Small Business Registration with the DTI and BIR in the Philippines
A practical, step‑by‑step legal guide (updated 2025)
Scope. This article focuses on the usual pathway for a sole proprietorship—the form of enterprise that registers its business name with the Department of Trade and Industry (DTI) and thereafter secures its tax credentials from the Bureau of Internal Revenue (BIR). Where relevant, the guide flags what differs if you later convert to a partnership or corporation (in which case you start with the Securities and Exchange Commission, not the DTI).
1. Legal Foundations
| Law / Regulation | Key Points for Small Businesses |
|---|---|
| RA 3883 (Business Name Law) + DTI Dept. Admin. Order 18‑07 (2018) | • Only Filipino citizens (or 60 % Filipino–owned entities) may register a business name. • Names must be distinct, non‑misleading, and not immoral. • A certificate is valid 5 years and is renewable. |
| National Internal Revenue Code (as amended) + Revenue Regulations 7‑2012, 19‑2020, 9‑2021 | • All businesses must register on or before the start of operations or within 30 days of issuance of Mayor’s permit, whichever comes first. • ₱500 annual registration fee per head office/branch (payable every January). |
| RA 11032 (Ease of Doing Business & Efficient Government Service Delivery Act, 2018) | • Caps processing times (e.g., 3 working days for simple BIR transactions). • Mandates online systems such as DTI BNRS NextGen and BIR NewBizReg. |
| RA 9178 (Barangay Micro Business Enterprises Act) | • Micro firms ≤ ₱3 million asset size may apply for income‑tax exemption and LGU fee reduction once DTI & BIR registration is complete. |
2. Choosing Your Structure (Why It Matters)
| Structure | First‑stop agency | Liability | Who usually uses it? |
|---|---|---|---|
| Sole Proprietorship | DTI | Unlimited personal liability | Market stalls, online sellers, freelancers, consultancies |
| Partnership / Corporation | SEC then BIR | Partners/corp. are separate juridical persons | Start‑ups seeking investors, higher‑risk trades |
| One‑Person Corporation (OPC) | SEC then BIR | Limited to capital | Solo entrepreneurs wanting limited liability |
If you begin as a sole prop and outgrow it, you can later fold the DTI business name (BN) into a corporation via asset transfer and SEC registration; the Tax Identification Number (TIN) of the old proprietorship is then cancelled through BIR Form 1905 and a new corporate TIN issued.
3. DTI Business Name Registration – Step‑by‑Step
| Step | What to prepare | Fees (2025) | Tips / Common pitfalls |
|---|---|---|---|
| 1. Name search @ BNRS NextGen (bnrs.dti.gov.ph) | At least two alternative names | Free | Avoid trade names containing “Corporation,” “Bank,” or barangay names unless coverage is barangay‑wide. |
| 2. Online application | • Valid ID • Taxpayer Identification Number (TIN) (if you already have one; you may get it at BIR later) |
— | Use an e‑mail you actually check—DTI sends the e‑certificate here. |
| 3. Pay via GCash, PayMaya, credit/debit, or OTC | See coverage: Barangay ₱230 City/Municipality ₱530 Regional ₱1,030 National ₱2,030 |
+₱30 documentary‑stamp tax (DST) auto‑collected | Pay within 5 calendar days or the application lapses. |
| 4. Download/print the Certificate of Business Name Registration | — | — | Print multiple copies; you’ll need one for Barangay, BIR, and bank opening. |
Validity & Renewal. A BN is good for 5 years. Renewal may be filed 6 months before up to 6 months after expiry (late fees apply after the anniversary date).
4. Local Government Clearances (LGU Layer)
Even though the user asked only about DTI + BIR, LGU permits are a legal prerequisite to BIR registration; omitting them will stall your COR.
- Barangay Business Clearance
- Bring your DTI certificate, proof of address (lease or tax declaration), and ID.
- Mayor’s / Business Permit (at City Hall or Municipal Hall)
- Documents: Barangay clearance, location sketch, occupancy permit, DTI certificate, ID photos.
- Fees vary by LGU and business line; new enterprises usually pay mayor’s permit fee, garbage fee, and sanitary inspection fee.
- Renewal period: 1 – 20 January every year.
- Zoning & Fire Safety Inspections may be nested into the Mayor’s permit; keep the receipts—they are exhibit “A” for the BIR.
