Should I Register as an Independent Professional or Sole Proprietor?

Freelancing has been a viable option for individuals nowadays because of its numerous advantages compared to the usual office jobs.

However, there seems to be an issue regarding these self-employed professionals whether they are complying with the tax requirements in the country, as well as if they should accomplish the different requirements for business registration in the Philippines to ensure the legality of their source of income.

If you fall under this population of workers, here are everything you need to know about paying your taxes and registering your small business.

Section 236 (j) of the Tax Code

According to the Section 236 (j) of the Tax Code, any person, regardless if he’s natural or juridical, should make, render, or file a return, statement, or other documents, as required by the authority of the Internal Revenue Code.

A Taxpayer Identification Number (TIN) shall be obtained with the Bureau of Internal Revenue (BIR) for proper identification for tax purposes. The TIN, then, shall be indicated on the return, statement, or document that the individual wishes to file with the BIR.

Independent Professional vs.  Sole Proprietor

Sole Proprietor

There are three categories that businesses in the Philippines can be classified into—according to ownership structures, namely the sole proprietorship, partnership, and corporation.

But, we’ll only focus on sole proprietorship as this is the business type usually owned by a single individual (proprietor) such as a small or home-based business, where the proprietor has full control and authority over the entire company.

The proprietor owns all the assets of the company and is solely responsible for its liabilities. He also enjoys all its profits but endures losses of the business as well.

For the tax aspect, conversely, the proprietor and his proprietorship can be considered as one taxpayer—with a single TIN as well. Further, he should register with the Department of Trade and Industry for the proper trade name application.

Obtaining a Mayor’s Business Permit and registering with the Social Security System (SSS), PhilHealth, Pag-Ibig Fund, and other applicable government agencies are also necessary for sole proprietorships. Accounting services provided by professional bookkeepers can be tapped by small business owners, especially those not having any knowledge of the processes of business registration.

Independent Professional

If you don’t have any organization yet providing services to clients, your income is considered taxable, and thus, you need to register yourself as a self-employed, independent professional.

Unlike in sole proprietorship, registering with the DTI isn’t necessary since your full name would be used as your trade name and refer to your services.

However, paying your professional tax with the Mayor’s Office and registering with the BIR is necessary, as well as registering with the SSS, PhilHealth, and Pag-Ibig Fund.

On the other hand, filing for an income tax return isn’t required if your income is derived from interest on bank deposits and has been subjected to final withholding tax. Other circumstances, however, such as having a gross income that exceeds your total personal and additional exemptions would require filing for an income tax return with the BIR form 1701/1701Q.

Benefits of Registering

•  Obtaining loans from different financial institutions like banks, lending companies, and SSS, as well as applying for a credit card would be much easier as your annual income tax return (BIR form 1701) will serve as your proof of earnings.

•  Your credibility as an individual rendering services among your clients will increase through your BIR registration and official receipts under your name.

•  You’ll likely earn more in the long haul as you’re able to pay your taxes on time and avoid incurring penalties like interests and surcharges.

•  Tax evasion, which is punishable by lax, wouldn’t be possible.

Registering your business or yourself may seem to be a demanding and challenging task to accomplish. Then again, with the potential benefits that you can reap from it, as well as ensuring your professionality is important in complying with the law.

Just keep in mind all these tips, and you’re on your way to enjoying your chosen career path and having a stable source of income that can help you throughout.


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Is Your Business Name Taken? How to Check If Someone Beat You To It

Choosing a business name is very much crucial as selecting the business you are taking on. Your business name will be your brand, your image, your identity—hence; you make sure that your idea of a business name is not yet taken by anyone else.

How would you know? Here are ways for you to check if that winning business name is still available:

Check if Your Business Name is Taken

Sole Proprietorship

•  Go online and check DTI’s e-Business Name Registration System (e-BNRS). Select “New Application” at the left-hand side menu bar, click “I Agree” for the BNRS Terms and Conditions and fill out the fields under Propose Business Name (both under Business Scope and Business Name) and select “Check Name Availability”.

•  Another way is to look up any keywords from your proposed business name here. It will reflect the first 1,000 business names based on the keywords you enter to give you an idea how many other businesses use the same words.

Corporation or Partnership

•  To confirm the availability of your business name idea, register through Securities and Exchange Commission (SEC) i-Register Facility. Creating an account is free and once you have your own account details, you may log in and verify your business name by following the instructions reflected. This online facility also allows you to reserve your business name.

However, it is important to note that your business name is not yet approved even if it passes for registration. Therefore, verifying your corporation’s proposed business name at the SEC office is still necessary.

Checking the availability of your business name through DTI and SEC is simple. But let us share with you some more tips to ensure you have a business name that is promotable and clicks well as a brand.

1. Prepare at least three (3) business names. We say “at least” because having more than one choice is much better. And it will save you a lot of hassle in case your first choice is unavailable.

