Research Opening a Company in the Philippines

Posted by Michael Michelini on Jun 08 2010

Today spent the afternoon going to various Philippines government offices in Makati and Quezon City – trying to determine which, if any, form of corporate entity should be formed here at this moment. Currently I am utilizing the Philippines as a night call center for USA ecommerce businesses, mainly newyorkbarstore. Been getting more confident, and comfortable – as Marie has been doing a great job here as the point person and local to help with keeping things in order. So today she guided me around all the various government offices – and tried to determine what was best.
From what I have researched, IT IS SO similar to US rules and procedures. Actually, a lot of things in Philippines are based after American standards and practices, as USA was ruling this country for some time, and implemented a lot of its policies and procedures here. First of all, the main government office for company setup is the SEC – securities and exchange commission – which is exactly like the bureau in America. The main floor is flooded with waiting lines, and insanity….but yea, I guess government offices all over the world suck like that. They did have a nice information booth for free consultation. I discussed things with them, and basically there are 5 choices, very closely related to USA company choices:

Sole Proprietorship – the easiest and cheapest to setup, for a local filipino, if you are a foreigner, then you need: (1) certified true copy of the current year’s permit to engage in retail business (2) Alien Certificate of Registration, (3) Department of Trade + Industry Form, (4) Written appointment of Filipino resident agent, and (5) clearance from other agencies such as police, etc.BASICALLY – too difficult for a foreigner to do plus, UNLIMITED liability…i’m not gonna sign up for that, and if there is a bankruptcy or a lawsuit it comes to me personally…..Also, I asked if a local filipino can open the company and sign a personal contract with me for ownership….and the government official said that is technically illegal, and that it wouldn’t hold up in court.
General or Limited Partnership – like in USA, setting up is quick and easy, has to be at least 2 owners, but a foreigner cannot be majority owner. General is unlimited liability, and limited partnership protects the owner’s personal assets from company liabilities.
Stock corporations – the traditional and most common company formation in Philippines, but MUST be at least 5 owners. This is where its different from other corporate structures in USA and other countries. Plus there’s about 1.5% filing fee of the registered capital.
Representative office of a foreign company – Representative companies are not allowed to derive income from the Philippines, it can only do marketing and support for the parent company. this seems to make most sense for me, it is easier to setup – but you have to prove and bring all forms of documents of the parent company, show financials from that company, notarized documents, etc.There are 2 types of representative offices -
(1) for domestic market – if you plan to sell and do business in philippines local market, (over 40% of your income) then you need to do this. Documentation seems longer and more expensive.
(2) for export market – if more than 60% of your income comes from sales outside of the Philippines, this is what you can file for.

So I will continue to research more. Tomorrow meeting with Vic from HSBC Philippines. There are also ways to open bank accounts in the Philippines as a foreigner (personally) and as a foreign company. There are a lot of various minimum balance requirements, and other ideas. Also taxes….meeting an accounting firm too. More complications of running an international business…but hey, keep on rocking, keep on pushing, its all about long term.

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http://www.blog.daviddho.com David Ho

Aye keep this rolling – my mind has been straying to thoughts of the Philippines lately. Need cheaper English to write content! I sent you some mail btw!
http://blog.michaelmichelini.com mike

aye! (I always think of you with this term) i did receive that email, I am of course open for that, I am just digesting everything here and we can work something out
may

it would be great if you have company there, so next time when i go there ,at least i have friends can give me some advice.
http://blog.michaelmichelini.com mike

cool May, hope to help ya out – a friend in need is a friend in deed as they say, right?

what do you want to do in philippines?
Asad Muntazir

i want to open a company in Phillip what the requirements of Phillip Govt. how much time require and how much rupees needed
Asad Muntazir

please send me full details for open a company
http://blog.michaelmichelini.com mike

Hi Asad,

I will get you in contact with the right people in Philippines, look for an email from me.
http://www.tripleiconsulting.com Judah Hirsch

Although I think the Philippines is an easy place to setup a business, I don’t think its anywhere the same like the states. In US you can open a company for a hundred dollars in less than one day online. While in the Philippines even if your lightening fast which we are it will still take 4-5 days, require 5 individuals and at least 2300 USD in capital a tremendous difference.
http://blog.michaelmichelini.com mike

Hi Judah,

Surely not as easy as opening a company in USA or Hong Kong…..but if you compare China to Philippines…..it is much smoother. and at least I can read the documents in english, and there are more clear, and concise rules. Even Chinese would agree with me
http://www.dayananconsulting.com Philippines Business Consultant

Hi Mike,

Just stumbled on to your blog.

Just a little correction. Representative companies are not allowed to derive income from the Philippines, it can only do marketing and support for the parent company.

David E.
http://blog.michaelmichelini.com mike

Thanks David, I will check over the post and update accordingly. This seems similar to other countries company setup I have heard in the past.
http://blog.michaelmichelini.com/2011/03/building-a-marketing-team-in-dongguan-china.html Building a Marketing Team in Dongguan, China

[...] and as I caught them up on what I am doing these days, they say “Mike, I thought you were opening a company in the philippines“, “hey man, didn’t you say you were lecturing at Stevens Tech in New Jersey, [...]
Dave Duerre

Hey, Mike I stumbled upon your website it is interesting to me, I have also considered opening a call center in Manila, and am curious how your endeavors have been going, I see your posts are from last year , are you still going? any advise? thank you.
http://blog.michaelmichelini.com mike

Hey Dave,

I have refocused a bit back to Shenzhen, China – I do travel back and forth to the Philippines for business, my friend went ahead and set up the formal company, while I still keep workers at home – I’ll send you a private email in a second.

Mike
http://blog.michaelmichelini.com/2011/08/marie-experience-having-a-baby-in-shenzhen-china.html Marie, Experience Having a Baby in Shenzhen China!

[...] my blog and tweets see her mentioned every once in a while, especially when she was helping me explore opening a company in the Philippines and build up a customer service support team in the Philippines. We ended up both deciding [...]
http://twitter.com/adametch Adam Lee

Hey Michael,

Just noticed this is a old post, but decided to drop the comment anyway…I have been there and done some research too.For a small operation, one of my friends decided to setup a 5 desk call centrer in a rented apartment in Cebu, its been running for a few years now without any problems, the staff are on a self employed agreement. - Hes doing outbound calls the the states only.For something on a larger scale, I visited some of the Economic Zones and Foreign investment centers’s they can help you with setting up a company and offer tons of incentives regarding tax, visa etc.. but they are really looking for a secure employment for 100′s of staff.I also looked into desk rental in the Asia IT park, but it was pretty pricey for just a couple of desks.I will return to the Philippines soon, and rent a apartment / office in Manila just for my own convenience and allow some of my freelance staff to work there when needed.Mactan Economic Zonehttp://www.asiatownitpark.com/home/http://ccebu.net/cipc/

About

American ecommerce guy, I've been living in South China - Shenzhen, Hong Kong, Dongguan (+ a touch of Philippines) since end of 2007.

Successfully selling online since 2004, took it fulltime early 2007. Love international business & connecting, and working on ways to give hard working people global opportunities. (Read More...)