Open a Business in the Philippines This 2022―Our Business Permit Application Guide Can Help

Opening a new business soon? A critical task you should make time for is your business permit application. This document is your proof that you can legally operate in the city or town where your business is located—whether it’s a physical store, a courier service, an online shop, or any enterprise.

So you can set up your business without fuss, learn how to apply for a business permit properly. Here’s a simple guide for business owners in the Philippines.

What is a Business Permit?

A business permit is a certification that your business is legitimate. Having this document means your business has the license to operate in the city or municipality where it’s registered.

This official document is also called the mayor’s permit because it’s processed by the local government unit (LGU) with jurisdiction over the place of business.

Business permits are issued to ensure that businesses pay taxes and comply with local regulations for safety, security, health, and sanitation. This document also entitles an individual or organization to any support provided by LGUs to businesses in their area.

Running an enterprise without this permit can result in penalties such as fines and imprisonment. In worst cases, the LGU may close the operations until a business permit is secured.

3 Things to Know Before Filing Your Business Permit Application

To avoid delays or any inconveniences with your business permit application, here are some things to note.

1. Apply for One ASAP

Being a new entrepreneur, you have so much on your plate as you prepare for your business launch. Despite that, it’s important to make your business permit application a priority.

Why? First, it’s required by law. Sole proprietors, partnerships, corporations, cooperatives, foundations, and associations in the Philippines need to get a business license from their respective LGUs before they start operations.

Second, a business permit is one of the requirements for applications for business loans, government financial assistance programs, BIR registration, and other related transactions. It may also be required when you apply as an authorized reseller/distributor of a brand or as an online seller on e-commerce marketplaces.

Thus, you need to get this permit first, so you can set up your new enterprise smoothly.

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2. You Should Secure Other Documents First

Before filing your business permit application, you need to register your business with the appropriate government agency and secure other clearances and permits.

Business permit requirements take time and effort to process and obtain. You might not have these documents on hand yet, so secure them first.

Business Permit Requirements

Every LGU has its own specific set of documents required for permit applications, but here are the typical requirements you have to obtain in the following order:

Your LGU may impose additional requirements, taxes, and fees for business permit applications. To know what else you need to secure and how much the fees are, contact your mayor’s office or visit your LGU’s website.

3. You Usually Need to Apply in Person

Most LGUs don’t have an online process for business permit applications, so you’ll need to come down personally to apply for one. But the good thing about this is that you can ask the person in charge any question you may have regarding your business permit application. You get the answers right away, and you can get the assistance you need.

How Do You Get a Business Permit Online?

Perhaps, you’re wondering if you could save time by getting a business permit online. You can get a business permit online, but not all LGUs have an online facility. This means you need to check with your LGU first.

If you’ll open a business in Manila,^[1] Valenzuela,^[2] Pasig,^[3] Muntinlupa City,^[4] or Quezon City,^[5] just to name a few, you can use the city’s online business permit application service. 

Still, you have the option to apply personally via walk-in business permit application. Just submit the requirements personally or through your authorized representative to the city or municipal hall where your business is located.

How to Apply for a Business Permit in the Philippines

Procedures for new applications vary per LGU. But to give you an idea of what to expect, here are the general steps to remember when you apply for a business permit.

1. Go to the Business Permit and Licensing Office located within the premises of the city/municipal hall having jurisdiction over your business address.
2. Secure and fill out the application form. The form is available on-site, or you can download it in advance from the LGU’s website.
3. Submit the accomplished application form and other requirements. The personnel will evaluate your documents. Your application will also undergo an assessment of tax and fees.
4. Pay for the assessed tax and fees to the cashier (once approved). Receive your official receipt.
5. Claim your business permit. The document may be issued together with a registration plate/sticker or any other certificate. Make sure to display them prominently in your store or office.

Government Agencies Involved in Business Permit Application

Depending on the type of business you own, there are several government agencies you need to register with.

1. Department of Trade and Industry (DTI)

• Purpose: Applying for a business name

All businesses, including single proprietorships, partnerships, corporations, and cooperatives should apply for a business name with the DTI to begin the business permit application process. 

Single proprietors need to submit the following:

• Duly accomplished Business Name Registration Application Form^[6]
• Recent 2×2 picture
• Documentary stamps

Partnerships, Corporations, and Cooperatives should submit:

• Certified photocopy of SEC and Articles of Incorporation, Partnership

2. Securities and Exchange Commission (SEC)

• Purpose: When corporations, partnerships, and cooperatives need to apply for SEC registration

Required documents for submission:

• Name Verification Slip – This can be secured through the SEC Company Registration System (CRS)^[7]
• Copy of Articles of Incorporation and By-laws or Articles of Partnership
• Treasurer’s Affidavit/Authority to Verify Bank Account
• Registration Data Sheet
• Written undertaking to change the corporate name by any Incorporator or Director, Trustee, Partner 
• Bank Certificates of Deposit (notarized in a place where the bank is located)
• Other Additional Requirements

3. Barangay Unit 

• Purpose: Applying for Barangay Business Permit and Clearance

After registering a business name, first-time entrepreneurs should go to the Barangay Unit where the business is located and apply for a business permit and clearance. You’ll be required to submit a Community Tax Certificate and pay the Barangay Clearance fee, which is around ₱200. 

4. City or Municipal Office (Business Permit and Licensing Office)

• Purpose: Securing all requirements for a Business Mayor’s Permit

This is necessary if you have your own building or physical store. However, you may not need to get one if your business is located inside a mall. The mall management will be responsible for conducting the inspection and issuing the certificate. 

