How to Start a Business in the Philippines (2025 Guide)

Starting a business in the Philippines can be one of the most rewarding decisions you make, whether you are a first-time entrepreneur or a growing international company looking to expand in Southeast Asia. With its rising economy, supportive startup environment, and an increasingly digital landscape, the Philippines offers strong potential for business success.

In this comprehensive guide, we will walk through what it takes to start a business in the Philippines, from understanding the benefits and choosing the right structure, to navigating registration, taxes, and workforce compliance.

Why Start a Business in the Philippines?

According to the Department of Trade and Industry, over 957,620 commercial companies operate in the country. Of these, micro, small, and medium enterprises (MSMEs) make up 99.51 percent and employ more than 62 percent of the national workforce.

There are several reasons why entrepreneurs and foreign investors choose to build their businesses in the Philippines:

Economic Growth

The Philippines continues to experience steady economic development. The Asian Development Bank projects a 6.2 percent GDP growth in 2025, signaling a healthy and expanding market for businesses across various industries.

Strategic Location

Located in Southeast Asia, the Philippines provides direct access to ASEAN markets. This makes it a practical base for businesses looking to expand regionally.

Skilled and Cost-Effective Workforce

The country is home to a large pool of highly educated and English-speaking professionals. Labor costs are relatively affordable compared to many Western countries, making it possible to access quality talent without high overhead expenses.

Digital-First Business Environment

With the growth of e-commerce, online payment systems, and social media platforms, it is now easier for entrepreneurs to start and scale their businesses digitally. Many business processes have also become more accessible through government online portals.

Support for Foreign Investment

The Philippine government continues to encourage foreign investment, offering tax incentives and expanding digital infrastructure to attract entrepreneurs and multinational companies.

Common Business Structures in the Philippines

Choosing the right legal structure is one of the first steps in setting up a business. Each type of entity comes with its own requirements, limitations, and advantages.

Here are the most common options:

Sole Proprietorship

This is the simplest structure where the owner is solely responsible for all operations, liabilities, and profits. It is suitable for small, low-risk ventures. Registration is done through the Department of Trade and Industry (DTI).

Partnership

A partnership is formed when two or more individuals agree to share in the ownership, profits, and liabilities of the business. Partnerships with capital contributions exceeding a certain threshold must register with the Securities and Exchange Commission (SEC).

Corporation

A corporation is a separate legal entity from its owners and provides limited liability protection. Corporations must register with the SEC and comply with reporting and tax regulations. Foreign ownership is permitted in many sectors but subject to certain restrictions.

One Person Corporation (OPC)

An OPC is a relatively new structure that allows a single shareholder to form a corporation. It offers limited liability and is ideal for solo entrepreneurs who want the benefits of a corporate structure. Only Filipino citizens may register an OPC.

Cooperative

A cooperative is formed by a group of individuals with shared economic goals. Members actively participate in operations and share in the profits. Registration is handled by the Cooperative Development Authority (CDA).

Branch Office

Foreign companies can establish a branch office in the Philippines to conduct business directly. This structure must be registered with the SEC and is subject to local regulations.

Representative Office

This setup allows foreign corporations to carry out marketing and liaison activities without revenue-generating operations. It is limited in scope but useful for market research and establishing a local presence.

Regional Headquarters (RHQ) and Regional Operating Headquarters (ROHQ)

These structures are used by multinational corporations to manage and support operations in the Asia-Pacific region. They benefit from tax incentives and must be approved by the Board of Investments (BOI).

Key Considerations Before You Start

Before you begin the registration process, it is important to consider the following:

• Conduct market research to understand demand, customer behavior, and competitive landscape

• Learn about local business culture, etiquette, and communication styles to build strong partnerships

• Familiarize yourself with national and local regulations related to taxes, permits, and industry-specific laws

Step-by-Step Guide to Starting a Business in the Philippines

Here is a breakdown of the essential steps involved in registering a business:

1. Choose a Business Name

Conduct a name search through the DTI (for sole proprietorships) or SEC (for corporations and partnerships) to ensure your chosen business name is not already registered or infringing on existing trademarks.

2. Register Your Business

• DTI Registration: Required for sole proprietorships. After submitting your documents and paying the fees, you will receive a Certificate of Business Name Registration.

• SEC Registration: Required for corporations and partnerships. You will need to submit articles of incorporation, bylaws, and other supporting documents. Upon approval, you will receive a Certificate of Incorporation.

3. Secure Local Permits

You must obtain a business permit from the local government unit (LGU) where your office or operations are based. This includes:

• Barangay Clearance

• Mayor's Permit

• Location Clearance (in some cases)

Each LGU may have different requirements, so be sure to confirm with your specific city or municipality.

4. Register with the Bureau of Internal Revenue (BIR)

You must obtain a Tax Identification Number (TIN) and register your books of accounts and official receipts. If your business is expected to earn above the VAT threshold, you must also register for Value Added Tax.

5. Comply with Employee Benefits Registration

If you plan to hire employees, register them with the following agencies:

• Social Security System (SSS)

• Philippine Health Insurance Corporation (PhilHealth)

• Home Development Mutual Fund (Pag-IBIG)

These contributions ensure your employees have access to retirement, health, and housing benefits.

6. Open a Business Bank Account

A separate business bank account helps streamline financial management, builds credibility, and keeps personal and business finances distinct. Most banks require your registration documents, government-issued ID, and a minimum initial deposit.

Should You Register a Company or Use an Employer of Record?

If your business is exploring the Philippine market or plans to hire talent without setting up a local entity, working with an Employer of Record (EOR) like Skuad may be a suitable alternative.

Below is a comparison between setting up a company and partnering with Skuad:

An EOR allows you to legally hire and pay employees in the Philippines without needing to register a legal entity. It is an efficient option for companies expanding remotely or hiring teams for project-based work.

Conclusion

The Philippines is an increasingly attractive place to start and grow a business. With its strong economic fundamentals, young and skilled workforce, and improving digital infrastructure, entrepreneurs have a real opportunity to succeed.

However, starting a business also requires careful planning, regulatory compliance, and a clear understanding of your chosen structure. Whether you set up your company independently or choose to work with a global partner like Skuad, the key is to align your strategy with your goals.

At MSME Philippines, we are committed to empowering Filipino and foreign entrepreneurs with reliable, practical information that supports business growth. If you are ready to take the next step, we invite you to explore more tools, guides, and services available at MSME Philippines.