Legal Aspects of

Doing Business in the Philippines

Start Your Business Right By Procuring All Legal

Requirements Needed!
What are the legal requirements?

A. Register the Business Organization

• Sole proprietorship—register with the Department of Trade (DTI). A sole proprietorship is the simplest type of business
organization that may be established by a person, called the sole proprietor. Unlike a partnership or corporation, which is a business
organization that has a separate existence from the partners in a partnership or stockholders in a corporation, the sole proprietorship
does not have a separate existence from the business owner.
• Partnership—register with the Securities and Exchange Commission (SEC). A partnership is a business organization whereby two or
more persons agree to contribute money, property, or industry to a common fund, with the intention of dividing the profits among
themselves. Two or more persons may also form a partnership for the exercise of a profession.
• Corporation—register with the SEC. A corporation is “an artificial being created by operation of law, having the right of succession
and the powers, attributes and properties expressly authorized by law or incident to its existence.”
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What are the legal requirements?

B. Obtain a Mayor’s or Business Permit

1. Lease contract or title covering the property where the business is located, whichever is applicable
2. Locational or zoning clearance
3. Building permit and occupancy permit
4. Public liability insurance
5. Barangay clearance
6. Fire safety certificate
• Other requirements specific to the type of business to be carried out
• For the specific requirements, one needs to visit the city or municipal hall of the city or municipality where the business will be established.

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What are the legal requirements?

C. Register with the Bureau of Internal Revenue (BIR)

All businesses have to register with the BIR before the commencement of operation for taxation purposes.
The registration process involves obtaining and registering a tax identification number (TIN), obtaining BIR-registered official
receipts and invoices, registering the business’s books of accounts, and paying the applicable fees.
The registration must be done at the Revenue District Office (RDO) of the BIR, which covers the registered address of the
business.
For the specific requirements for BIR registration, one needs to visit the RDO that covers the registered address of the business.

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What are the legal requirements?

D. Register with the Social Security System (SSS)

• All businesses that have employees must be registered with the SSS. The registered employer will be assigned an employer number, which
will be used as reference for the remittance of monthly contributions, composed of the employee’s contribution and the employer’s share.
• SSS coverage is compulsory for all employees not over sixty years of age and their employers. 7
• An employer is any person who carries on in the Philippines any trade, business, industry, undertaking, or activity of any kind and uses the
services of another person who is under his or its orders as regards the employment. Meanwhile, an employee is any person who performs
services for an employer in which either mental or physical efforts or both are used and who receives compensation for such services,
where there is an employer‐employee relationship.8
• The SSS provides replacement income for employees in times of disability, sickness, maternity, and old age. It also provides assistance
during death and for funeral expenses.

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What are the legal requirements?

E. Register with the Philippine Health Insurance Corporation (PhilHealth)

• All employers are required to register themselves and their employees with PhilHealth, the
government health-care system. Upon registration, an employer shall be issued an employer
number.
• Under the PhilHealth system, the monthly contribution is divided equally between the
employer and the employee. It is deducted and withheld automatically by the employer from
the employee’s salary then remitted to PhilHealth.

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What are the legal requirements?

F. Register with the Home Development Mutual Fund (Pag-IBIG Fund)

• All employees who are or ought to be covered by the SSS are also covered by mandatory
membership in the Pag-IBIG Fund.10 The Pag-IBIG Fund provides various types of housing loans
to employees.
• Members make their contributions to the Pag-IBIG Fund through salary deduction. The
employer has the responsibility to deduct the contribution from the employee’s salary.
Together with the employer’s share of the contribution, the employee contribution is remitted
to the Pag-IBIG Fund on a monthly basis.

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Importance of Securing the Legal Requirements

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References It is very important to secure these essential legal requirements. The
consequences of operating a business without the said legal requirements range from
the closure of business, to the imposition of monetary fines, and finally, to
imprisonment.
Local government units in different cities and municipalities have different
penalties for businesses operating without the required mayor’s or business permit,
such as surcharge and interest on the amount of fees due. However, one common
penalty that may be imposed is the closure of the business. Confiscation of the
business property and assets may also be done.
As for failing to register a business with the BIR, the said violation is penalized
by a fine ranging from P5,000 to P20,000, imprisonment of six months to two years.
There is also a compromise penalty of P2,000 to P20,000, depending on whether the
business is located in a city or in a municipality.
For failing or refusing to register the employees or to deduct contributions from
the employees’ compensation and remit the same to the SSS, the penalty is either a
fine (ranging from P5,000 to P20,000) or imprisonment for six years to twelve years.
Any employer who fails or refuses to register employees with PhilHealth or to
deduct contributions from the employees’ compensation or remit that same amount to
PhilHealth is penalized with a fine of P5,000, multiplied by the total number of
employees of the business.
On the other hand, any employer who fails or refuses to register employees with the
Pag-IBIG Fund or to collect or remit the required contributions is penalized either
with a fine of not less than but not more than twice the amount involved, or
imprisonment of not more than six years. The employer may be both fined and
imprisoned, depending on the discretion of the court.
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List of Business Laws in the Philippines

