Are you planning on starting your business in the Philippines? The country offers immense opportunity for entrepreneurs and investors in several industries such as manufacturing, Business Process Outsourcing, E-commerce and more.
In this article, we will take a look at the essentials of starting a business in the Philippines including the types of business entities, requirements, and process of registering your business.
Popular Business Structures in the Philippines
1. Domestic Corporation
A Domestic Corporation is the most popular legal entity for businesses in the Philippines. It is similar to LLC or a private limited company as it is a separate legal entity where the owner's liability is limited to the amount of share capital.
A domestic corporation can have up to fifteen (15) directors including foreigners. Most corporations can have 100% foreign ownership unless specified in the Foreign Investment Negative List. For industries on the aforementioned list, they either require a certain percentage of Filipino ownership or must be fully Filipino-owned.
2. One Person Corporation (OPC)
The One Person Corporation (OPC) is similar to a domestic corporation in the Philippines except the fact that an OPC has only one shareholder that can only be a natural person, a trust, or an estate..
As an OPC only has a single shareholder, the capital requirements are easier to determine as compared to a Domestic Corporation given that it is only either a Filipino-Owned OPC or a Foreign-Owned OPC.
3. Sole Proprietorship
A Sole Proprietorship has only one owner. The owner has full control over the business and owns all assets and profits. Unlike a corporation or an OPC, the sole proprietor is personally liable for any debts and losses incurred by the business without limitation. This means that the liabilities of the sole proprietorship will be absorbed by the owner’s assets and profits.
Refer to types of business entities in the Philippines for more details on business entities and their characteristics in the Philippines.
Understanding Key Requirements for Setting Up a Business in the Philippines
When establishing your corporation in the Philippines, whether it's a standard Domestic Corporation or a One Person Corporation (OPC), you need to define its structure correctly. This involves appointing shareholders, directors, and corporate officers according to the rules set by the Securities and Exchange Commission (SEC) to ensure compliant operations.
Let's take a look at these in detail.
I. Number of Shareholders in a Corporation in the Philippines
Shareholders are the owners of the corporation. The structure differs primarily between standard corporations and OPCs:
| Type of Corporation | Number of Shareholders | Who can be a shareholder |
|---|---|---|
| Domestic Corporation | 2 to 15 | Natural personPartnershipAssociationCorporation |
| One Person Corporation (OPC) | Only 1 shareholder | Natural personTrustEstate |
II. Requirements for Directors
The shareholders elect the Board of Directors, responsible for governing the corporation. In an OPC, the single shareholder also serves as the sole director.
Directors of a company in the Philippines must meet the following requirements:
- Must be a natural person and of legal age
- Must hold at least one share
- Must not have been convicted of a crime punishable by imprisonment for longer than six years
- Must not have violated the Corporation Code within five years before the date of election
Since directors must hold shares, a domestic corporation can have no more than 15 shareholders. Meanwhile, in an OPC, the sole shareholder is also the director.
III. Corporate Officers Requirement
The Board of Directors appoints the corporate officers who handle the company's day-to-day management and administration. Philippine corporations must appoint the following officers:
- President. The president acts as the signatory on behalf of the corporation. He or she must be a shareholder and a director. As such, the sole shareholder of an OPC is also the president.
- Treasurer. The treasure is in charge of all financial matters in the corporation. The president of an OPC may also hold this position. However, in such cases, the OPC president/treasurer must pay a surety bond. The amount of the surety bond depends on the company’s authorized capital stock.
- Corporate Secretary. The corporate secretary handles all of the corporation’s administrative and informative work. Many corporate secretarial tasks involve maintaining compliance with laws. As such, your corporate secretary must have in-depth knowledge of laws and regulations regarding corporations.
Having a knowledgeable Corporate Secretary is vital for ongoing compliance. Emerhub provides expert Corporate Secretarial services in the Philippines, ensuring your company adheres to all local regulations.
