Complete Guide To Starting A Small Business In The Philippines
Starting a business is a dream that many Filipinos share, and doing so has the potential to be one of the most fulfilling careers you could imagine. As a business owner, you get to make a decent income while being your own boss. What could be better?
Make no mistake, opening your own business is a lot of work. The road to success won’t be easy, but it is possible to be successful as a business owner. Having a great idea for a business is an important first step to make, among many others. There are a lot of requirements and processes you must complete to get up and running, in addition to licenses you must obtain and government agencies that must be involved. In this post, we will detail the three main types of businesses, and the steps you must take to start up your own sole proprietorship. We’ll also include some helpful tips on how to be successful, and practices you should avoid.
Three Types Of Business In The Philippines
There are three main types of businesses: sole proprietorships, partnerships, and corporations.
- Sole Proprietorship: A Sole proprietorship is the most basic type of business organization you can run in the Philippines. It can be established by just one person, referred to as a sole proprietor. Essentially, your business in a sole proprietorship is an extension of yourself, so the assets and liabilities of your business are also your own assets and liabilities.
- Partnership: A partnership requires two or more people who agree to contribute assets, with the intent of dividing profits among all parties involved.
- Corporations: A corporation is comprised of many individuals who act as a single entity to advance the interest of the corporation as a whole. Corporations are given the same rights that individuals by the Philippine government, and are as an individual person.
Why Choose A Sole Proprietorship?
A sole proprietorship is a great option for any Filipino who dreams about starting his or her own company. As previously stated, a sole proprietorship is the most basic form of business you can operate. A sole proprietorship can be run with just one person, meaning you will not be required to work for anyone or have anyone work under you. Since you will not have any employees working for you, you will be able to keep all the profits on your own. In addition, a sole proprietor business is easier to set up and register, it requires little amount of capital to start, has lower costs in regards to government permits and licenses, and has less regulations than other types of businesses.
How To Get Funded
If you are like many other Filipinos, you will need some financial help to get your business up and running. That’s where a personal loan can assist. A personal loan can provide you with the upfront funding you need to open your business’ doors. There are many options when considering to apply for bank personal loans in the Philippines. To get an estimate, we suggest you use our personal loan calculator to help find a financial institution, loan rate, and repayment term that work best for you.
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Steps On How To Register A Sole Proprietor Business
- Register your business name at the Department of Trade and Industry (DTI)
Make sure to search the DTI website to see if there are any businesses in existence that have a name similar to yours. If the business name that you want is available, fill out a business name application form, and submit it to DTI’s office. You must wait for your DTI certificate of registration before you move onto the next step of opening your own sole proprietor business.
- Register with Barangay
Once you have received your certificate of registration from the DTI, it’s time to go to the Barangay where your business is located to fill out an application. In addition to your application, you will need to submit your DTI Certificate of Business Registration, two valid IDs, and a proof of residence. Wait and claim your Barangay Certificate of Business Registration.
- Register your sole proprietor business with the Mayor’s Office (LGU)
The next step, after receiving your Barangay certificate of business registration, is registering your business at the municipal office in the city where your business is located. You will need to fill out an application, as well as submit your Certificate of Business Registration from the DTI, your Barangay Clearance Certificate, two valid forms of ID, and proof of residency.
- Register With The Bureau of Internal Revenue (BIR)
After you receive your certificates and permits from DTI and LGU, it’s time to register your sole proprietor business with the BIR. To do this, you will need to visit your regional district office in the city where your business is located. You will be required to fill out a BIR form 1901, which is an application to register your sole proprietorship. In addition to your completed BIR form 1901, you will need to submit your Certificate of Registration from DTI, your Barangay Clearance Certificate, your Mayor’s Business Permit, proof of residency, and valid ID. You will also have to pay for registration, (BIR Form 0605), and register your book of accounts and provide any receipts or invoices you have for the business. After all of this has been completed, you will be able to claim your certificate of registration, (BIR form 2303).
