15 steps to starting a business in Cebu City
And why it's easy to start a business there
May 23, 2011 16:00 pm
Cebu City, also known as the Queen City of the South, is the finance and trading hub of the Visayas. With only 15 steps of procedures before an entrepreneur can start his business, it's no surprise that the city is among many businessmen's favorite.
The Doing Business in the Philippines 2011 study of the International Finance Corporation, ranked Cebu City 7th out of the 25 major cities in the country when it comes to the ease of starting a business. While it has the shortest number of procedures among the cities in the study, the 31-day long processing has pulled it down.
Here are the 15 steps that you have to take to start your business in Cebu City.
Step 1. Verify and reserve the company name with the Securities and Exchange Commission (SEC)
The company can verify the availability of the company name online. Verification is free but reservation of the name, once approved by the SEC, costs PHP 40 for the first 30 days. The company name can be reserved for a maximum of 120 days for a fee of PHP 120, which is renewable upon expiration of the period.
Step 2. Deposit paid-up capital in the authorized agent bank (AAB) and obtain bank certificate of deposit
The company is required by law to deposit paid-up capital amounting to at least 6.25% of the authorized capital stock of the corporation. This paid-up capital must not be less than PHP 5,000.
Step 3. Notarize articles of incorporation and treasurer's affidavit at the notary
Step 4. Register the company with the SEC
The company can register online through SEC i-Register but must pay on site at the SEC. The following documents are required for SEC registration:
a. Company name verification slip;
b. Articles of incorporation (notarized) and by-laws;
c. Treasurer's affidavit (notarized);
d. Statement of assets and liabilities;
e. Bank certificate of deposit of the paid-in capital;
f. Authority to verify the bank account;
g. Registration data sheet with particulars on directors, officers, stockholders, and so forth;
h. Written undertaking to comply with SEC reporting requirements (notarized); and
i. Written undertaking to change corporate name (notarized).
Step 5. Obtain the business permit application form and community tax certificate (CTC) from the Cebu City Hall representative at Department of Trade and Industry's National Economic Research and Business Action Center (NERBAC)
Step 6. Notarize the business permit application form at the notary
Step 7. Obtain the Business Tax Payment Certificate (BTPC) from the Cebu City Hall representative at DTI NERBAC
Once the BTPC is issued, the company can already operate while it is given 60 days to comply with other legal requirements such as barangay clearance and Social Security System (SSS), Philippine Health Insurance Company (PhilHealth) and Bureau of Internal Revenue (BIR) registration, and to submit itself to the required inspections. For purposes of this study, the cost of the barangay clearance has been included in the total cost for the business permit even though this is paid to the barangay separately after the issuance of the BTPC.
The city has a joint inspection team (JIT) consisting of representatives from the Zoning Department, Office of the Building Official, City Health Department, Bureau of Fire Protection and the Office of the Mayor. Inspections are conducted within sixty (60) days from issuance of the BTPC.
Step 8. Buy special books of account at bookstore
Step 9. Apply for Certificate of Registration (COR) and Taxpayer Identification Number (TIN) at the BIR
The company must register each type of internal revenue tax for which it is obligated by filing BIR Form No. 0605 and paying the annual registration fee of PHP 500. Upon registration, the BIR will issue to the company the certificate of registration—BIR Form No. 2303.
To obtain the TIN, the company has to file:
a. Barangay clearance;
b. Mayor's permit; and
c. Copy of its SEC registration.
For company registrations filed with the SEC Head Office in Metro Manila, the BIR confirms the pre-registered TIN issued by the SEC.
Step 10. Pay the registration fee and documentary stamp taxes (DST) at the AAB
The company must pay DST on the original issuance of shares of stock. The rate is PHP 1 on each PHP 200 or a fractional part thereof, of the par value of such shares of stock. This payment with the BIR should be made on the 5th of the month following registration with the SEC.
The COR will be released only after all the DSTs are paid.
The company must also pay DST on its lease contract at the rate of PHP 3 for the first PHP 2,000 or fractional part thereof, and an additional PHP 1 for every PHP 1,000 or fractional part thereof in excess of the first PHP 2,000 for each year of the lease as stated in the contract.
Step 11. Obtain the authority to print receipts and invoices from the BIR
The authority to print receipts and invoices must be secured before the sales receipts and invoices may be printed. The company can ask any authorized printing company to print its official forms, or it can print its own forms (i.e., it uses its computers to print loose-leaf invoice forms) after obtaining a permit from BIR for this purpose. To obtain the authority to print receipts and invoices from the BIR, the company must submit the following documents to the Revenue District Office (RDO):
a. Duly completed application for authority to print receipts and invoices (BIR Form No. 1906);
b. Job order;
c. Final and clear sample of receipts and invoices (machine-printed);
d. Application for registration (BIR Form No. 1903); and
e. Proof of payment of annual registration fee (BIR Form No. 0605).
Step 12. Print receipts and invoices at the print shops
The cost is based on the following specifications of the official receipt: 1/2 bond paper (8 ½ x 5 ½ cm) in duplicate, black print, carbonless for 10 booklets.
Step 13. Have books of accounts and Printer’s Certificate of Delivery (PCD) stamped by the BIR
After the printing of receipts and invoices, the printer issues a Printer’s Certificate of Delivery of Receipts and Invoices (PCD) to the company, which must submit this to the appropriate BIR RDO (i.e., the RDO which has jurisdiction over the company’s principal place of business) for registration and stamping within thirty (30) days from issuance. The company must also submit the following documents:
a. All required books of accounts;
b. VAT registration certificate;
c. SEC registration;
d. BIR Form W-5;
e. Certified photocopy of the ATP; and
f. Notarized taxpayer-user’s sworn statement enumerating the responsibilities and commitments of the taxpayer-user.
The company must also submit a copy of the PCD to the BIR RDO having jurisdiction over the printer’s principal place of business.
Step 14. Register with the SSS
To register with the SSS, the company must submit the following documents:
a. Employer registration form (Form R-1);
b. Employment report (Form R-1A);
c. List of employees, specifying their birth dates, positions, monthly salary and date of employment; and
d. Articles of incorporation, by-laws and SEC registration.
Upon submission of the required documents, the SSS employer and employee numbers will be released. The employees may attend an SSS training seminar after registration. SSS prefers that all members go through such training so that each member is aware of their rights and obligations.
Step 15. Register with PhilHealth
To register with PhilHealth, the company must submit the following documents:
a. Employer data record (Form ER1);
b. Report of employee-members (Form ER2);
c. SEC registration;
d. BIR registration; and
e. Copy of business permit.
Upon submission of the required documents, the company shall get the receiving copy of all the forms as proof of membership until PhilHealth releases the employer and employee numbers within three months.