IV. Minimum Capital Requirements When Starting a Business in the Philippines
The required minimum capital for setting up your business in the Philippines depends heavily on the percentage of foreign ownership and the type of business activity, rather than just the corporate structure itself.
For instance, if you register a company in the Philippines with at least 60% Filipino ownership, the minimum capital requirement is PHP 5,000 (USD 90). However, if the foreign owners own 40% or more, the minimum capital requirement goes up to USD 200,000.
With that being said, it is possible to reduce the minimum capital requirements for a foreign owned domestic corporation from USD 200,000 to a lower amount. For that, you can book a free consultation with Emerhub's business advisors by filling out the form below.
| Business Structure | Minimum Capital Requirement |
|---|---|
| Domestic Corporation (>=60% Filipino ownership) | PHP 5,000 |
| One Person Corporation (Filipino-owned) | PHP 5,000 |
| Foreign-owned Domestic Corporation | USD 200,000 |
| Sole Proprietorship | None |
Note: Companies primarily focused on exporting or operating within specific incentivized sectors may not be subject to the high domestic market enterprise capital requirements.If you are unsure whether your planned operation need to comply with the minimum capital requirements or not, talk to our consultants.
How to Start a Business in the Philippines
To legally start and operate your business in the Philippines, you need to complete several key registration steps. This involves reserving your company name, registering your business with the Securities and Exchange Commission (SEC), securing permits from the Local Government Unit (LGU), registering for taxes with the Bureau of Internal Revenue (BIR), and registering as an employer with social security agencies.
Here is the step by step process of starting a business in the Philippines:
1. Reserve Your Company Name with the SEC
To start the business operations in the Philippines, companies must reserve their business name with the Securities and Exchange Commission (SEC). The business name must be unique and comply with the business naming regulations in the Philippines.
2. Prepare and File Incorporation Documents with the SEC or DTI
Once your name is reserved, you need to prepare and file the core incorporation documents with the SEC to legally establish your corporation.
Following are the required documents to register a business in the Philippines with the SEC:
- Cover Sheet: The SEC's standard application form.
- Name Reservation: Proof that your chosen name is reserved.
- Articles of Incorporation (AoI): Defines the corporation's primary purpose, structure, and basic details.
- By-laws (BL): Outlines the internal rules for governing the corporation (meetings, director duties, etc.).
- Treasurer’s Affidavit: Attests that the required capital (subscribed and paid-up, as defined in your AoI, even if no strict minimum applies generally) has been received.
- SEC Form F-100/F-105 (if applicable): Required for corporations with foreign equity, detailing the investment.
Emerhub's experienced business advisors draft the articles of incorporation and bylaws and obtain the certificate of registration from the SEC on your behalf.
Note: Under SEC Memorandum Circular No. 3, Series of 2025, it is now mandatory for domestic corporations (both with local and foreign equity) to use SEC ZERO for company registration. This new digitalization initiative aims to move to paperless system and streamline the overall company registration process.
3. Obtain the Necessary Business Permits (Barangay & Mayor's Permit)
After receiving your SEC Certificate of Registration, you must obtain business permits from the Local Government Unit (LGU) where your business address is located. This typically involves two key stages:
- Barangay Clearance: An approval from the local barangay (village/district) office confirming your business complies with local community requirements.
- Mayor's Permit (Business Permit): Issued by the City or Municipal Mayor's office after submitting the SEC registration, Barangay Clearance, proof of address (like a lease contract), and potentially other local requirements (e.g., fire safety, sanitary permits).
These permits ensure your business complies with local ordinances and allow you to operate legally within that specific LGU. You must have a valid registered office address within the LGU to apply.
Emerhub can assist in finding a compliant office address (including virtual office options in prime locations like Makati CBD) and efficiently processing both the Barangay Clearance and Mayor's Permit applications.
4. Register with the Bureau of Internal Revenue (BIR) for Taxes
To conduct business activities in the Philippines, compliance with national tax laws is mandatory. You must register your newly formed corporation with the Bureau of Internal Revenue (BIR) shortly after receiving your SEC registration and LGU permits.
