Businesses don’t always start the way you expect them to. Sometimes it starts with a Facebook post of your handmade crochet earrings, sparking the interest of your friends and snowballing to friends of friends. Or sometimes during a potluck, after a friend asks you to make the same lasagna you brought because she wants to bring it to another office potluck and then another.
When that happens, the thought that this could someday turn into a big business may not cross your mind. You only feel flattered that someone, other than your family, is actually willing to pay for something you made. And you’re just happy to indulge them.
But for Vanessa Pastor-Ledesma, vice president of EnterPH, a market entry business consultancy, there’s merit in having an entrepreneurial state of mind.
“If your new venture is something worth pursuing, then it’s worth doing it correctly from its inception,” said Pastor-Ledesma. “One never knows how a side gig may grow or evolve into your main hustle, and the last thing you would want is to pause your operations just when you’re building momentum so that you can register your company.”
Formalizing your business, especially when it’s just something you’re doing out of your own kitchen or bedroom and during your free time, can seem like a huge step that you’ll never be ready to take. But if there’s that possibility, no matter how slim, that your hobby can grow into an income-generating endeavor, wouldn’t you want to take it?
However, there are things that you wouldn’t really know how it would pan out unless you start it the right way – and building a successful business is one of those.
Aside from holding your business back from evolving or risking pausing your operations, Pastor-Ledesma shares more reasons why formalizing your business is beneficial for you and your brand.
You never know when someone from a big corporation would see your food photography shots on Instagram and when they do, you wouldn’t want to make them wait or worse, drop the project because you can’t provide them with an official receipt. Having an official receipt is also your key to joining bazaars and trade fairs.
“Having a formal business structure gives you legitimacy in the business community and, more importantly, gives you a more [seamless] access to your potential suppliers and customers,” said Pastor-Ledesma.
Other than being able to enter into hassle-free transactions with legitimate companies, having a formal business also means that your doors are open to anyone who may want to help you take your business to the next level.
“It also makes your business investment-ready should you come across people who believe in your business enough to put their money, time, or effort into it.”
If you run a registered business, you feel more secure even if you come across problematic suppliers, clients, customers, or even fellow entrepreneurs who are running a business that’s similar in nature to yours.
Imagine receiving a complaint from a customer for a dented box of cookies only for it to blow up into legal questioning of the legitimacy of the business you are running. It’s not only going to be stressful and costly, to say the least, but you’ll also risk losing your business altogether.
The government, up to the barangay level, has several benefits for people who are starting small businesses. So, if you are just exerting the same amount of effort as those who have a registered microbusiness – losing sleep while manufacturing products to meet the demand, aggressively marketing your products on social media, investing money – why not let the government help you while doing it? For starters, the cost of starting and doing business has been lowered.
“Microbusinesses can also check out the Department of Trade and Industries’ Negosyo Center on how to apply for certification as a Barangay Micro Business Enterprise (BMBE) in order to receive certain benefits made available by the government to start small businesses,” said Pastor-Ledesma.
The benefits include:
Improving your products, upgrading your facilities, hiring manpower, advertising – these are all important business moves that require a lot of money. Money that you can’t just borrow from a friend or family member.
This is where business loans come in. But you will only be eligible for a business loan if you are a legitimate business with the right documents. So, if you are thinking of expanding your business in the near future, you better consider registering your business as soon as possible so you’ll be loan-ready when the time comes.
Completing the registration for a business seems daunting based on the horror stories we keep on hearing. There’s some truth in that – as in everything worth doing – but you can take comfort in knowing that the Philippines is doing its best in making entrepreneurship much easier for everyone.
As an aspiring business owner, here are some of the questions you might have in mind, answered by Ledesma-Pastor:
Every business needs to be registered either with the Securities and Exchange Commission or SEC (for corporations or partnerships) or the Department of Trade and Industry DTI (for sole proprietorships) in order to be legally organized to conduct business.
But that is merely the first step, as you would need to register with the LGU for your Business Permit (Mayor’s Permit), with the Bureau of Internal Revenue for taxes, then finally with SSS, Pag-ibig, and Phil Health for your employees’ government-mandated benefits.
If you need assistance on how to start, let Globe myBusiness’ Digital Negosyo Consultant guide you.
Admittedly, the process can be a bit time consuming, but it should not be too difficult. That said, the government has taken great strides to make business registration much easier given the passage of the Ease of Doing Business and Efficient Government Service Delivery Act of 2018 (Republic Act No. 11032), by stripping non-essential processes and streamlining procedures for registration in government offices.
Yes, for the most part, as you can use virtual addresses for a nominal fee every month as your primary place of business and run most of your business online.
It takes some resources to organize your business, but not as much as people think. With the passage of the Revised Corporation Code (Republic Act No. 11232), capital requirements have been greatly relaxed and filing fees for small businesses should not be too heavy a burden for small businesses.
If money is tight, then entrepreneurs can go through the process on their own. However, if the business is in a complicated or regulated area such as employment, financing, or other government regulated industries, then it would be worth the investment to seek professional help, at least for the advice and the structuring of your business.
For more information on registering your business yourself, visit Globe myBusiness for a full DIY guide on how to formalize.
Need help with business registration? Sign up at the Globe myBusiness Taxumo portal and use the code GmBTXMBiz to get up to 50% discount on different Taxumo services*.
*This service is only available in Metro Manila, Cavite, Tarlac, Rizal, and Laguna. Promo duration until December 31, 2020.
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