Make sure you have covered all additional clearances, permits, or licenses you need to obtain before opening your business to the public. There are certain categories of business that require additional documentation. After you have completed the four steps listed above, you can focus on a strategy to succeed in your new business venture.
Six Tips For Sole Proprietor Success
Getting your business up and running is only the first step. Once that has been completed you need to focus on ways to grow your business. Here are six tips to help you succeed as a new business owner.
- Create A Solid Business Plan/Strategy
Without a strategy, it will be extremely hard to succeed as a business owner. Conduct a thorough SWOT analysis to uncover your company’s strengths, weaknesses, opportunities, and threats. It will be essential to define your target market, and build your business strategy around that.
Also, create a mission and vision statement for your company, goals and objectives, courses of action, an overall business model, marketing models, and financial projections. We know, it sounds like a lot, but a major determination of your success will be in the strength of your business plan.
- Create A Killer Website
Think of a website as your digital storefront. In our digital world, a company without a website might not exist at all. Think about how you search for companies and services. More than likely, you turn to Google to return results for you.
- Build Customer Loyalty
Once you start gaining customers, ask them to go online and complete reviews on your products and services. Many Filipinos rely on online reviews when deciding between products and services.
- Have A Strong Social Media Presence
Being a business owner means you need to interact with your customers wherever they are. This means being active on the social media channels they use. Consider setting up contests once you get more established to engage your audience and create hype and brand loyalty.
- Don’t Forget Advertising
You may not have a lot of money to put into advertising when you first open your doors, but even a little bit of social media advertising could help generate leads that convert. Consider starting a small social media campaign when you first open to generate buzz and foot traffic.
- Find A Good Lawyer
It is a good idea to research some lawyers in your area that specialize in small business just in case you ever get into a situation that would require legal knowledge. Don’t wait until a situation arises to seek out the best option. Doing so could result in a rushed decision, or your first few choices being unavailable.
Six Things To Avoid As A Sole Proprietor
- Skipping The Planning Phase
One of the biggest mistakes you can make as a new business owner is skipping out on planning your business strategy. This would include opting out of goal setting. Without a solid plan, it will be really hard to succeed.
- Paying Bills Late
One of the worst habits you can get into as a new business owner is paying your bills late. Getting behind on your bills will result in increased debt that you may not be able to repay, which could force you to close your business.
- Not Knowing Who Your Customer Is
If you don’t know who your customer is, it will be extremely hard to succeed with your new business venture. You can’t be everything to everyone. Instead, do some upfront research on who buys your products and services, and focus your marketing efforts and messaging to cater to those groups of people.
- Fear Of Financing
If you need help with financing to get your sole proprietor business up and running, consider applying for a personal loan. Remember, not all debt is bad. If you are able to make your monthly repayments, there is nothing wrong with using a personal loan to fund your business-related ventures.
- Wearing Too Many Hats
As a sole proprietor, you will wear many hats, and conduct most business activities on your own; however, if there are some areas of the business you are less comfortable with there is nothing wrong with outsourcing them. For instance, if you need help with blog content, website design, or social media management, consider hiring a freelancer to carry out these essential business tasks for you. You want to make sure everything you do for your business is done effectively and efficiently. This may mean delegating some activities to others so you can focus on other activities that are essential to your business’ success.
- Expecting To Get Rich Overnight
No successful business owner became a millionaire overnight. Understand that success is a process, and can only be achieved by hard work.
Owning your business has the potential to provide you with an above average income if you are willing to put in the work to get it up and running. These are the important, various licenses and certificates you will need to obtain from different government agencies to get things started:
- Certificate of Registration from the DTI
- Barangay Clearance Certificate
- Permit from the Mayor’s Office
- Certificate of Registration from the BIR
If you are willing to put in the work, the rewards you could avail from being a business owner and your own boss are infinite.