Legal Requirements for Small Businesses

Brainstorming, planning, and making sure you adhere to all the legal requirements are all necessary when starting a firm. These regulations safeguard that businesses follow the law while also defending small business owners and their clients.

Let’s take that novel new company concept and go over all the regulations you need to take into account in order to successfully launch a legally recognized business.

So read on to find out how to launch a business in the Philippines, whether you’re a lone owner, partner, or member of a corporation! Additionally, you may get the necessary paperwork for properly registering your business here.

The following are the crucial business paperwork you require in the Philippines to open a small business:

• Barangay clearance
• Business permit from the mayor;
• Registration paperwork for BIR;
• Registration from the SSS, PhilHealth, and Pag-IBIG, as well; and particular authorizations, if necessary.

Select the appropriate business structure.

To run a legitimate firm, you must specify your organizational structure. A business structure is the recognized organizational structure of an entity in a specific jurisdiction. It alone decides what kinds of activities are legal for it to engage in.

The primary varieties of business structures consist of:

• The simplest type of business structure is a sole proprietorship, which is owned and operated by one person. The costs and revenues of the company are included in the owner’s tax return because it is not a separate legal entity from them.
• A partnership is created when two or more owners come to an agreement on how to launch, run, and manage a company. It shares funding, risks, earnings, and losses with the owners and is not a separate legal entity from them.
• Corporation (S, C, B) – An S corporation is a business that elects to pass on its profits, tax credits, losses, and deductions to the tax returns of its shareholders. The shareholders of a C company are taxed separately from the entity. A B corporation is an organization dedicated to generating money while also benefiting the broader population.
• A form that combines the traits of both corporations and partnerships is a limited liability company (LLC). Each owner must report a portion of the earnings or losses on their individual tax returns, and it shields owners from their debts or liabilities.
• Nonprofit – An organization whose main goal is to use the money it makes to support a social mission or cause rather than to produce profits for the owners.

Please submit a report to the Department of Trade and Industry.

Filing with the Department of Trade and Industry, or DTI, is simple in comparison to these other procedures. It is nevertheless as important because doing so will enable you to utilize the business name as a trading name. So, you can possess a trademark if you register with the DTI.

Today, filing can be done online, which is fantastic! If you are a lone proprietor, you should check the DTI website’s database to see if the business name you want is still available. Once you’ve located a name that is available, you can submit the business name application.

After that, you hand the form into the government agency. But before you proceed to the next stage, you must wait for the Certificate of Registration, or COR.

Head over to the Bureau of Internal Revenue.

Every company must register with the BIR, or Bureau of Internal Revenue. You can pay taxes once you’ve enrolled. Despite the fact that it may be difficult to see your hard-earned money disappear, your company (and, if you employed them, your personnel) will get certain advantages as a result.

Report to the Securities and Exchange Commission

The Securities and Exchange Commission, or SEC, oversees the nation’s registered businesses. If you’re a corporation, partnership, or cooperative, it’s one of the most important company registration processes! Sole proprietors can proceed to the following step. Additionally, according to the Corporation Code, these documents must be notarized before being filed with the SEC.

Capitalize on your enterprise!

The use of money, or more particularly, capital, is involved in the following stage. You must deposit a minimum quantity of capital as the owner at a particular bank. The Corporation Code of the Philippines specifies a minimum of ₱15,000. However, keep in mind that additional papers may be required depending on the bank. The two most important of these criteria are identification documents and articles of organization.

Identify the business taxes you must pay.

The local, state, and federal taxes that apply to your company must be known to you. You’ll be able to appropriately submit your taxes and promptly make the necessary payments. Property confiscation, late payment costs, and criminal prosecution are some of the repercussions of failing to pay taxes.

The taxes you must pay and when you must pay them depend on the structure of your firm. However, income, estimated, employment, excise, and self-employment taxes are the five main categories of business taxes.

Secure your intellectual property.

Anything produced by human intellect that is legally shielded from illegal use by others is known as intellectual property (IP). When someone uses one of their innovations, it enables them to receive money or acknowledgment for their work.

Consider whether your product or service has a distinctive invention that has to be protected from being duplicated by others when beginning a business. Anyone can use your creations in their own goods and services if they are not protected.

Get business insurance.

Business insurance is a type of risk management that guards an organization against dangers that might arise while it is in operation. Numerous dangers might harm your company, resulting in losses and legal action. To ensure you can cover the costs should they arise, get company insurance.

Every company confronts different dangers. Depending on the industry, there are many insurance options that are suitable for your company. Some, nonetheless, are unavoidable demands imposed by the majority of state legislation.

• Protects your company from lawsuits alleging bodily harm, property damage, and other claims involving personal injury.
• Professional liability insurance defends a company against claims of service errors made by clients in lawsuits.
• Workers’ compensation insurance protects employees in the event of an accident at work. It covers medical expenses, funeral expenses, death benefits, and income replacement while you’re recovering.
• Insurance for commercial property: covers building or equipment.

Please read: GET BUSINESS INSURANCE IN THE PHILIPPINES

Open a bank account for Small Business

A business owner uses a corporate bank account to separate their personal money from their company’s finances. It makes it simpler to keep your company’s money secure, monitor cash flow, and keep track of spending.

Which bank you choose to open a business bank account with depends on your preferences. No matter how much you enjoy working with a specific bank, you must think about what is best for your company. Compare each bank that is available to you. Watch out for their fees, interest rates, small business deals and benefits, and anything else that can be used to your advantage.

The techniques of receiving payments for your business are something else to think about. If the company only accepts cash, you will be depositing its funds. However, you must take transaction fees into account when making electronic payments.

Conclusion

Having trouble managing some of these initial procedures? To make sure you have everything covered, it can be worthwhile to get in touch with qualified legal advice. In this manner, you may devote more of your time to organizing, supervising, and ultimately expanding your company.

Running a business requires a lot of work, but so does dealing with all the legal issues. Your mind will spin from all the fees, permits, and certificates. Hopefully, the questions on this list have been addressed. New businesses maintain the local economy’s strength.

Therefore, make good plans and learn about procedures, business owners!

Suggested Reading:

• A Business Require Legal Services