5 Different phases of making an enterprise

1. Fund Sourcing 3. Business launch

2. Pre-operating phase; Business set- 4. Business operation
up 5. Business continuation or closure

Discussion Point 1:

PHASE 1
Top Three Fund Sources when Setting up a Business (Fund Sourcing)

1. Personal savings
Positive points: Issues, concerns, and related matters:
 Have ready and easy access to  Resources are generally limited, this
funds. limits and scales down the
 The entrepreneur will learn to development process.
bootstrap and maximize the use of  Bear all the risks and burdens of
resources. funding an enterprise.
 If it is sole proprietorship, gains, if
any, are enjoy singly

2. Contributions from team members/partners.

Positive Points:
 Can pool the resources.
 Can learn to distribute equity
exposure, giving the project bigger
resources to scale up development,
operations, or production.
Issues, concerns, and related matters:
 Problems arise when members do
not contribute as expected or as
agreed upon.

3. Contributions from relatives or friends.

Positive Points:
 Some relatives give an angel
investment or become a silent co-
investor; this can be treated as an
informal loan with an obligation to
return after after specific time of use
is over.
 Some relatives provide funds as a
gift, without obligation to return.
Issues, concerns, and related matters:
 May not be able to return the
investment as promised.
 May have a difficult time returning
the favor.

Discussion Point 2:
PHASE 2
Business Registrations, permits, and licenses (Pre-operating phase; Business
set-up)

PHILIPPINE BUSINESS REGISTRY

A government-initiated project that integrates the services of all agencies involved in

business registration, such as the DTI, Securities and Exchange Commission (SEC), Bureau of
Internal Revenue (BIR), Social Security System (SSS), Pag-ibig Fund, PhilHealth, local
government units (LGUs), and other permit/license-issuing agencies to facilitate business
registration.

Steps for Registering a Business using a PBR kiosk

1. Fill out the PBR application form at the kiosk to either register a new business name or
validate your existing one.
2. Follow the steps on the kiosk screen to get a new tax information number (TIN) or
validate your existing number from the Bureau of Internal Revenue (BIR), as well as your
employer registration numbers (ERNs) from the Social Security System (SSS), Home
Development Mutual Fund (Pag-IBIG), and Philippine Health Insurance Cooperation
(PhilHealth).
3. Use your GCash or BancNet debit card to pay your fees and complete the process. You
should have your business name registered, your SEC registration number, your TIN
from the BIR, a Pag-IBIG fund, PhiliHealth, and your ERNs.

Discussion Point 3:
PHASE 3 AND 4
Launch and operate own business either individually or by team

Things to consider in launching and operating a business enterprise

1. Consider the importance of the relationships and interconnectedness of the following

management functions: organization, marketing, production, and finance.
2. Value the presence of organizational policies and rules for order, time management,
good discipline practices, teamwork, including security and safety on situations and
concerns at hand and related matters.
3. Find the right location for the business operation or for selling the products.
4. Prepare the budget and cash flow for the first three months of operation.
5. Use the dynamics of push forces or the active marketing of products together with the
use of technology.
6. Increase awareness on the following components of entrepreneurship: social
responsibility, ethics in business, good practices, and the sustainability of the
environment affecting the whole human chain in relation to operating and doing
business.

Discussion Point 4:
PHASE 5
Business Continuation or Closure
Business closure or retirement is an activity that any business owner do not want to
happen. It can happen for various reasons. Most of the time, it’s financial like loss or low profits.
But whatever the reason is, closing a business in the Philippines formally is a must if the
company want to ensure they have clean records.

Process of Business Closure

The actual process of closing a business is often called retiring a business

1. Closing a Business at the Barangay Level

Closing your business at the barangay is the first thing you do. It’s also the easiest. Just
complete the requirements listed above, go to the barangay hall where your business is
registered, and submit the requirements. There is no form to be filled-up. And if they do, you can
readily do that since it should be available at the barangay. Once you’re there, they’ll receive the
files.

When the certificate is ready, you have to pay the fees first prior to it being released.

2. Closing a Business at City Hall

Once you get the certificate of closure at the barangay, you can head straight to the city hall,
if you have all the requirements. Here, you will definitely need a form signed by the owner. It’s
readily available at the city hall of your registered business. Once the form is submitted, you
need to have this notarized. You submit the notarized form with the other requirements. They’ll
assess this and let you know if you need to submit something else. You’ll then be given a stub
with some contact information. They’ll often put a date on when to follow-up again. Normally,
that’s at least a month’s time from now.