Certificates Required for Business Permit Application

Make sure you have the following documents for your business permit application.

1. Fire Safety Inspection Certificate

To get this certificate, you must have the following:

• Building permit and building plan
• Barangay Business clearance
• Fire insurance coverage
• Proof of compliance to requirements and recommendations from fire safety inspectors

2. Sanitary Permit

For the sanitary permit, the requirements are:

Requirements:

• Most recent chest x-ray results of the business owner
• 1×1 photo
• Inspection certificate of the establishment
• Receipt of paid Sanitary Permit Fee and Sanitation Inspection Fees
• Medical Certificate and Health Card issued by the City Health Officer

3. Building Permit and Electrical Inspection Certificate

You’ll need the following to get this certificate:

Requirements:

• Building plans
• Lot plan
• Clearances from the homeowners association, barangay, or any other authorized offices
• Fire safety requirements
• Contract of lease and authorization of owner (if rented)
• Title, tax declaration, a tax receipt (if owned) 
• Contractor’s business permit
• Sketch of your business location
• Bill of materials, specifications, structural computation
• Copy of License of the Engineer

4. Certificate of Occupancy

To get a Certificate of Occupancy, here are the things you need to provide:

• Images or photos of the site
• Fire Inspection Certificate

5. Locational Clearance

For the locational clearance, submit the following:

• Pictures of the site
• Fire Inspection Certificate
• Building Permit
• Authorization letter from the owner (if rented)
• Electrical Permit 
• Sanitary Permit
• Certification of Non-Improvement
• PRC License /PTC of the Engineer

6. Electric Utility Connection

And for the electric utility connection, these are the requirements:

• Letter of request from the owner
• Electrical plan
• DTI Registration or Copy of SEC Registration with Articles of Incorporation
• Copy of Lease Contract, Transfer of Certificate Title (TCT), or Deed of Sale
• Company SSS number or Tax Identification Number (if SEC/DTI Registration is not available)

Business Permit Application FAQs

1. When is the deadline for business permit application renewal?

Business owners are required to renew their business permits on or before January 20 of each year. However, due to COVID-19 restrictions, some LGUs have extended their renewal deadlines.^[8]

• Quezon City – July 20, 2022
• Manila – March 31, 2022
• Caloocan – February 28, 2022
• San Juan – March 21, 2022
• Mandaluyong – February 15, 2022
• Makati – February 6, 2022
• Muntinlupa – February 15, 2022
• Valenzuela – February 14, 2022
• Paranaque – February 28, 2022
• Malabon – February 28, 2022
• Marikina – February 28, 2022

2. Can I operate immediately after I receive my business permit?

Yes. You can operate immediately once the business permit application is approved. But don’t forget to secure the following:

• Business TIN and Certificate of Registration from the BIR
• Business SSS Number
• Pag-IBIG Employer-Member Registration
• PhilHealth Employer-Member Registration

3. What are the requirements for the renewal of business permits?

Each LGU may have a different set of requirements for the renewal of business permits. Take for example Makati’s business permit renewal^[9] requirements:

• Three copies of the notarized application form
• Declaration of Gross Sales from the previous year
• Number of employees
• Paid-up capital
• Copy of last year’s Business Permit and Billing Assessment
• Audited Financial Statement or Business Income Tax Return
• Community Tax Certificate
• Barangay Clearance
• Public Liability Insurance
• Affidavit of Low Income

4. Do you need a business permit for a sari-sari store?

Owners of sari-sari stores and carinderias still need to operate legally and must secure a business permit. However, take note that some LGUs don’t require Public Liability Insurance for these types of businesses. 

5. How much should I pay for my business permit application?

The fees for business permit applications differ depending on your location. But here are some fees you should pay when processing your business permit application. 

• Business Permit Processing Fee: ₱500 
• Mayor’s Permit Fee: ₱100 
• Sanitary Fee: ₱150 
• Building Inspection Fee: ₱200 
• Electrical Inspection Fee: ₱20 
• Plumbing: ₱15
• Signboard: ₱50
• Fire: ₱300
• Sticker: ₱50 

6. I registered my business in November 2021. Should I renew my business permit a year after my registration date?

No. All businesses, regardless of the date of registration, should be renewed before January 20 of each year. 

7. What happens if I fail to renew my business permit?

Failure to renew your business permit may result in payment of a 25% surcharge on top of the tax assessed, and an additional 2% for each month that the business permit was not renewed. 

You may also be asked by the BIR to pay a fine of ₱5,000 up to  ₱25,000. Delinquencies may also lead to the closure of the business and seizure of the business assets.

Final Thoughts

A business permit application may look tedious because of its long list of requirements, but the actual procedure is simpler than you might expect. Remember that business permits should be renewed annually. Make sure to renew your permit between January 2 and 20 of every year to avoid penalties and suspension of your business license.

Sources:

• ^[1] Business Permits (City of Manila)
• ^[2] Paspas Permit Valenzuela City
• ^[3] Pasig City Online Services
• ^[4] City of Muntinlupa Business E-Payment System
• ^[5] The New Normal Unified Business Permit Application (Quezon City Government Website)
• ^[6] Business Name Registration Application Form for Single Proprietors (DTI, 2022)
• ^[7] SEC Company Registration System
• ^[8] [Ask the Tax Whiz] Is there any extension for business permit renewal? (Rappler, 2022)
• ^[9] 2022 Business Permit Renewal (My Makati, 2022)