In 2015, I went full-time freelancing after quitting my corporate job of three years and getting fired as a work-from-home team member of a parenting blog.
However, it wasn’t until this year that I decided to go official and register my business. I actually tried to be a good citizen and continue my government contributions on my very first month of working from home full-time but our finances weren’t very stable yet (such is often the story of freelancers and entrepreneurs) and it wasn’t until 2017 that I shifted my mindset and the way I ran my freelancing career.
But enough about the introduction, because I’m here to share with you the step-by-step guide on how I registered my virtual assistant business as a sole proprietor:
Sole Proprietor vs Professional
First things first: when you’re running a VA business and want to be legit, you actually don’t have to register yourself as a sole proprietor.
In fact, most freelancers would just register themselves as a professional and while there are many similarities when it comes to how you run and register things, there are also several major differences.
Why should you register as a sole proprietor?
The only big advantage I can see is that doing so makes it easier should you decide to scale your business and build a team.
I did speak with an accountant prior to doing all the leg work and he said that I could still build my team even as a professional. The major difference is that I have to hire them as subcontractors instead of employees, which also means I won’t be obligated to pay for their government contributions or taxes.
Of course, I went the sole prop route just because I love the ring to it. I have one employee under me (the partner) but the major reason I did it was because it made me feel like a legit business owner, having a trade name under my name.
On that note, I also plan on switching to a one-person corporation next year because it provides better protection over my personal assets. (We need to think big, right?)
How to Register as Sole Proprietor in the Philippines
1. Register with the DTI
One of the biggest differences when you’re registering yourself as sole proprietor is that you will be required a DTI certificate as a requirement.
Fortunately, this step is super easy because everything can be done online.
Just head over to their Business Name Registration portal, enter your details such as your business/trade name and then pay for the registration fee via GCash. The fee will vary depending on your business scope:
- Barangay – Php 200
- City/Municipality – Php 500
- Regional – Php 1000
- National – Php 2000
I chose National for mine.
Alternatively, you can opt to go to the nearest DTI Office or Negosyo Center. These are often found near or inside the City Hall. Bring along one government ID as well as three business name alternatives, in case the one you choose are already taken.
(On a side note: See how easy and how affordable it is to register with the DTI? This certificate shouldn’t be the only document you look for when checking the legitimacy of a business – *ehem* talking about the rampant scams in the country.)
What You Need:
- One valid ID
- Filled-up form
- Three business names (the other two will be alternatives)
- Payment
Total Cost: Php 200 – Php 2000
Validity: 5 years
2. Get a Barangay Business Clearance
Once you have a Business Registration Certificate from the DTI, bring it over and head to the Barangay Hall where your business will be registered. In our case, our office is also our residence so this was just within the neighborhood.
Bring along two valid IDs and a Certificate of Land Title (if owned) or Contract of Lease (if rented). We are still paying for the mortgage of our house so I brought none of those last two documents.
This step costed me Php 515 plus Php 105 for my Community Tax Certificate (cedula). I am unsure how the calculations are done for the certificate but this could be dependent on the barangay and your business capital. Of course, the cedula is dependent on your declared income (which the barangay worker filled up for me).
What You Need:
- Two valid IDs
- Certificate of Business Registration from the DTI
- Certificate of Land Title (if owned) or Contract of Lease (if rented)
- Payment
Total Cost: Php 620
Validity: 1 year
3. Obtain a Mayor’s Permit
A lot of people are often discouraged at this step because it’s too hard and takes too long. However, if you do it at the start of the year (January 25th is usually the deadline for registrations and renewals), then it’s a much faster and streamlined process. It did take us about half a day but still…
If you ask for quotes from accountants and other financial institutions that provide registration services, this will cost you around Php 10000 – 30000 – a major expense for a one-person small business with a capital of less than Php 5000!!! So, the partner and I (along with the kids) decided to brave it and do the process ourselves and spent less than Php 5000 – including the actual permit fee plus our snacks, lunch and transportation costs.
Just go to the information center for the steps, but this is how it usually goes:
- fill up forms and submit requirements
- pay for the permit fees
- wait for your business plate
What You Need:
- Two valid IDs
- Certificate of Business Registration from the DTI
- Certificate of Land Title (if owned) or Contract of Lease (if rented)
- Barangay Clearance Certificate
- Certificate of No Objection (we were asked this since our business address was our house located inside a subdivision)
- Payment
Total Cost: ~Php 2700
Validity: Until December 31st of that year (regardless of when you registered)
4. Register with the BIR
This is the biggest beast you’ll have to tackle if you want to have a legit virtual assistant business here in the Philippines.
Because I was previously employed, I didn’t have to register with the BIR and get a TIN. However, I did ask the help of an accountant to have my RDO (Regional District Office) transferred because our employee RDOs were located in Makati and doing the whole transfer process was just tedious.
Once I got to the RDO where my business is located, I filled up a Form 1901 to register as Sole Proprietor and then got a Form 0605 to pay for the registration fee of Php 500.
The officer who received my form was much younger than I was and took care of filling up the form for me. Haha! Basically, I had the following checked under Tax Types:
- Income Tax – write 1701 and 1701Q in the Form Type
- Other Percentage Taxes – 2551Q
- Registration Fees – 0605
One very important thing to take note is to have this process done on the day of the New Business Registration Seminar to save yourself trips to the Bureau. Ours was scheduled every Wednesday so I had to go back there about four times (to register, to attend the seminar, to get my COR and to get my receipts).
