, and your DTI Certificate of Registration. 

While you’re at it, fill out the application for registering your books of accounts and receipts/invoices. You can do so using BIR Form 1905. You’ll be all done with the registration process once you’ve claimed your Certificate of Registration and your book of accounts and invoices.
We hope that this article has helped any aspiring entrepreneurs who are aiming to create their own sole proprietorship. This ongoing series will also be discussing the other business entity types, such as partnerships and corporations. Look forward to what else Bits of Law has to offer in the future!

Leave a Comment

Your email address will not be published. Required fields are marked *