5. BIR Registration – Sole Proprietor Track
Core forms & one‑time fees
| Form | Purpose | When / Where filed | Cost |
|---|---|---|---|
| BIR 1901 | Registration of self‑employed / sole prop. | At the Revenue District Office (RDO) where head office is located. | — |
| BIR 0605 | Annual Registration Fee (ARF) | Pay at AAB* or online (eFPS/e‑pay) | ₱500 |
| BIR 2000 | DST on COR | Same day as 1901 | ₱30 |
| BIR 1906 | Authority to Print (ATP) receipts/invoices or Notice of Issuance of OR when using Computerized Accounting System (CAS) or e‑Invoicing | Optional if you use BIR‑accredited POS/e‑books | ~₱1,500–₱2,500 printing cost for initial 10 booklets (private printer) |
*Authorized Agent Bank.
Documentary checklist
- DTI Certificate of BN
- Mayor’s Permit (or Official Receipt showing application is in process—Revenue Memorandum Circular 57‑2020 lets the RDO accept it)
- Valid government‑issued ID
- Proof of address (lease, OR of real‑property tax, or notarized consent if home‑based)
- Duly filled BIR forms (above)
The RDO will issue:
- Certificate of Registration (BIR Form 2303) – keep framed at business premises.
- “Ask for Receipt” Notice – display beside the cashier.
- Validated BIR stamped books of accounts or e‑books acknowledgement.
Timelines under Ease of Doing Business
Simple BIR registration must be completed within 3 working days after submission of complete documents. In practice, many RDOs issue the COR the same day when lines are short.
6. After‑Registration Tax Compliance
| Obligation | Frequency | Where filed / paid | Notes for small/micro firms |
|---|---|---|---|
| Percentage Tax (BIR 2551Q) or VAT (BIR 2550Q) | Quarterly | eBIRForms/eFPS | Choose: (a) VAT if expected gross sales > ₱3 M; (b) Non‑VAT 3 % percentage tax ⇢ OR opt‑in 8 % flat income tax (replaces 0 % percentage + graduated income rate). |
| Income Tax Return (BIR 1701Q / 1701A) | Quarterly & Annual | eBIRForms/eFPS | Small sole props may elect the 8 % regime if non‑VAT. |
| Expanded Withholding (BIR 0619E/1601EQ) | Monthly & Quarterly | — | If you pay rent > ₱15k/mo or hire freelancers. |
| Annual Registration Fee (BIR 0605) | Every January 31 | — | ₱500 per place of business. |
| Inventory of Unused Receipts (BIR 1905) | On ATP expiry (5 years) | — | Apply for new ATP at least 2 weeks before expiry. |
| Books of Accounts | Annual for manual books (stamping) or before activation for CAS | — | Micro firms may use loose‑leaf Excel if approved. |
Failing to file on time triggers a 25 % surcharge + 12 % interest p.a. + compromise penalty (₱1 k–₱50 k).
7. Special Incentive Path: BMBE Registration
- Apply for Barangay Micro Business Enterprise Certificate at DTI Negosyo Centre (or LGU Treasurer).
- Present DTI BN, TIN, and financial statements showing ≤ ₱3 million assets.
- Once approved:
- Income–tax exemption on income from operations.
- Exemption from the 3 % percentage tax (interpretative BIR rulings apply).
- LGUs may impose zero local taxes & fees (optional for LGU).
- Renewal every 2 years.
8. Common Trouble Spots (and How to Avoid Them)
- Unfiled “No Operations” Returns. Even if sales are zero, quarterly returns are still due—file a nil return to dodge penalties.
- Wrong RDO. TINs are jurisdiction‑specific; transferring business address requires an RDO transfer via BIR 1905 before filing returns in the new district.
- Mixed Income Earner Confusion. If you run a side business while employed, you cannot claim the 8 % flat rate on your self‑employment income unless your total compensation ≤ ₱3 million.
- Late DTI Renewal. Pay within six months after expiry or the BN lapses; you might lose the name to another applicant.
- Missing ATP. Printing receipts without an approved ATP is punishable by closure (Section 115, NIRC).
