Unregistered Business Philippines

Legality of Operating a Small Unregistered Online Business in the Philippines

Question:

I have a small online business that has been operating for four years, and it's not registered. I don't earn more than P20,000 monthly. Is this legal?

Answer:

Legal Requirements for Businesses in the Philippines:

1. Business Registration: Under Philippine law, specifically the Code of the Municipality where your business operates, all businesses are generally required to be registered.

2. Tax Registration: The Bureau of Internal Revenue (BIR) requires all income-generating entities to be registered and to pay appropriate taxes.

3. DTI and SEC: Sole proprietorships need to be registered with the Department of Trade and Industry (DTI), while corporations and partnerships typically register with the Securities and Exchange Commission (SEC).

4. Online Sellers: Republic Act 10175, also known as the Cybercrime Prevention Act, could potentially be applicable to online businesses, although its primary focus is not on business registration.

Consequences of Not Registering:

1. Penalties and Fines: You may be subjected to penalties, fines, or even criminal charges for operating an unregistered business.

2. Tax Evasion: Failing to register with the BIR could lead to charges of tax evasion.

3. Lack of Legal Protections: Operating without registration could make it difficult for you to enforce contracts or seek legal remedies.

Income Level:

The fact that you earn less than P20,000 monthly doesn't exempt you from the requirement of business registration. However, it may qualify you for some tax incentives or exemptions, depending on existing laws and regulations.

Recommendation:

1. Business Registration: It's advisable to register your business with the appropriate government agencies to avoid legal complications.

2. Tax Consultation: Speak with a tax consultant to understand your tax obligations and potential exemptions.

3. Legal Counsel: Consult a lawyer to fully comprehend the legal ramifications of operating an unregistered business and how to transition to a legally compliant status.

Conclusion:

Regardless of how small your online business is or how much you earn, it's generally advisable to adhere to the legal requirements of business and tax registration to avoid potential complications.

Disclaimer:

This article is for informational purposes only and does not constitute legal advice. For personalized legal advice, consult with a qualified attorney.