The document discusses sole proprietorships and the process for legally establishing one in the Philippines. A sole proprietorship is a business owned and operated by a single individual. It is the most common business structure due to its ease of establishment. To legally operate a sole proprietorship, one must register the business name with the Department of Trade and Industry, obtain a barangay clearance, acquire a business permit from the mayor's office, and register with the Bureau of Internal Revenue. The four-step registration process involves filling out forms and providing identification documents.
2. Sole Proprietorship
Is a business owned and operated by a single person.
Most businesses are owned by sole proprietors which is why this is the
most common type of business ownership.
3. Advantages and Disadvantages
Advantages Disadvantages
1) Easy to establish and register. 1) Inexperienced SBO’s that’ll lead to
failure.
2) Profits are enjoyed by the sole
proprietor alone.
2) Difficulty in attaining and keeping
quality employees.
3) Control of the business. 3) Raising capital is difficult.
4) Taxation. Tax is less compared to the
other types of ownership.
4) Limited life of the business. Usually
below 15 years. Exhausting workload for
a Sole proprietor might be one cause for
this.
5) Less or minimal restrictions in
operation from the government.
5) Unlimited risk and liability for the sole
proprietor.
6) Closing the business in your own time.
7) Secrecy of information.
4. How can I legally become a sole
proprietor?
You have to register your business at the DTI (Department of Trade and
Industry), the local government units where your business is located.
(Barangay and Mayor’s Office), and the BIR (Bureau of Internal Revenue).
If you have employees, you must register to the following:
Social Security System
Philippine Health Insurance Corporation
Home Development Mutual Fund
There are 4 steps in registering your business as a sole proprietor
Register a business name at the Department of Trade and Industry (DTI),
Registration with the Barangay for the Barangay Clearance,
Register your business in the Mayor’s Office, and
Register your business in the Bureau of Internal Revenue (BIR)
5. 1) Register a business name at the Department of Trade and Industry (DTI)
Come up with 3 business names
Search in the DTI’s website if there is an existing name similar to yours
If your business name is available, fill-up Business Name Application Form
Submit the completed form to your local DTI office/branch
You have to wait for your certificate of registration then you can now go to your barangay to get
the barangay clearance.
2) Registration with the Barangay for the Barangay Clearance:
Go to the barangay where your business is located to secure and fill-up an application
from and submit it together with the following:
Present your Certificate of Business Registration from DTI
Two (2) valid ID’s
Proof of Address such as Contract of Lease (if rented) or Certificate of Land Title (if owned)
Claim your Barangay Certificate of Business Registration (Barangay Clearance)
6. 3) Register your business in the Mayor’s Office
Go to your municipal office where your business is located to fill-up and submit an application form. Bring the
following requirements:
Present your Certificate of Business Registration from DTI
Present your Barangay Clearance Certificate
Two (2) IDs
Proof of Address such as Contract of Lease (if rented) or Certificate of Land Title (if owned)
Claim your Mayor’s Business Permit and Licenses.
4) Register your business in the Bureau of Internal Revenue (BIR)
Go to the Regional District Office (RDO) where your business is located
Fill-up the BIR form 1901- Application for Registration (for Sole Proprietor) and submit the completed form
along with the following:
Present your Certificate of Registration from DTI
Present your Barangay Clearance Certificate
Present youir Mayor’s Business Permit
Proof of Address such as Contract of Lease (if rented) or Certificate of Land Title (if owned)
Valid IDs (if applicable)
Pay the Registration Form (BIR Form 0605)
Register your book of accounts and receipts/invoices.
Claim your Certificate of Registration (BIR Form 2303)