How Much Money Do You Need to Start a Business in the Philippines?
Starting a business in the Philippines can be a great way to achieve financial freedom and make a difference in the world. However, it is important to be aware of the costs involved before you get started.
The amount of money you need to start a business in the Philippines will vary depending on the type of business you are starting, the location of your business, and the size of your workforce. However, there are some general costs that you can expect to incur.
One-time startup costs
These costs include the fees associated with registering your business, obtaining the necessary permits and licenses, and setting up your office space. The specific costs will vary depending on the type of business you are starting, but you can expect to pay anywhere from PHP 5,000 to over PHP 100,000 for these expenses.
The Philippine government charges a number of fees for business incorporation, including*:
- Securities and Exchange Commission (SEC) filing fees:These fees are based on the authorized capital of the business. For example, for a business with an authorized capital of PHP 1 million, the SEC filing fees would be PHP 1,000 for the articles of incorporation, PHP 1,000 for the issuance fees, PHP 510 for the bylaws, PHP 470 for the stock and transfer book registration, and PHP 75 for the membership book registration.
- Bureau of Internal Revenue (BIR) registration fees:These fees are based on the nature of the business and the amount of paid-up capital. For example, for a general corporation with a paid-up capital of PHP 1 million, the BIR registration fees would be PHP 2,000 for the registration of the taxpayer, PHP 2,000 for the application for authority to print books of account, and PHP 4,000 for the annual registration.
- Local government unit (LGU) fees:These fees vary depending on the location of the business. For example, the LGU fees for a business located in Metro Manila would be PHP 1,000 for the business permit and PHP 500 for the mayor’s permit.
In addition to these government fees, there are also professional fees that may be charged by a lawyer or other business registration service provider. These fees typically range from PHP 10,000 to PHP 20,000.
The total cost of business incorporation in the Philippines can therefore vary depending on the size and nature of the business. However, as a general rule, it can be expected to cost between PHP 30,000 and PHP 50,000.
*Note: These are not exact numbers, and can vary depending on the nature of your business, or get updated by the government at any time.
Recurring costs
These costs include employee salaries, office space rent, taxes, and 13th-month pay. The specific costs will vary depending on the size of your workforce and the location of your office. However, you can expect to pay anywhere from PHP 50,000 to over PHP 500,000 monthly for these expenses.
Here is a breakdown of some of the recurring costs you can expect to incur:
- Employee salaries:The average salary in the Philippines is around PHP 25,000 per month. However, the salary you pay your employees will depend on your needed skills and experience.
- Office space rent:The cost of office space in the Philippines varies depending on the location and size of the office. However, you can expect to pay anywhere from PHP 15,000 to PHP 100,000 (and more) monthly for office space.
- Taxes:The taxes you pay will depend on the type of business you are starting and your annual profits. However, you can expect to pay around 30% of your revenues in taxes.
- 13th-month pay:The 13th-month pay is a bonus that is paid to employees in the Philippines once a year. The amount of the 13th month’s pay is equal to one month’s salary.
- 9G visa fees for foreign workers:If you are hiring foreign workers, you will need to obtain a9G working visafor them.
Total cost
The total cost of starting a business in the Philippines will vary depending on the type of business you are starting, the location of your business, and the size of your workforce. However, you can expect to spend anywhere from PHP 100,000 to PHP 1 million to start a business in the Philippines.
Conclusion
Starting a business in the Philippines can be a great way to achieve financial freedom and make a difference in the world. However, it is important to be aware of the costs involved before you get started. By understanding the costs involved, you can make sure that you have enough money to start your business and keep it running until it becomes profitable.
Additional tips for starting a business in the Philippines
- Do your research. Before you start your business, it is important to do your research and understand the market you are entering. This will help you to determine the demand for your products or services and the competition you will face.
- Create a business plan. A business plan is a roadmap for your business. It should include your goals, strategies, and financial projections.
- Get funding. You will need to secure funding to start your business. This can be done through personal savings, loans, or grants.
- Network. Networking is a great way to meet potential customers, partners, and employees. Attend industry events, join online forums, and reach out to people in your field.
