Business Registration

Contemplating to establish and register a business?

Here are few concepts you need to know:

1. Know your business entity as to ownership and where to register the business.

• Sole Proprietorship - register at Department of Trade and Industry (DTI) 
• Partnership - register at Securities and Exchange Commission (SEC)
• Corporation - register at Securities and Exchange Commission (SEC)

DTI Registration Steps:  

1. Get a business application registration form either from downloading it from DTI website or DTI Office near you.
2. Fill-up the business application registration form. 
3. Submit duly accomplished registration form to the DTI office near you. 
4. Wait for your application to be called.
5. Once called, you will be asked of simple questions relating to the business.
6. Once questions are answered, DTI personnel will direct you to the cashier.
7. Pay the application fee and documentary stamps.
8. Get your DTI Business Registration Certificate.

SEC Registration Steps:

1. Reserve a Corporate Name.
2. Obtain SEC forms relating to application of new business. These are the cover sheet, articles of incorporation, by-laws, etc.
3. Accomplish the SEC forms.
4. Have the SEC forms notarized by a notary public.
5. Deposit an amount equivalent to 25% of the 25% of authorized capital stock thru TIT Account.
6. Obtain Bank Certificate.
7. Submit to SEC the Corporate Name Reservation, Cover Sheet, Notarized Articles of Incorporation and By-laws, Bank Certificate, Treasurer's Affidavit of Deposit 
8. Pay the registration fees and documentary stamps.
9. Present the receipt to the SEC personnel who you submitted the documents.
10. Claim the SEC Certificate Registration at the due date to be given.   

2.  Obtain Business Permit at the City or Municipality you are going to operate.

a.  Obtain Barangay Clearance,
b.  Submit the Barangay Clearance and xerox copies of your approved SEC papers and other requirements* to the City Hall.
c.  Pay required fees and documentary stamps for the application of business permit.
d.  Claim the business plate and mayor's permit on due date.
* Requirements depend on the nature/industry of business. Example are zonal clearances, fire, safety and environmental clearances, etc. For complete lists of requirements, inquire or get a list copy of requirements from City Hall. 

3. Register the business at BIR office in your district.

a.  Submit copies SEC papers and business/mayor's permit and other required documents (if any) to BIR office in your area.
b.  Pay application fees and documentary stamps
c.  Claim when due.
d.  Obtain Books of Accounts and Official Receipts.


Note:  Above are the basic steps.  Take note that there are some business applications which needs to submit additional requirements depending on the nature or industry of the business. When this happens just ask the government agencies/office concerned for the additional requirement.

Prepayments

As the prefix "pre" implies which means advance. Prepayments is advance payments.

Prepayments is advance payments of business expenses which expire through use, consumption or passage of time.

Prepayments may be initially recorded as prepaid assets or prepaid expenses.

Expiration of prepayments happens day-to-day and slowly. And, prepayments' expiration is impractical or unnecessary to record daily recurring entries. That's why its adjustments is recorded before the preparation of financial statements.

Example of business expenses which are prepaid are insurance, rentals, supplies, advertising, etc.

Methods of recording prepayments

Prepayments maybe recorded either of the following:

• Asset Method

• Expense Method