Are you interested in starting your business venture with a group of people? Do you want to turn your sole proprietorship into a corporation? According to expert tax and audit services in the Philippines, based on their experience, a corporation reduces risks and although it will require more legal documents to set up, it will keep your personal assets protected in case of a debt settlement or lawsuit. Learn how to set up your own corporation in this article.
What is a Corporation?
Traditionally, a corporation is a legal entity composed of a group of people. It is distinct from its owners and has limited liabilities and risks which is most beneficial for entrepreneurs to establish a stock corporation.
The capital expenses are shared by the shareholders and incorporators. It is separate and distinct from its owners which means that the liabilities will not be taken against the assets of the owners but are taken against the corporation. The shareholders and the incorporators are safe in case of bankruptcy.
If you want to set up your own traditional corporation, the minimum number of incorporators required is 2 and the maximum number is 15. There are two types of corporations:
- Stock Corporation – the capital stock is divided into shares and is distributed to the holders of the shares, allotments, or dividends. It generates income for businesses.
- Non-stock Corporation – it is a corporation made for non-profit purposes and does not issue stocks.
Noteworthy, according to tax services in Manila, in the past few years, the BIR allowed the registration of a One Person Corporation. It also holds the same benefits of a traditional one, such as perpetual succession and separation of personal and business assets, except that there is only one incorporator.
Whether traditional or OPC, the BIR does not allow a corporation to be an incorporator of any other company. But, a corporation can acquire the stocks of another company after its incorporation.
How To Set Up a Stock Corporation with SEC?
You need to secure a name verification slip which you can get through the Securities and Exchange Commission main or satellite offices. Fill out the Articles of Incorporation and the By-laws. You may also do it through SEC’s CRS Web Portal. Create an account if you don’t have one yet. Fill out all necessary forms and print them out. Sign them and then you can now scan the documents and get them evaluated by uploading them to the system for evaluation.
Once approved, you can get the payment assessment form from the portal. Pay and get the proof of payment for you to upload. Once completed, submit the hard copy along with the BL and AOI to the SEC office.
Note that your treasurer needs to execute an affidavit showing the subscribed stocks of cost and shares subscribed. When you have completed all the application forms and complied with the procedures mentioned, within 2 weeks, your SEC Certificate should be released.
How To Completely Register as a Corporation?
- Secure your SEC Certificate of Registration
- Get a Barangay Clearance
- Visit the Mayor’s Office and Get a Business Permit
Prepare the following:
- SEC Certificate of Registration
- 2 Government IDs
- Proof of Address (i.e. Lease Certificate or Title)
- Barangay Clearance
Depending on the nature of your business, there will be additional requirements. Take gas stations as an example. They are required to get clearances from the DoE, get zoning clearances, fire safety inspection, etc.
To register with the BIR, the following steps will help you:
- Fill out the BIR Form 1903 and prepare the necessary documents
- File BIR Form 1901 so you can print your receipts and invoices
- Use BIR Form 1905 to process your book of accounts
- Pay BIR Form 0605
- BIR Form 200, pay Documentary Stamp Tax
If you have completed the requirements above, you may now claim your BIR Certificate of Registration, along with your authority to print official receipts. You can do all of these on your own or dispense with the stress by hiring a tax and accounting services in the Philippines.
What About the Corporation’s Employees?
Both the employer and employees must register with the following:
- Social Security System
- Philippine Health Insurance Corporation
- Home Development Fund
- Bureau of Internal Revenue
The requirements mentioned are mandatory. When you complete all them, safeguard your own copies of the documents for safekeeping. You must also make sure to display the necessary permits and notices in your place of business and your website. Your clients will be informed that you are compliant with the law. Plus, it will help improve your credibility as a legitimate corporation.
To help you secure the correct documents and prepare the right forms for your corporation, it is vital to seek a professional’s help. Reach out to our firm for assistance. We provide tax and accounting services in Pasig, along with business registration services.