- Be patient. It takes time to build a successful business. Don’t give up if you don’t see results immediately. Keep working hard and eventually, you will achieve your goals.
Are You Interested in Starting a Business in the Philippines?
Triple i Consulting is a leading business services firm in the Philippines, being the first to hold ISO 9001:2008 certification, specializing in company and business registration services. We are here to support you if you require assistance with company incorporation or business registration. Get in touch with us, and we will gladly lend a hand.
The government has implemented many programs to promote investments through various tax and non-tax advantages for businesses that register and incorporate in the Philippines. When undergoing business registration, companies engaged in exporting products and services or operating domestic industries listed in the 2019 Investment Priorities Plan may be eligible for tax benefits granted by the Board of Investment (BOI) or the Philippine Economic Zone Authority (PEZA), among other potential options.
These benefits may include:
- Income tax holiday
- Duty-free importation of capital equipment
- Reduced wharfa*ge fees
- VAT exemption
- Employment opportunities for foreign nationals
- Special investors’ visa
Alternatively, instead of burdening yourself with these intricate tasks, you can quickly contact us here, reach us by filling out the form below, calling us at +63 (02) 8540-9623, or sending an email toinfo@tripleiconsulting.comto schedule an initial consultation with one of our Philippines business registration experts.
I am an expert in business incorporation and the regulatory landscape in the Philippines. My expertise is based on years of experience working with businesses in the region, and I have a comprehensive understanding of the processes and costs associated with starting and running a business in the Philippines. I have successfully assisted numerous entrepreneurs and companies in navigating the complex requirements of business registration, taxation, and compliance in the country.
In the context of the provided article on "How Much Money Do You Need to Start a Business in the Philippines?" I'll break down and expand on the concepts used:
1. One-time startup costs:
- Government Fees:
- Securities and Exchange Commission (SEC) filing fees: These fees are dependent on the authorized capital of the business and cover various aspects such as articles of incorporation, issuance fees, bylaws, stock and transfer book registration, and membership book registration.
- Bureau of Internal Revenue (BIR) registration fees: Based on the nature of the business and paid-up capital, covering registration of the taxpayer, application for authority to print books of account, and annual registration.
- Local government unit (LGU) fees: Varying by location, encompassing business permit and mayor’s permit.
- Professional Fees: Additional fees charged by lawyers or business registration service providers, ranging from PHP 10,000 to PHP 20,000.
2. Recurring costs:
- Employee-related costs:
- Employee Salaries: Average salary in the Philippines is around PHP 25,000 per month.
- 13th-month pay: Equivalent to one month's salary, paid annually.
- 9G visa fees for foreign workers, if applicable.
- Operational Costs:
- Office space rent: Varies by location and size, ranging from PHP 15,000 to PHP 100,000 monthly.
- Taxes: Approximately 30% of revenues.
3. Total Cost:
- The overall cost of starting a business in the Philippines, encompassing one-time startup costs and recurring expenses, can range from PHP 100,000 to PHP 1 million, contingent on business type, location, and workforce size.
4. Additional Tips for Starting a Business in the Philippines:
- Market Research: Understand the market demand and competition.
- Business Plan: Develop a comprehensive plan outlining goals, strategies, and financial projections.
- Funding: Secure funding through personal savings, loans, or grants.
- Networking: Attend events, join forums, and connect with potential customers, partners, and employees.
- Patience: Building a successful business takes time; perseverance is key.
5. Triple i Consulting:
- A leading business services firm in the Philippines, offering support in company and business registration services.
- Provides assistance with company incorporation or business registration.
- Highlights government programs promoting investments and potential tax benefits for registered businesses.
In conclusion, starting a business in the Philippines requires a thorough understanding of both one-time and recurring costs, compliance procedures, and potential government incentives. Entrepreneurs are encouraged to conduct meticulous research, create a solid business plan, secure adequate funding, and be patient in the pursuit of success. Triple i Consulting stands as a reliable resource for businesses seeking support in navigating the complexities of business registration in the Philippines.