1. Tax Reform Act of 5. 

1997 (Republic Act No. The Corporation Code of the
8424)  Philippines
 (B.P. 68)
2. The Local Government
Code of the 6. Civil Law of the
Philippines (Republic Act Philippines (R.A. No. 386)
No. 7160) 7. Social Security Act of
3. Labor Code of the 1997 (R.A. No. 8282)
Philippines (Presidential 8. National Health Insurance
Decree No. 442)  Act of 1995 (R.A. No. 7875)
4. Intellectual Property 9. Home Development
Code of the Mutual Fund Law of
Philippines (R.A. 8293)  2009 (R.A. No. 9679)

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List of Business Laws in the Philippines

10. Food and Drug 14. Financing Company Act

Administration (FDA) Act of of 1998 (R.A. No. 8556)
2009 (R.A. No. 9711)

15. Truth in Lending Act (R.A.

11. The Philippine Fisheries No. 3765) 
Code (R.A. No. 8550) 

16. Consumer Act of the

12. The Animal Welfare Act Philippines (Republic Act No.
of 1998 (R.A. No. 8485) 7394)

13.  17. Electronic Commerce Act

Securities Regulation Code o of 2000 (R.A. 8792)
f the Philippines
 (R.A. No. 8799)

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List of Business Laws in the Philippines

18. The Magna Carta for 22. Anti-Violence Against

Micro, Small and Medium Women and Children Act of
Enterprises (MSMEs) as 2004 (R.A. 9262)
amended (RA 9501)

23. Philippine Cooperative

19.  Code of 2008 (R.A. 9520)
Barangay Micro Business Ente
rprises (BMBEs)
 Act of 2002 (R.A. No. 9178) 
 24. Anti-Money Laundering
Act of 2001 (RA 9160)
20. Insurance Act of the
Philippines
25. 
The Anti-Red Tape Act of 20
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21. Foreign Investments Act
 (RA 9485)
of 1991 (R.A. No. 7042)

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What entrepreneurship
laws do aspiring
entrepreneurs need to
live by?
• Always have a plan
• Learn how to stand out
• Surround yourself with people
• Look and act successfully

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Always Have a Plan
As the age-old saying goes, “If you fail to plan, you are planning to fail.”
Traversing the world of entrepreneurship without a single plan is like
jumping off a high cliff and onto solid land without any kind of safety
device. The end is predictable and failure is inevitable.

If you really want to achieve success, then don’t leave your future up
to fate. Draw up a plan using everything you learned from your days
in entrepreneurship school. Calculate the risks and consequences of
all your actions. Prepare for all possible outcomes – even failure – and
make sure you have all bases covered.

Simply “winging it” is not enough; you have to plan every step of the
way down to the smallest detail. It may be difficult but that is the
path to success.

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Learn How to Stand Out
Entrepreneurship is an extremely competitive field that is full of people who are equipped and determined to reach the
top. If you want to be ahead of them all, then you will have to learn how to stand out and not just blend in.

One way to do this is to think outside the box. It may sound like a cliché, but the truth is what it is. The more you stand
out from your peers and competitors, the closer you are to reaching your goal. Of course, we mean for you to stand out
in a good way by unlocking different but effective ways to build a business and solve problems and dilemmas.

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Surround Yourself With the Right People

• The start of your entrepreneurial journey is sure to be a lonely one. You might have to spend weeks,
maybe even months, working alone to keep your business afloat. While that’s a fine setup for some,
it is not going to work forever.
• Somewhere along the way, you’re going to have to enlist the help of other people. These aren’t just
random strangers that you pick without any criteria, though. They should have the skills and
knowledge to propel your business to great heights. Those you can trust to stay by your side and
compliment you.

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Look and Act
Successful
People only want to do business with successful people and if
you aren’t one, then you at least have to look and act like it. We
don’t mean that you have to fake it and put on airs, but to be
confident in your ideas, plans, and most importantly, yourself.

One of the most important qualities to have as an aspiring

entrepreneur is confidence. Believe that your plans are going to
be set in motion and that you are going to achieve all your goals
and objectives. Having a positive attitude and standing tall
during whatever event or situation is sure to take you a long way.

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What has just happened?

Importance of
Securing Legal Entrepreneurship Laws
Requirements That Need to Live By

Legal Requirements List of Business Laws

in the Philippines

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References

The things you learn at an • https://foundersguide.com/legal-requirements-

entrepreneurship school in the business-phils/
Philippines stand as your weapon and
armor during your journey into the
entrepreneurial world. When you pair • https://businesstips.ph/list-of-business-laws-in-
them with knowledge of how the the-philippines/
entrepreneurial world works, then you
are sure to come out on top and
achieve success. The laws we have • https://www.enderuncolleges.com/news/entrep
enumerated here may seem few and reneurship-laws-aspiring-entrepreneurs-need/
obvious, but we assure you that they
are going to help you traverse the
unknown world of entrepreneurship!

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