Many businesses started small from a single person in their bedroom or garage. Many even started as a hobby; work at home self-employed individual or as a freelancer. For these businesses the most common option for formation is a Sole Proprietorship.
What is a Sole Proprietor?
A sole proprietor is an individual engaged in business of selling products or services for profit. The sole proprietor is the single owner of the business.
Advantages of Being a Sole Proprietor
- The proprietor enjoys the profit alone
- Having the flexibility to work and decide alone
- Easy to set-up and manage
- Less regulated
Disadvantages of Being a Sole Proprietor
- Capital is limited to the sole proprietor’s capacity
- Personal assets are at risk in case of financial difficulty of the business
- The income tax of a sole proprietor is computed the same for employees with maximum percentage of 32% rate. For corporation its 30%.
Sole Proprietorship Registration Tips in DTI
To ensure smooth and hassle free business name registration, consider reading these quick facts:
Not all sole proprietors are required to register in DTI
It’s important to take note that not all sole proprietors or self-employed individuals are required to register in the Department of Trade and Industry (DTI).
Professional registered and holding Philippine Regulatory Council (PRC) Licensed No. such as
lawyers, doctors, engineers, teachers, accountants, brokers, etc., are not required to register in
the DTI if they’re not going to use a business name or tradename aside from their name.
- Atty. Maria Pineda— full name was used by the professional, no need to register in DTI
- Maria Pineda Law Offices — a trade name or business name was used by the professional,
then this must be registered in DTI.
DTI Registration is not equivalent to business permit
What you are registering in DTI is just the trade name or business name, and it’s not equivalent
to business permits and licenses. This means DTI doesn’t give you the business permit to
operate, it’s the local city offices who does.
Age requirement for registration of business name in DTI
The owner or proprietor should be at least 18 years old to be allowed to register.
Registration form signatories
The business name registration form must be signed by the sole proprietor in duplicate copies. If the processing will be done by authorized person aside from the sole proprietor, there must be a Special Power of Attorney (SPA) and two (2) original valid government ID with specimen signature of the sole proprietor, to be presented in DTI Offices.
DTI List of Requirements
- Two copies of completely filled-up business name registration form signed by the sole proprietor only.
- Two (2) original valid government ID with specimen signature of the sole proprietor
- Payment of registration fee and documentary stamp tax
- In case of processing by authorized representative, Special Power of Attorney (SPA) and valid ID of the authorized representative.
DTI Business Name or Trade Name Registration Guidelines
Your chosen business name or trade name submitted in DTI is subject for approval and as sole proprietor, there are certain guidelines that you need to follow in choosing a name. Here are the things that are not allowed in a business name.
- Business name which nature are illegal, offensive, scandalous, or contrary to propriety (e.g. Sabungan ni Moses, Supsup Spa)
- Business name is the same with an existing registered business, company, partnership, corporation, cooperative name; or those that infringe on any trademark, service mark or tradename (e.g. Mangdonalds, Starbaks, Addidong)
- Business name that is too generic or geographic (e.g. The Pet Supplies, Tagaytay Apartments)
- Business names which by law or regulation cannot be appropriated (e.g Philippine Intelligence Agency (PIA), Philippine Accounting Academy)
- Business name that use words which designate or distinguish, or suggestive of quality of any class of goods, articles, merchandise or service (e.g. Best Spa, First Quality Nail Salon)
- Business names with abbreviation used by the government in its governmental functions (e.g. BIR Accounting Services, PNP Tutorial Services)
- Business names with abbreviation used by any nation, intergovernmental or international organization (e.g. UNICEP Restaurant, GREENPEACE Gasoline Station)
- Business names which is misleading, deceptive, or misrepresent the real nature of the business (e.g. “DAP Printing Services” where nature of business is bookkeeping and accounting services)
Territorial Limitations and Registration Fees in DTI
Keep in mind that when you register a business name in DTI, you’ll be asked to choose a territory. Registration fees will differ depending on selected territory and it can be any of the following.
Please take note that your business name will only be valid in the territory you choose. Choose carefully based on your business plan of expansion and operation.
In addition to the registration fee based on territory, 15 pesos will also be collected for the documentary stamp tax.
Bring your TIN ID Number
DTI will ask and verify your TIN number in their records, to avoid hassle, bring your TIN ID No.
How to Register in DTI (Department of Trade and Industry)
Now that you already know the important facts in registering a business name in DTI, let’s now proceed on the steps.
Offline or Walk-in Application in DTI Office
- Fill-out the Business Name Registration Form which you can download in DTI’s website, print it then sign it.
- Prepare and bring the list of requirements mentioned above.
- Proceed to DTI office near you for processing
- In DTI office, proceed to the checker to validate your application and list of documents, then
- follow the next steps.
- After payment, wait for the release of your Certificate of Registration.
DTI Online Application
For online, you can register your business name online through these websites
For online registration, DTI is accepting payments via GCash. Once the process is completed, your certificate of registration can be picked up or downloaded.
DTI Certificate Expires and Must Be Renewed
As the date of this writing, the usual validity of a DTI Registration is 5 years. The expiration date is displayed in your DTI certificate. You have to remember the expiration date so you don’t forget to renew it before the expiration date or else other people might be able to register that trade name.
Display Your DTI Certificate in Your Office or Place of Business
Once you have your certificate, it should be displayed in your office or place of business together with your Mayors Permit, Barangay Permit, BIR Certificate of Registration and other registration certificates which we will discuss in our upcoming articles.