9. Digital Tools Worth Trying
| Platform | What it does | Practical tip |
|---|---|---|
| DTI BNRS NextGen | Online name search, application, payment, renewal | Use the “Proceed Without Middle Name” fix if your ID carries a middle initial only. |
| BIR NewBizReg | Upload 1901, Mayor’s OR, etc.; RDO e‑mails the COR | Check the RDO’s specific e‑mail on the confirmation page—attachments go there. |
| eBIRForms v7 | Offline form preparation & online submission | Generate the .xml then “Submit/Validate” twice—first submission is just validation. |
| Mobile e‑FPS (pilot RDO 043A, 2025) | File and pay via QR Ph | Keep the eFPS acknowledgement & GCash ref. nos. together for audit trail. |
10. Lifecycle Events Requiring BIR Updates
| Change | File BIR Form | Deadline |
|---|---|---|
| Change of Business Address | 1905 + proof of new address | Before effectivity |
| Change of Tax Type (e.g., non‑VAT → VAT) | 1905 | Within the month prior to exceeding ₱3 M gross |
| Closure / Retirement | 1905 + inventory & unused ORs | Within 10 days from cessation |
| Conversion to Corporation | 1905 (cancel), SEC docs (new TIN) | Within 30 days after incorporation |
11. Practical Timeline (Typical Metro Manila Sole Prop)
| Day | Task |
|---|---|
| Day 0 | Brainstorm & reserve business name on BNRS. |
| Day 1 | Pay BNRS; download DTI certificate. |
| Days 2‑3 | Secure Barangay Business Clearance. |
| Days 4‑7 | Apply for Mayor’s Permit (fire & sanitary inspections run concurrently). |
| Day 8 | File BIR 1901, pay ₱530 (ARF 500 + DST 30), receive COR, ATP, books stamped. |
| Day 9 + | Print official receipts (3–5 days). Start operations legally. |
With the LGU one‑stop shops mandated by RA 11032, many entrepreneurs finish everything in under two weeks—some in three business days if the RDO accepts the Mayor’s payment receipt in lieu of the printed permit.
12. Penalties & Enforcement Highlights
| Violation | Statutory Penalty |
|---|---|
| Operating without BIR registration | Closure order + ₱20 k–₱50 k fine (NIRC § 258). |
| Failure to register books/receipts | ₱1 k–₱50 k compromise per booklet/notebook. |
| Late filing/payment | 25 % surcharge + 12 % interest p.a. + compromise (₱200–₱50 k). |
BIR examiners may inspect your premises anytime during business hours. Always keep: (1) COR, (2) Mayor’s permit, (3) DTI certificate, (4) “Ask for Receipt” notice, (5) last 3 years’ books and ORs.
13. Frequently Asked Questions
Q: Can I register a DTI business name before I have a permanent address?
A: Yes—DTI only needs you to declare an address (even home‑based). But BIR will want proof (lease, consent letter) when you file 1901.Q: I sell purely on Shopee/Lazada—do I still need printed receipts?
A: If the platform issues BIR‑accredited receipts in your name, you may submit a waiver of ATP and switch to an e‑receipt solution; otherwise, a regular ATP is still required.Q: What if I incorporate later—do my OR booklets carry over?
A: No. The proprietorship and corporation are different taxpayers; unused ORs of the sole prop must be inventoried and destroyed under BIR supervision, and new CAS or ATP issued to the corporation.Q: Is the ₱500 BIR annual registration fee still required under RA 11972 (Ease of Paying Taxes Act)?
A: Yes; pending the BIR’s implementing rules, the ARF remains in force for 2025.
14. Checklist for Compliance Nerds (Print & Post)
- DTI BN certificate (validity check)
- Barangay Business Clearance (renew every Jan)
- Mayor’s Permit & fire/sanitary clearances
- BIR COR + “Ask for Receipt” poster
- ATP / e‑receipt accreditation & books of accounts
- eBIRForms installed + user credentials tested
- Calendar reminders for quarterly and annual filings
- Set aside cash for ₱500 ARF every January
- Review gross sales vs. VAT ₱3 M threshold
15. Final Thoughts & Disclaimer
Registering a micro or small enterprise in the Philippines still involves three regulatory layers—DTI or SEC, LGU, and BIR—but online portals and the Ease of Doing Business law have made the journey far faster than a decade ago. Stay on top of renewals, file even zero‑sales returns, and consider the BMBE incentive if your asset base is micro‑size.
This guide is for general information only and does not constitute legal advice. Consult a Philippine lawyer or a BIR‑accredited tax practitioner for advice tailored to your specific facts.
Good luck—may your books always balance and your receipts never run out!