Partnerships in the Philippines
It is then owned by two or more individuals called partners. This partnership is recognised as a separate judicial person distinct from the legal personality of its owners by the Civil Code of the Philippines.
Partnerships in the Philippines that have more than three thousand pesos (P3,000.00) capital need to register with the Securities and Exchange Commission (SEC) to conduct their business.
Legal fees and capital requirements
To establish a partnership business in the Philippines, you need to accomplish several registrations and legal fees to avoid problems with the law.
The Securities and Exchange Commission (SEC) will issue payment fees once you apply for a Certificate of Partnership; once you go to the bank to pay, evidence in the form of ‘proof of payment’ must be passed either through physical or online means.
Here is a list of all the fees all companies are required to pay:
- 1/5 of 1% of the Partnership’s capital but not less than PHP2,000 plus 1% of the amount as a legal research fee
- PHP30.000 for DST
Afterwards, you are required to register with certain government agencies to complete your capital requirements. These include the Bureau of Internal Revenue (BIR), Social Security Systems (SSS), Home Development Mutual Fund (HDMF) / Pag-IBIG Fund and even the local Barangay Office and Business Permit and Licensing Office (BPLO) relative to your corporation’s location.
You’ll also have to register with the Philippine Health Insurance Corporation (PhilHealth); they are the ones monitoring your employee’s wellbeing, and it's best to show them that you’re taking proper care of your people by paying a fixed amount for the employee’s health insurance fund.
Partnership Ownership Structure
Partnerships are organised based on the kind of management structure they want; this business entity is considered as a juridical person with a separate legal personality from its members. Members decide if they wish to a member-managed or a manager-managed structure. Those who have shares in the partnership can decide which direction it takes moving forward.
Types of Partnerships in the Philippines
In the Philippines, there are two kinds of partnerships:
A. General Partnership
This gives the agreement partners unlimited personal liability for the business's debts and obligations. They also gain complete management control of the business, giving the owners more freedom on how they want to conduct their business, with the added risk of all problems being solely liable to them.
B. Limited Partnership
These partnerships limit the liability of the partners based on the amount they’ve contributed to the business’ overall capital. They limit your potential liability based on how much you’ve invested in the corporation. So, while this reduces you and your partner’s control of the business, it also lessens the liabilities you’ll accumulate if something goes wrong.
Registering a partnership
To register your corporation in the Philippines, you need to approach the correct government entities and follow the simple steps below:
I. Registering with the Securities and Exchange Commission (SEC)
1. You must first register your company name with the SEC using any of the following methods:
- Undergoing a personal visit to the SEC’s office.
- Reserve a spot online through SEC’s online registration system webpage (https://esparc.sec.gov.ph/application).
2. Then prepare the required documents for submission; these include the below:
- Cover Sheet
- Name Verification Slip
- Articles of Partnership (AP)
- Joint affidavit of two partners to change partnership name. (Not required if already stated in AP)
- Endorsement/clearance from other government agencies, if applicable
- FIA Form - 105 For partnership with foreign national as a partner
- Valid IDs of the individual partners
II. Process documents required by the Bureau of Internal Revenue (BIR)
To complete this process, you need to complete the following documents
1) BIR Form 1903
2) BIR Form 1906
3) Clear sample of templates of receipts/invoices
4) Partnership Resolution to transact with the BIR
5) SEC registration
6) Payment to BIR registration fee (using BIR form 0605)
7) Secure BIR Certificate of Registration (BIR Form 2303)
8) Apply for Authority to Print (ATP) within 30 days upon issuance of the BIR Form 2303
9) Apply for registration of Books of Accounts within 30 days upon issuance of the BIR Form 2303.
III. Compile the necessary business permits from the local government unit (LGU) of your business address
1) Secure a Barangay Business Clearance and Barangay Business Plate from your area’s Barangay Hall.
2) Secure Location/Zoning Clearance
3) Secure Company Cedula or Community Tax Certificate (CTC).
4) Secure Comprehensive General Liability (CGL) Policy. Other LGUs will not require a CGL Policy.
5) Pay the business tax assessment/billing assessment
6) Secure a Mayor’s Permit and Business Plate from the BPLO.
7) Secure Sanitary Permit.
8) Secure a Fire Safety Inspection Certificate.
IV. Registering a partnership with employees
To register a corporation as an employer, you must submit the following documents to the appropriate government agencies.
- Social Security System (SSS) for your employees’ social security.
- Philippine Health Insurance Corporation (PhilHealth) provides health insurance benefits for your employees.
- Home Development Mutual Fund (Pag-IBIG fund) to get housing benefits for your location.