BIR Business Registration Requirements

For those who are eager in putting up a sole proprietor business in the Philippines and also for individuals who like to practice their profession, it is a must to register with the Bureau of Internal Revenue (BIR). 

I put in here the basic required documents and the procedures taken from the BIR website TIN Application links. I also include the processing of Invoice/Official Receipts and the registration of the Books of Accounts to be used. Thus:

FOR SELF-EMPLOYED AND MIXED INCOME INDIVIDUALS

       Tax Form

     BIR Form 1901- Application for Registration for Self-Employed and Mixed Income Individuals, Estates/Trusts

      Documentary Requirements

      1. For single proprietors, mixed income earners:

      Photocopy of Mayor’s Business Permit (or duly received Application for Mayor’s Business Permit, if the former is still in process with the LGU) and/or PTR issued by the LGU; and NSO Certified Birth Certificate of the applicant;

    2. For Professionals where PTR is not required (e.i. Consultants, Agents, Artist, Underwriters & the like):

      a) Occupational Tax Receipt (OTR)/Professional Tax Receipt (PTR);

      b) NSO Birth Certificate;

      c) Marriage Contract, if the applicant is a married woman;

      d) Contract/Company Certification.

      Other documents for submission only if applicable:

       a) Contract of Lease;

       b) DTI Certificate of Registration Business Name, if business trade name shall be used;

       c) Certificate of Authority if Barangay Micro Business Enterprises (BMBE) registered entity;

     d) Proof of Registration/Permit to Operate with Board of Investment (BOI/Board of Investment for Autonomous Region for Muslim Mindanao (BOI-ARMM), Philippine Export Zone Authority (PEZA), Bases Conversion Development Authority (BCDA) and Subic Bay Metropolitan Authority (SBMA);

      e) Sworn Statement of Capital;

      f) Waiver of husband to claim additional exemption;

      g) Marriage Contract; and

      h) NSO Certified Birth Certificate of declared dependents.

      3. For Non-Residents:

      In addition to the above applicable requirements, a Working Permit;

      4. For Franchise Holders/Franchisees:

      In addition to the above applicable requirements, a photocopy of the Franchise Agreement;

Documentary Requirements for new application of Authority to Print (ATP)

      BIR form 1906 together with the following:

       1. Job order

       2. Final & clear sample of Principal & Supplemenatary Receipts/Invoices

 

Documentary Requirements for new Registration of Books of Accounts

      New sets of books of accounts

      The procedures for the processing of ATP and Books of Accounts are as follows:

      a) Accomplish BIR Form 1901 and submit the same together with the documentary requirements to the RDO having jurisdiction over the place where the head office and branch, respectively.

      b) Pay the Annual Registration Fee (P500.00) at the Authorized Agent Banks (AABs) of the concerned RDO.

      c) Pay Documentary Stamp Tax (DST) (loose DST / BIR Form 2000* for DST on Contract of Lease, etc). Present proofs of payment.

      d) Submit requirements for ATP and registration of books of accounts.

     e) Attend the taxpayer’s initial briefing to be conducted by the RDO concerned for new registrants in order to apprise them of their rights and duties/responsibilities.

     f) The RDO shall then issue the Certificate of Registration (Form 2303) together with the “Ask for Receipt” notice, Authority to Print and Books of Accounts.

      Deadline:

      All Individuals engaged in trade or business shall accomplish and file the application on or before the commencement of business, it shall be reckoned from the day when the first sale transaction occurred or within thirty (30) calendar days from the issuance of Mayor's Permit/Professional Tax Receipt (PTR) by LGU, which ever comes earlier.

In regard to the corresponding taxes to be paid, it shall be determined upon registration of the business.  The tax liabilities are reflected in the Certificate of Registration (COR) or the BIR Form 2303. It is a must to attend the briefing conducted by the RDO prior to the issuance of the COR to initially assist you in the conduct of the business.

Here is a brief rundown for your information, a business entity will be liable for an annual registration fee of PHP 500.00 payable upon registration and every January 31st thereafter. Other taxes imposed in a business entity, in general, are Income Tax, Withholding Tax on Compensation (for your employees, if any), Expanded Withholding Tax (for rental expenses and/or income payments to Professionals like Accountants, Lawyers and others), and the Business Tax which are the Percentage Tax (PT) or Value-Added Tax (VAT). 

The annual gross sales or receipts of the business will be considered in order to determine the applicable Business Tax. Entrepreneurs or professionals may register for VAT  if there are reasonable grounds that their gross sales or receipts for the next twelve (12) months will exceed One million nine hundred thousand pesos (Php1,900,00.00) or even if it is below the said amount but the individual opted to register for VAT. Otherwise they will register as non-VAT and will be held liable to pay PT which is equivalent to 3% of gross sales or receipts.

There are, however, VAT exempt transactions such as those that are exempt under Section 109 (1)(A) to (U) of the Tax Code and listed in Section 4.109-1 of Revenue Regulations No. 16-2005, This will be, further,  discussed in my another blog.

Likewise, the registered tax types have corresponding returns due for filing regularly - monthly, quarterly, or annually.  The BIR Forms are, but not limited to the following:

          

The applicable BIR Forms must be filed and tax due be paid with the Accredited Agent Banks (AAB) of the RDO where the business is registered. It is also important to  file the required returns even if the business becomes non-operational to avoid open cases and payment of penalties. You must only indicate the word "non-operational" in the return.

In addition, take note that non issuance of receipts and unregistered books are considered violations subject to corresponding penalty. The latest list of the offenses and amount of penalties are provided in Revenue Memorandum Order (RMO) No. 7-2015.

Good day to all of us!