How to Start a Business in the Philippines (2011 PDF)

CHAPTER 5: Starting up your own Business Let’s start! Learning Outcomes: 1. Practice how to source money for the planned business. 2. Undertake necessary steps in order to set up the business. Entrepreneurship in the Philippines The most common enterprises in the Philippines are micro and s...

CHAPTER 5: Starting up your own Business Let’s start! Learning Outcomes: 1. Practice how to source money for the planned business. 2. Undertake necessary steps in order to set up the business. Entrepreneurship in the Philippines The most common enterprises in the Philippines are micro and small-scale enterprises. They make up the bulk of the enterprises in the Philippines. As of 2011, there are 820,255 business enterprises operating in the Philippines. Of these, 99.60 (816,759) are micro, small and medium enterprises(mSMEs) and the remaining 0.4% (3,496) is large enterprises. Of the total number of mSMEs, 91.0% or 743,250 are micro enterprises, 8.6% or 70,222 are small enterprises, and 0.4% or only 3,287 are medium enterprises. Majority of the mSMEs in operation in 2011 can be found in the National Capital Region (NCR), with 211,974 business establishments; region 4-A (Calabarzon) with 122,562; region 3 (Central Luzon) with 83,279; Region 7 (Central Visayas) with 50,078; and region 6 (western Visayas) with 47,166. These top five (5) locations accounted for about 63.10% of the total number of mSMEs establishments in the country. Category Category Asset Size Number of Employees Micro Php 3 million and below Below 10 Small Php 3,000,001 to Php 15 million 10 to 99 Medium Php 15,000,001 to Php 100 million 100 to 199 Large Over 100,000,001 and above 200 above Phases of Enterprise Implementation a. Fund Sourcing Cost of Organizing Working Capital Plant, property and equipment Margin of Safety b. Pre-operating phase; business setting-up c. Business Launch d. Business Operation e. Business Continuation or Closure Forms of Business Organization Sole Proprietorship Partnership Corporation Government Agencies 1. Department of Trade and Industry. Business Name Certificate Number Sole Proprietorship Partnership Corporation Registration will protect the business’ name from being used by other businesses. 2. Security and Exchange Commission All Partnerships and Corporation must secure a certificate of registration from SEC.  3. Local Barangay Office All businesses must obtain a barangay clearance from the local barangay office where the business is located. 4. Local Government Unit – Mayor’s Office 5. Bureau of Internal Revenue Secure a permanent tax Identification Number (Form 1904) Register the Business Name with BIR Revenue District Office. a. Form 1901 for individuals b. Form 1903 for partnerships and Corporation The following support papers must be attached: a. Mayors Permit of Application for Mayors Permit b. Certificate of Business Name Registration (DTI, and/or SEC) c. Residence Certificate Pay prescribed fees A certificate of Registration BIR form 2303 will be issued Apply for Issuance of Books; Form 1900 and receipts Form 1906. It is the responsibility of the business to submit and pay the following remittances: Monthly remittances - Monthly percentage tax Return, BIR form number. 2551M - Monthly value-added tax Declaration, BIR form no. 2550M - Monthly remittance Return of Income Taxes withheld on Compensation, BIR form No. 1601C Quarterly remittances - Quarterly Value-added Tax Return, BIR form no. 2550Q - Quarterly Income Tax Report, BIR form no. 1702Q (partnership and corporation) and BIR form no. 1701Q (single proprietorship) Annual remittances - Annual Income Tax Return, BIR form No. 1702 (Partnership and Corporation) and BIR Form 1701A (Single Proprietorship) - Payment form No. 0605 - 6. Social Security System Employer’s Registration Number 7. Philhealth  8. Home Development Mutual Fund (HDMF) R.A. No. 7742 states that SSS members earning 4,000 must be registered with HDMF, the agency that administers Pag-ibig. The agency provides members with an adequate housing saving scheme. 9. Other Government Agencies All businesses must secure a business permit from the municipality or the city mayor’s office. The issuance of the mayor’s permit states that all the requirements were submitted and standards were meet. Mayor’s Permit a. DTI Registration b. SEC Registration c. Building Permit and Occupancy Permit for newly constructed Bulding d. Zoning Clearance e. Barangay Clearance f. Community Tax Certificate g. Fire Safety Certificate h. Sanitary Permit Top 3 fund sources when setting up a business Personal savings and parent’s cash support Contributions from team members Contributions from relatives and friends 10 Entrepreneurial Competencies 1. Opportunity Seeking. This refers to the ability to look for, to find, and to seize business opportunities. 2. Moderate risk-taking. This refers to the ability to calculate the chances of success before taking a risk. 3. High demand for efficiency and quality This refers to the ability to meet or surpass the existing standards of excellence in the business. 4. Commitment to work contract. This refers to the ability to accept responsibility in completing job for the customers. 5. Persistence. It refers on the ability to keep on doing something even when faced with difficulties. 6. Information seeking. It refers to the ability to seek and find the right and valuable information for one’s business. 7. Goal Setting. It refers to the ability to set clear short-term and long-term goals. 8. Systematic Planning and Monitoring. It refers to the ability to develop logical plans in order to reach goals and to keep necessary data to monitor progress in the attainment of these goals. 9. Persuasion and Networking. It refers to the ability to make others want to work and help in achieving the goals. 10. Self-Confidence. It refers to the ability to take charge of things and to take responsibility for decisions made. Reference: Windows to Entrepreneurship, A teaching Guide. Small Enterprise Research and Development Foundation.