A Sole or Single Proprietorship is a business structure owned by one natural person. The owner is in direct control of all business areas. Most of small business owners chose to operate as a sole proprietorship due to numerous benefits.
Advantages of Sole Proprietorship:
- Simple business structure
- Easy to make decision
- Minimal government compliance is required
- Lower initial investment and set-up cost
Disadvantages of Sole Proprietorship:
- No legal separation of business and personal liability
- Limited growth
- Difficulty in raising funds
Steps in Business Registration
Step #1: Obtain a Certificate of Business Name (BN) Registration from Department of Trade and Industry (DTI)
Step #2: Get barangay clearance at the barangay where your business is located
Step #3: Obtain business permit from municipal hall
Step #4: Go to BIR office for Certificate of Registration (COR)
After obtaining the permits and licenses, sole proprietor employing services of another person in business undertaking needs to be registered in other government agencies.
Step #5: Social Security System – RA 8282, Social Security Act of 1997 Sec. 2. Requirements: SSS Forms R-1 (Employer Registration) and R-1A (Employment Report)
Step #6: Home Development Mutual Fund (HDMF) RA 7742. Required for SSS members earning at least P4,000.00 monthly
Step #7: Philippine Health Insurance Corp. (PHIC) RA7875/RA 9241
Alternatively, sole proprietors may walk-in at DTI office and proceed with PBR kiosk for one-stop shop registration and follow these steps:
- Applicant fills out the PBR application form and submits to DTI Teller for processing.
- DTI Teller secures applicant’s Tax Identification Number (TIN).(If there is an existing TIN, PBR will validate against records).
- Business Name (BN) Certificate and Employer’s Registration Numbers (ERNs) are processed.
- A Transaction Reference Number (TRN) is presented to Cashier for BN fee.
- Official Receipt of Payment is presented to the DTI Releasing Office for the BN Certificate.
- Applicant gets SSS, Philhealth, and Pag-IBIG ERNs from DTI Teller.
- Certificate of Registration or Employer ID can be secured from agencies upon presentation of PBR-generated ERNs.
Disclaimer: Information contained in this article may become outdated and is therefore meant as general guidance only. It is not intended as professional accounting or tax advice.