This involves:
- Obtaining a Tax Identification Number (TIN) for the corporation.
- Registering your official books of accounts.
- Obtaining your BIR Certificate of Registration (Form 2303), which details your tax obligations (e.g., income tax, VAT or Percentage Tax).
- Getting authority to print official receipts/invoices.
You cannot legally issue official receipts or conduct taxable transactions without BIR registration.
Emerhub manages the complete BIR registration process, ensuring you obtain your TIN and Certificate of Registration correctly.
5. Register as an Employer (SSS, PhilHealth, Pag-IBIG)
Before you can legally hire and pay employees in the Philippines, your company must register as an employer with three mandatory government agencies:
- Social Security System (SSS): For employee social security, sickness, disability, and retirement benefits.
- Philippine Health Insurance Corporation (PhilHealth): For national health insurance coverage.
- Home Development Mutual Fund (HDMF or Pag-IBIG Fund): For housing loan benefits and savings.
Registration allows you to remit both employer shares and employee contributions legally, ensuring your compliance with Philippine labor and social security laws.
Emerhub will take care of employer registration with the SSS, PhilHealth, and Pag-IBIG within 2 working days.
To discuss your specific plan and requirements for starting a business in the Philippines, book a free consultation with Emerhub's experts by filling out the form below.
Frequently asked questions
Can a foreigner have 100% ownership of a company in the Philippines?
In the Philippines, 100% foreign ownership depends on the sector you want to operate in. This is common for export-oriented businesses or those operating within specific sectors promoted for foreign investment (like BPOs or certain manufacturing). However, certain sectors are subject to foreign ownership restrictions defined by the Constitution or specific laws (e.g., mass media, retail trade below certain capital thresholds). It is advisable to verify the specific rules for your intended business activity. Emerhub helps you determine the foreign ownership limits applicable to your business.
What is the minimum capital needed to start a business in the Philippines?
While Filipino-owned corporations often have no mandated minimum, foreign-owned companies (more than 40% foreign equity) targeting the domestic market are subject to a USD 200,000 minimum paid-up capital under the Foreign Investments Act. Crucially, this can often be reduced (e.g., to USD 100,000 or less) if your company utilizes advanced technology, employs at least 50 Filipino workers, or meets other specific criteria. Keep in mind that export-focused businesses generally do not face this high capital requirement.
How long does it usually take to register a company in the Philippines?
The total timeline to register a company in the Philippines varies on your planned activities and additional approvals. The SEC registration itself takes two to four weeks once all documents are correctly submitted. Obtaining LGU permits (Barangay and Mayor's) can take another one to three weeks, depending on the location. Additionally, BIR registration might take one to two weeks. Therefore, achieving basic operational readiness (SEC, LGU, BIR) can realistically take one to two months. Opening a corporate bank account will add several more weeks. It is advisable to Plan for two to four months for the full end-to-end setup including banking. Emerhub manages each step efficiently to streamline the overall process for you.
Do I need a local Filipino partner or director for my company?
You generally do not need a local Filipino shareholding partner if your business activity allows 100% foreign ownership. However, there are specific residency and citizenship requirements for officers and directors: Emerhub provides qualified Corporate Secretarial services and can advise on fulfilling residency requirements for officers and directors.
Can I use a virtual office address for my Philippine business registration?
Yes, in many cases, you can use a virtual office address for the initial company registration with the SEC and for securing LGU permits (Barangay Clearance and Mayor's Permit), especially if your business activities do not inherently require a physical operational space according to regulations. Emerhub offers compliant virtual office packages in prime business locations like Makati CBD, suitable for business registration and LGU permit applications.
How long does it take to register a Sole Proprietorships business?
For Sole Proprietorships, registration is simpler and done with the Department of Trade and Industry (DTI), not the SEC. Our consultants can complete the DTI registration on your behalf in as little as one day.