Online businesses are thriving in the Philippines, as more and more Filipinos turn to online selling as a result of the COVID-19 economic crisis, which caused many to lose their jobs. The latest BIR decision forcing online merchants to register with the government and pay taxes to the government is sure to cause concern if you’re one of the financially strapped Filipinos who tries to make a living over the internet.

Online company registration and tax payment are required by law, and as a result, online retailers and anybody else who makes money online is obliged to follow the rules. Knowing how to complete these tasks correctly might alleviate your concerns.

Related: How to Start an Online Business?

Do I Need to Register My Online Business in the Philippines?

BIR registration is required, according to Revenue Memorandum Circular No. 60-2020, for “all persons conducting business and earning income in any manner or form, specifically those who engage in digital transactions through the use of any electronic platforms and media, and other digital means.”

However, the government clarified a few days after issuing the decree, stating that not all types of internet retailers are obliged to register with them.

The DTI and BIR do not require registration for persons who sell things “intermittently or irregularly” and those who sell homemade items as a hobby, according to the Department of Trade and Industry. According to the DTI, such internet vendors are not considered to be in business yet, and as a result, they are not required to register.

As a result, even if your firm is modest, you must register your company if you are earning money on a consistent basis through any internet means, including affiliate marketing. It is not just online retailers who are covered by the current BIR letter, but also other people who make money online such freelancers, YouTubers, and bloggers who are covered by the memo.

Online enterprises in the Philippines have until July 31, 2020, to register with the government and pay any taxes that may be owed. The failure to register before the deadline may result in late registration penalties being assessed.

You might want to read 10 Successful Online Businesses You Can Start Now.

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What Permits Are Needed for an Online Business in the Philippines?

Whether you’re a freelancer giving online services or a retailer selling things through an online store, you’ll need to register with the appropriate authorities and obtain necessary licences. As a result, below is a step-by-step guidance on how to register your company:

  • Register Business Name in DTI
  • Get Barangay Clearance
  • Acquire Mayor’s Permit
  • Register in BI

Related: Low Cost Online Business Ideas from Home

Register Business Name to DTI

In the Department of Trade and Industry, you should register your business name (DTI). Construct a business name for yourself. According to the Department of Trade and Industry, your business name (BN) refers to any name other than your true name that you intend to use in connection with your firm.

Confirm that the name you want to use for your company is available. Following the preparation of your business name suggestions, search them on the Department of Trade and Industry’s website to see if they are available for usage.

Fill out the online registration form (if applicable). It is now possible to proceed and fill out the DTI’s online registration form through their Business Name Registration System if your desired business name is currently accessible (BNRS). It is important that you keep track of the reference code that will be issued to you, since you will need it in order to complete all transactions with BNRS.

Make payment for the registration cost. Following completion of your online registration form, follow the on-screen instructions and submit payment of the required registration fee within seven calendar days of the application date. You can pay the cost with GCash, PayMaya, or a credit/debit card, among other methods.

Save a copy of your certificate. Your Business Name will be successfully registered as soon as your payment has been received and confirmed. Enter the reference code that was supplied to you when you completed the registration form at Transaction Inquiry, accept the Terms and Conditions, and submit your request.

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Get Barangay Clearance

Create a list of the prerequisites.Two pieces of identification that are valid. Proof of residency is required. Contract of Lease (if the property is rented) or Certificate of Land Title (Certificate of Land Title). Certificate of registration issued by the Department of Transportation (DTI).

Travel to the barangay where your company is headquartered. Completing the application form and submitting it along with the other prerequisites will allow you to obtain your Barangay Business Clearance.

Acquire a Mayor’s Permit

Create a list of the prerequisites. Two pieces of identification that are valid. Proof of residency is required. Contract of Lease (if the property is rented) or Certificate of Land Title (Certificate of Land Title). Certificate of registration from the Department of Trade and Industry’s Barangay Business Clearance.

Visit the municipal office in the area where your company is located. Fill out the application form and send it along with the other required documents to receive your Mayor’s Permit in the mail.

Register in BIR

Create a list of the prerequisites:

  • Certificate of Registration from the Department of Transportation (DTI).
  • Business Clearance in the Barangay.
  • Permission from the Mayor.
  • Certified lease (if the property is rented) or Certificate of Land Title (if the property is owned) Government-issued identity (passport, driver’s license, birth certificate, and so on).

Fill out the BIR Form 1901 as completely as possible. Completing three copies of the BIR Form 1901, which can be downloaded, is required. Visit the Revenue District Office in your local area (RDO). The RDO is the location where your company is located and has jurisdiction over your activities. This is the location where you will submit your applications. You can find the RDO for your area. 

Make a payment for the registration fee. The annual registration charge is Php 500, with an additional Php 30 for lost DST or proof of payment of the annual registration fee (whichever is greater) (ARF). You can pay the registration cost in any bank that has been accredited by the BIR. Accredited financial institutions will issue you with a BIR payment form. 

Ensure that this is sent to the bank together with your Documentary Stamp Tax on Lease. Following payment, submit to your RDO a photocopy of your BIR form payments as well as any additional documentation that may be required.

Obtain an Authorization to Print (ATP). Enterprises must have the Authority to Print Receipts (for firms that provide services) or Commercial Invoices (for businesses that sell commodities) (for businesses selling goods). 

Complete and send three copies of BIR Form 1906 to the RDO, along with a sample of principal or supplemental invoices and a copy of your certificate of registration. Ordinarily, it would take a week before you could receive your ATP.

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