Opening a new business in the Philippines 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.
Learn how to get a business permit properly, so you can set up your business without a fuss. Here’s everything you need to know about business permits in the Philippines.
In the Philippines, a business permit is a certification that your business is legitimate and authorized 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.
A business permit is issued to ensure that a business pays taxes and complies 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.
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As a new entrepreneur, you have a lot 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 in the Philippines 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.
In short, you need to get this permit first, so you can set up your new enterprise smoothly.
Running an enterprise without this permit can result in penalties such as fines and imprisonment. The LGU may close the operations until a business permit is secured.
In case you're wondering, this doesn't just apply to small businesses—even big companies have to face the consequences, like when the Makati LGU shut down the Smart Communications Inc. headquarters in February 2023 for allegedly operating without a valid business permit and failing to pay billions' worth of taxes. [1]
Before applying for a business permit, you need to register your business with the appropriate government agencies and secure other clearances and permits. These take time and effort to process and obtain.
Here are the required documents for your business permit application in the Philippines:
To get this certificate, you must have the following:
Prepare the following requirements for a sanitary permit:
Submit the following requirements to secure a building permit and electrical inspection certificate:
To get a Certificate of Occupancy, here are the things you need to provide:
For the locational clearance, submit the following:
For the electric utility connection, these are the required documents:
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Depending on the type of business you own, there are several government agencies involved in your business permit application.
Purpose: Business name registration
All businesses, including single proprietorships, partnerships, corporations, and cooperatives should register for a business name with the DTI to begin the business permit application process.
Partnerships, corporations, and cooperatives should submit a Certified photocopy of the SEC and Articles of Incorporation or Partnership.
Purpose: When corporations and partnerships need to apply for an SEC registration
For a partnership or corporation to be regarded as a legal entity, it has to register with the SEC. You can file for your company's business registration at the SEC head office (Secretariat Building, PICC Complex, Roxas Boulevard, Pasay City).
Alternatively, online SEC registration can be done via the eSPARC (Electronic Simplified Processing of Application for Registration of Company) facility, which can be accessed through esparc.sec.gov.ph/application.
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.
Purpose: Securing all requirements for a Business or 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.
To sum up, here are the typical requirements for a business permit that you have to obtain in the following order:
