Are you opening a small business soon? Specifically an online store? If so, one of the first tasks you should make time for is applying for a business permit.
Before you can start operating your small business, this is a crucial document you need to get because this serves as proof that you can legally operate your business in that specific city or town—even if you’re an online store.
Studies show that 94% of customers are more likely to appreciate and transact with a legitimate business. This is important, especially for Philippine MSMEs.
The process of getting a business permit is overwhelming especially if you are unfamiliar with the requirements. In this blog post, we’ll guide small business owners on how to get a business permit in the Philippines including the complete list of requirements you need to submit and where to go.
What is a Business Permit?
All registered businesses—including online shops—are required to get a business permit. It is a certificate that shows proof that your business is legitimate and has the license to operate in the city or town where it’s registered.
Business permits are issued to make businesses reliable to pay their corresponding taxes and comply with local regulations for safety, health, and sanitation. This document also entitles the owners and businesses to any support provided by their local government.
It is important to remember that you cannot operate your small business without an updated business permit or you’ll face potential sanctions including fines and imprisonment.
List of Requirements To Get A Business Permit (Mayor’s Permit)
If you are running or planning to open a small business, here is a list of requirements you need to get a Business Permit in your city or town.
- Barangay Business Clearance
- Community Tax Certificate
- Authorization Letter of Owner with ID
- Sketch of the Business Location
- Contract of Lease/Certificate of Title (if your physical store is either leased or owned)
- Occupancy Permit
- Locational/Zoning Clearance
- Public Liability Insurance
- Sanitary Permit
- Fire Inspection Permit
- Certificate of Business Name Registration (from Department of Trade and Industry if Sole Proprietorship); Articles of Partnership/Incorporation (from Securities and Exchange Commission if Partnerships); Certificate of Registration (from Cooperative Development Authority if Cooperatives)
Just keep in mind that some local governments may have other additional requirements but the ones listed here are the most important and common ones.
Steps on How to Get a Business Permit
Getting a business permit in the Philippines is usually a manual process that requires you to physically appear at varied government offices. Although some Local Government Units have slowly adopted a hybrid system that involves online booking for physical appointments.
The step-by-step process of getting a business permit varies per city or town where your business is located, especially now with the strict Covid-19 protocols. But here’s a simplified version for you to get an idea of how to get a business permit.
- Secure the list of requirements (as listed above).
- Go to the Business Permit and Licensing Office in the city or town hall where your business is located.
- Fill out the application form.
- Submit the application form together with the initial requirements.
- An assessor will then assess your application for tax and fees.
- Pay the necessary taxes and fees to the city treasurer or cashier.
- Submit the remaining requirements, if there are any.
- Claim your business or mayor’s permit.
Congratulations, you can now legally operate your small business!
Guide on Business Permit Renewal
As a small business owner, it’s important to note that a business permit application is not a one-time activity. It has to be renewed every year as long as your business is operating.
There is still a lot of work required and documents to be prepared for Business Permit Renewal so it’s better if you start filing it before its deadline (January 20 of each year).
The documents for business permit renewal may vary depending on your city or town. But the common requirements include the previous year’s Business Permit, Barangay Clearance Certificate, CTR, Sanitary Permit, and Fire Safety Inspection Certificate along with the following additional and updated documents:
- Audited Financial Statements from the previous year
- Confirmation of the number of employees at the time of Business Permit Renewal (this includes their individual addresses, registration numbers for TIN, SSS, PHIC, Pag-ibig, etc.)
- Quarterly VAT returns from the previous year
- Letter of Explanation (if gross sales is lower than the previous year)
With regards to the fees of the renewal process, it also depends on the city or town your business is located—so, it’s best if you check with your Local Government Unit for the applicable fees and charges.
You should also keep in mind that there’s a 25% surcharge on renewal fees and an additional 2% every month if you fail to renew your business permit on time.
Plus, the queues and waiting lines in the City or Municipal Hall get longer and longer as the deadline comes close—so it would be better if you prepare early and do not process your renewal at the very last minute.
Business Permits FAQs
Does a small business need a business permit?
Yes. All businesses, whatever type or form, are required to secure a business permit or mayor’s permit from the city or town where their business is located.
How much does a business permit cost in the Philippines?
The fees vary depending on your location but most LGUs would charge around P500-P600 for their processing fee.
Is a Mayor’s Permit the same as Business Permit?
The Business Permit is also often referred to as the Mayor’s Permit in the Philippines because it is issued by the local government with jurisdiction over the place of business.
Final Thoughts
The process of getting a business permit doesn’t have to be overwhelming, especially if you’re a solo entrepreneur. If you prepare ahead and know all the requirements, you can make the process much easier and faster for yourself.
We hope this article has helped you have a better understanding of how to get a business permit in the Philippines. Have questions about permits or other aspects of starting an online business? Leave us a comment below and we’ll do our best to help you.
Further reading:
- How to Find a Niche for Your Online Business
- How to Find Investors for Your Online Business in the Philippines
- How to Register Your Online Business in BIR and DTI?
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