How to Register Your Online Business in BIR and DTI

In today’s digital age, the internet offers a plethora of opportunities to become your own boss. Whether you’re considering launching an online business, diving into the gig economy, or even stepping into the world of social media influencing, the possibilities are endless. However, it’s essential to bear in mind that online ventures come with their fair share of regulations, including business registration and tax obligations. To ensure the legitimacy of your enterprise and sidestep potential issues in the future, adhering to these requirements is crucial. In this comprehensive guide, we’ll walk you through the nuances of online business registration, along with vital reminders on tax compliance.

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

According to the Revenue Memorandum Circular No. 60-2020, the Bureau of Internal Revenue (BIR) stipulates registration for “all persons doing business and earning income in any manner or form, specifically those who are into digital transactions through the use of any electronic platforms and media, and other digital means.” However, it’s important to note that not all online sellers are required to register. Exemptions include individuals selling products “intermittently or irregularly” and those offering homemade items as a hobby. The Department of Trade and Industry (DTI) views such online sellers as not yet engaged in a business requiring registration. Therefore, you should register your business only if you’re generating regular income through online means, even if your business is relatively small. The recent BIR memo encompasses not just online sellers but also freelancers, YouTubers, bloggers, and others who earn income online.

6 Benefits of Online Business Registration

While online business registration in the Philippines may entail expenses, time, and effort, it offers several advantages that can foster your business’s growth:

  1. Increase Your Customer Trust: Registration lends legitimacy to your online business, instilling trust in potential customers. People are more likely to transact with registered online sellers, as they comply with the law and are perceived as less likely to engage in fraudulent activities. Some e-commerce platforms like Lazada and Shopee also require business registration documents from the DTI and BIR.
  2. Qualify for Business Loans: If you require additional funds for working capital, you may need to apply for a business loan. Banks typically request DTI certification, BIR registration certificates, and income tax returns (ITRs) from self-employed or entrepreneurial borrowers. These documents are attainable only after registering your business.
  3. Access Government Assistance: Registered online businesses become eligible for government assistance programs during specific crises. Various government agencies extend cash aid or loans to micro, small, and medium enterprises, exclusively to registered entities.
  4. Build Partnerships: To establish partnerships and collaborations with suppliers and larger corporations, you need to convey the legitimacy of your business. Online business registration is especially crucial when aiming to work with prominent partners, as substantial companies often conduct rigorous background checks before engaging with other businesses.
  5. Legal Compliance: Attempting to evade taxes and other obligations can eventually lead to legal repercussions and hefty penalties. Online business registration is your safeguard against such complications.
  6. Confident Marketing: Knowing that your business is 100% legal allows you to market your products and services with confidence. Transparency and adherence to regulations bolster your credibility.
How to Register Your Online Selling Business in the Philippines

To register your online business, you need to follow these essential steps:

DTI Online Business Registration:

1. Begin by registering your online business name with the DTI. The Business Name Registration System (BNRS) simplifies this process for online sellers. Refer to the DTI business registration guide for requirements and steps.

BIR Online Business Registration:

2. Once you’ve obtained certification from the DTI, proceed to register your online business with the BIR. You can do this either by visiting the Revenue District Office (RDO) with jurisdiction over your area or using the NewBizReg portal. To register with the BIR, you’ll need the following:

  • Accomplished registration form (BIR Form No. 1901)
  • Valid ID (e.g., birth certificate, passport, driver’s license, etc.)
  • DTI Certificate of Registration
  • Annual registration fee (₱500)
  • Documentary stamp tax (₱30)
  • Note: The mayor’s permit or business permit is no longer required, following a BIR order issued on June 9, 2020, to streamline business registration.
Filing Your Income Tax Return:

3. After registering your online business, you’ll need to file the required tax returns with the BIR. The specific taxes to be filed are indicated on your BIR Certificate of Registration. Common tax returns for online businesses are BIR Forms 1701 (or 1701A) and 1701Q. Ensure that you declare all your income and pay the corresponding taxes on time. These tax returns can be filed with the BIR online through the eFPS or eBIRForms facility. Deadlines for filing include April 15 for BIR Form No. 1701/1701A and specific dates for each quarter of the year for BIR Form No. 1701Q.

Tax Obligations for Online Businesses: 4. As an online seller, you’re obligated to pay several taxes, including income tax, percentage tax (if gross sales/receipts for 12 months are ₱3 million or below), value-added tax (VAT) (if gross sales/receipts for 12 months are above ₱3 million), withholding tax on compensation (if you have employees), and withholding tax on expanded tax. Various convenient online payment methods are available to fulfill your tax obligations, such as online or mobile banking, GCash, PayMaya, and more.

FAQs on Online Business Registration in the Philippines

If you have further questions regarding online business registration, you may find these FAQs helpful:

  1. Additional Requirements for Corporations: The Securities and Exchange Commission (SEC) may require corporations to provide additional documents such as a cover sheet, articles of incorporation, and written consent of nominees.
  2. Additional Requirements for Cooperatives: Cooperatives engaged in online business may need to submit documents such as an economic survey, surety bond of accountable officers, treasurer’s affidavit, articles of cooperation and by-laws, approved cooperative name reservation slip, and certificate of pre-membership education seminar (PMES).
  3. Direct Registration with the BIR: After obtaining your DTI online seller registration, you can proceed directly to the BIR for business registration.
  4. Other Obligations for Online Entrepreneurs: In addition to tax return filing and tax payments, online entrepreneurs must issue invoices and receipts for sales and payments, maintain records of transactions, and ensure employees receive benefits like SSS, Pag-IBIG, and PhilHealth.
  5. Special Permits: Depending on your business’s nature, you may need to apply for special permits, with the issuing department varying across industries.
  6. Selling Medicines Online: The FDA does not permit the online sale of health products, including medical devices and supplies, without proper authorization. Obtaining licenses like the License to Operate, Certificate of Medical Device Notification, and Certificate of Medical Device Registration/Product Registration is necessary for such operations.
  7. Intellectual Property Protection: If you have concerns regarding trademarks, copyrights, and patents, the Department of Trade and Industry (DTI) recommends working with the Intellectual Property Office of the Philippines (IPOPHL). You can find contact information for various IPOPHL offices at www.ipophil.gov.ph.
Final Thoughts

Running an online business, whether as an Instagram seller, freelancer, YouTuber, TikTok vlogger, or social media influencer, holds significant earning potential if approached strategically. However, before you embark on this exciting journey, ensuring the legitimacy of your operation is paramount. By prioritizing online business registration in the Philippines, you can sidestep legal complications down the road and establish a solid foundation for your digital enterprise.

Remember, the world of online entrepreneurship is continually evolving, so staying informed about the latest regulations and requirements is essential to your success. Embrace the opportunities the digital landscape offers, but do so with a commitment to compliance, transparency, and the growth of your legitimate online business.

Now that you have a comprehensive understanding of online business registration and tax obligations in the Philippines, you’re equipped to embark on your entrepreneurial journey with confidence. Feel free to reach out if you have any more questions or require further guidance on your path to online business success.

FULL STEP BY STEP BY GUIDE ON STARTING AN ONLINE BUSINESS HERE IN THE PHILPPINES

Sources:

  1. online-business-registration
  2. how-to-register-online-business-in-bir-in-philippines
  3. how-to-register-your-online-business-in-bir-and-dti
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