After I submitted my documents, the officer gave me a date of when to claim my COR which unfortunately was different from my seminar date.
You will also be required to get your books of accounts (Ledger and Journal, in our case), which you can register when you claim your COR (Certificate of Registration).
Once you have the COR, you have 30 days to get your receipts printed. The office will usually give recommendations for accredited printers but try to ask around for better prices. We found ours from a friend’s recommendation and they printed a minimum of 12 books for Php 2000, valid for 5 years.
What You Need:
- Valid IDs
- Certificate of Business Registration from the DTI
- Certificate of Land Title (if owned) or Contract of Lease (if rented)
- Barangay Clearance Certificate
- Mayor’s Permit
- Payment
Total Cost: Php 500 (BIR registration) + Php 2000 (receipt printing; varies)
Validity: Deadline of COR renewal is January 31st of the following year; Receipts are valid for 5 years
That’s it!
Well, the first part, that is.
Next beasts to tackle: registering for your government contributions and paying for these bills as well as your taxes.
Stay tuned!
Thank you for this!
You’re welcome! 🙂
Hi Pam! Did you register as VAT or NON VAT? Do you have an article that’s tax related for us freelancers?
Hi Grace. I’ve yet to discuss with my accountant regarding tax calculations because it’s something I try to stay away from. Haha!
I’m currently registered as NON VAT. 🙂
Hello! May question lang po dun sa part na may 1 employee ka(partner)
Kailangan mo rin po ba bayaran sss philhealth etc. Niya? Thank you
Hi John,
Yes. Required ang employer to pay SSS and other government benefits. Otherwise, malaki penalty babayaran mo. (Sometimes computed per employee per month).
Hi! What if kung nagpa register lang ako ng Business name, just for it, is it okay ba? Pwede ba yun? Is it legal?
Possible na no one will never find out but it’s a huge risk if they do found out. Baka magka penalty ka sa Mayor’s Office or sa BIR because you are using it to run your business but you are not registered with them. Baka makulong ka pa.
If you do register sa DTI but never use the business name anyway, wala din mangyayari.
Hi Pam, if based I am based abroad, do I have to register under the Philippines government or into the country where I reside? Thanks!
Hi Ces. I’m unsure sa legalities but you most likely will pay taxes here sa Philippines if you’re not being taxed there. Best to discuss with an accountant though. 🙂
Hi Pam
Thanks for this. I am also starting my own business and have only so far managed the DTI requirement.
I noticed that you managed to get your Mayor’s Permit by just submitting the documents and paying the fee. Did they not require to inspect your “office” for fire safety, etc? I inquired at our Municipal Office and they said that even though my registered office is my own house it is still subject to such inspections. They also did not mention anything about a Certificate of No Objection.
Appreciate your thoughts on this. Thanks again!
Hi Paulo.
I think it varies per city/municipality? I did not have any Certificate of No Objection beforehand so they asked me to bring it when I claimed my business plate.
As for the inspections, I think I remember one of my neighbors mentioning that there were City Hall personnel visiting but we weren’t around. My assumption is that because we are in a subdivision, the place had already passed safety requirements and so they didn’t find it necessary to revisit.
Hope this helps and best of luck on the process! 🙂
This is very helpful. Thank you
Im looking forward to hear more about reg govt mandated benefits 🙂
Hi Dianne,
Thanks for dropping by!
You can actually read them here –
For freelancers (as voluntary members): https://thecreativestretch.com/government-contributions-freelancers/
For business owners (paying for employees): https://thecreativestretch.com/government-contributions-business-owners/
Hi, I’m planning to have a startup company which deals with Web Development. I don’t know what type of permit I should get. I am the owner and I’ll be hiring 3 to 5 web developers. And also our house will be the office and my employees can also work at home.
Should I get permit as sole proprietor or what? I’m sorry I don’t really know anything yet about business hehe
Same question as Jigz
The perfect read for me right now! I was battling between sole and OPC but mu bookkeeper advised me to register under sole first. I wanted to go for OPC because it sounds realy cool but it’s not practical at this time.
Hi pam. I want to start an online business. its like a dropshipping business. can I register as sole proprietor and since im still not in the Philippines, as Im currently abroad. can I make register my business name in DTI as national direct? and no need the mayors permit, etc?
Do I need to make a BIR since I dont have physical office in the philippines, and I already have TIN ID.
Hope you can give me some advice. Thank you
Wow, that’s an in depth article. Are there any changes with the process due to covid-19?
Hi, I would really like to know more about the part where you said, “I did speak with an accountant prior to doing all the leg work and he said that I could still build my team even as a professional. The major difference is that I have to hire them as subcontractors instead of employees, which also means I won’t be obligated to pay for their government contributions or taxes.” How can I hire subcontractors as a professional? Do you have a link to this information or is there a way I can communicate with the accountant you talked to? Thanks.
Is that also the requiremenst of a foreigner who wants us to do business in the Philippines
Hi Pam,
Many thanks for such an instructive article!
Was wondering whether you ever got around to registering as a one-person corporation as you were planning eventually do; And, if so, whether you might want to share your experience with us?
Hope you remain safe and well