2. Google your business name. Of course you want your business name to be unique, and Google is one of the best ways to check that, since it covers worldwide. Type in your business name and if you find that Google displays a lot of matches (especially within the same region) then re-think your business name idea.

3. Verify if your domain name and social media username is not yet taken. In this day and age, what is a business without a strong online presence? Every business today must have their own website and social media to be able to market their brand more successfully.

However, here is where many business people usually err. They normally go ahead and create a brand using their business name through websites and social media, without properly registering it yet (check our previous post about how to register your business name). So when it doesn’t get approved, they are faced with the dilemma of having to change everything again—worse, if it already has grown quite a number of followers and having to inform them to re-route to a new page for the official website or social media.

By checking the availability of possible domain names and social media, you can create a website and social media presence with a name that is catchy and distinct. To confirm availability of your domain name, search it via for top level domain extensions such as .com, .net and .org. In case you want to use a .ph extension, then check via if your business name idea for a domain name is free.

So there you have it, all you need to know when checking the availability of your business name. Create an identity for your business by choosing a name that is best for you. May these tips help you decide one that will stick and will click and propel your business to success.


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Don’t Want to Line Up at DTI? Register Your Business Name Online Instead

Finally, you have found the business venture that you are confident of and you are now ready to be officially called an entrepreneur. You prepare a checklist of the things you need to accomplish to jumpstart your business, one of which is naming your business. Then you have to register your business name to make it legit.

Thing is, you are swamped with so many other tasks getting this business up and running that registering over-the-DTI-counter can be so tedious. So how what do you do then?

Business Name Online Registration

Register Online!

Yes, DTI has provided us the ease of registering business name and paying fees online through their Enhanced Business Name Registration System.  Allow us to walk you through DTI’s Online Business Name Registration for your own convenience.

Before you can proceed with registering your business name, you need to carefully review the BNRS Terms and Conditions which you will see upon clicking “New Application” on the left-hand side of the webpage. For quick review, DTI reminds applicants that your business name should not be any of the following:

•  Illegal, offensive, scandalous, or contrary to propriety (e.g. Popoy’s Jueteng Betting Place, Boobs Massage and Spa);

•  Similar or almost resembling an existing registered business, company, partnership, corporation (Securities and Exchange Commission), cooperative name (Cooperative Development Authority); nor it infringes on any trademark, service mark and tradename (e.g. Anne Dok’s Lechon, Jolibee, Starbax Cafe);

•  Purely of generic or geographic words (e.g. The Laundry Shop, Bacolod)

•  A name  which by law or regulation cannot be appropriated (e.g. Intelligence, State College, CALABARZON);

•  Used to designate or distinguish, or not suggestive of quality of any class of goods, articles, merchandise, or service (e.g. Best Taho Factory, A-1 Auto Repair Shop );

•  A name or abbreviation of a name used by the government in its governmental functions (e.g. NBI Private Investigation Services, DTI Trading);

•  A name or abbreviation of a name of any nation, inter-governmental or international organization (e.g. Philippine Manpower Pooling Agency, UNESCO Marketing, WHO Health Services); and

•  Deceptive, misleading or which misrepresent the nature of business (e.g. ABC Construction Services“ where nature of business is recruitment, Manny Pacquiao’s Sports Retail Shop).

Click “I Agree” to proceed. You will be directed to an online form which you need to fill out with the necessary information:

1. Under the Business Scope segment, choose the appropriate coverage of your business (i.e. If Sari-sari store—Barangay, if foodcart franchise—City/Municipality, if online reseller—Regional, if courier services that ships nationwide—National). The corresponding fee is also reflected under each option for your guidance.

2. Indicate your selected business name on the Proposed Business Name field then click “Check Name Availability” to make sure it doesn’t have a duplicate name. Once it goes through without any similar names, you will see a prompt summarizing the details you just filled out. If you want to try another name, you can just simply click on “Try a Different Name”.

3. Then fill out with accuracy the Owner’s Details and Residence Address, ensuring that required fields are completed.

4. For Payment Method, assuming that you want to use DTI’s e-Payment facility, just choose GCash or Bancnet. Select “Download” for your business name certification and hit “Submit”.

5. Your certification will be provided on the next page. Download the e-copy and have it printed if you wish. Take note of your Transaction Reference Number (TRN) Acknowledgement found in the last page of the online application form as this will be required when you pay online.

6. Go back to the online business registration homepage and click “Online Payment” on the left-hand side menu. Settle the appropriate fees via your chosen facility accordingly.

And that’s it! In less than 15 minutes your business name registration is done. If you have other queries related to business name registration, refer to DTI’s FAQ page.

It is important to note that there are requirements you need to comply with to ensure the success of your business name application. Submit these requirements to DTI within fifteen (15) working days or else, your registration will be considered abandoned.

But as far as business registration is concerned, doing it online is so much easier. We hope that our step-by-step process have helped simplify the DTI business name registration for you.


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