3. Closing a Business at BIR

Now that the Local Government Unit (LGU) is complete, i.e. you already have the certificate
of closure at the barangay and the city hall, it’s now time to tackle the retirement at the BIR
level. The process is mostly the same: gather the requirements, fill out a BIR form 1905, and
submit them to your RDO. You’ll be asked to head over to the TIN Issuance group. That’s where
they’ll receive the receipts, etc. If they don’t have any other questions, they’ll give you a
stamped copy of the BIR form 1905 that will serve as proof that you already cancelled your TIN.
That means only at that point do you stop filing tax returns. Afterwards, you submit the rest of
the requirements with the examiner of the RDO. Again, from our experience, they’ll simply
glance over to see if you’re missing something. If not, they will tell you to followup with them
after 1-2 weeks.

4. Closing a Business at SEC / DTI

Finally, the last step. Take all requirements and submit everything to the SEC and DTI.
Since most requirements were already given during the previous steps, most likely, the SEC
and the DTI won’t ask for something new. So this will be faster. Again, this will be a waiting
game. It can take 2-4 weeks before you receive the certificate.

Closing a business in the Philippines is a long and tedious process. The requirements and
processes are different per type of company, per city, and per government agency.

Discussion Point 5:
Legal Forms of Business Ownership

1. Department of Trade and Industry

A sole proprietorship, a partnership, and a corporation must register it’s business name with
the DTI. Registration will protect their business names from being used by other individuals
and/or companies.
To be qualified to register a business name, all applicants must be 18 years and above.

2. Securities and Exchange Commission

Corporations and partnerships must secure a certificate of registration from SEC. This
agency has the overall jurisdiction over corporations and partnerships.

3. Local Barangay Office

 All businesses must obtain a barangay clearance from the local barangay office where the
business is located. The barangay clearance assures that the business being established is
community-friendly and conforms to the standards of the barangay. The fee of the barangay
clearance varies, depending on the size of the business or the district where the barangay is
located.

4. Local Government Units –office

All businesses must secure a mayor’s business permit from the municipality or the city of
mayor’s office. The issuance of mayor's business permit states that all requirements were
submitted and the standards were met. The fees for new applicants may depend on their initial
capital while fees for renewals depend on the applicant's prior year gross revenues and sales.

5. Bureau of Internal Revenue

For tax purposes, all businesses must register with the BiR before the business operation.
The procedures are as follows:

1. Secure a permanent Tax Identification Number, BIR form no. 1904, from the nearest
satellite or regional district office.
2. Register the business name with the BIR Revenue District Office that has jurisdiction
over the registered address of the business establishment, BIR form no. 1901 for
individuals opening a new business and BIR form no. 1903 for partnerships and
corporations. Upon submission of the application form, the following support papers may
be attached:
a. Mayor's permit of Application
b. Certificate of Business Name registration from DTI and/or SEC certificate of
Registration for Partnership and Corporations
c. Residence certificate
3. Pay the prescribed fees at the authorized agent bank of the Regional District Office
4. A certificate of registration, BIR form no. 2303 will be issued to the business.
5. Apply for issuance of the books, BiR form no. 1900 and the official receipts, BIR form no.
1906.

6. Social Security System

The business owners or employers who hire another person to do service for the business
must register at the SSS. Registering employees to SSS assumes that the employer is properly
remitting the contributions for the benefits of the employees.

The SSS administers two programmes, namely;

1. Social Security Program-This program provides replacement income for workers in

time of difficulty, sickness, maternity, and old age and it provides assistance for death
and funeral expenses.
2. Employee Compensation Program-This program provides double compensation to the
worker when illness, accident, or death happens in work-related activities. The benefits
of this program are only granted to members with employers other than themselves.
Employee assistanceay be in form of salary, housing and calamity loans.

7. Philippine Health Insurance Corporation

The National Health Insurance Act (RA 7875/RA 9241) mandates all employees to register
their employees with PhilHealth and to remit to the agency the share of contribution. This
program ensures that employees are adequately covered by health insurance covering
hospitalization cost and other health care needs.
 8. Home Development Mutual Fund (Pag-ibig Fund)

Republic Act 7742 states that SSS members earning at least 4,000 pesos a month must be
registered with HDMF, the agency that administers the Pag-ibig fund. It is the employers’
responsibility to remit the employers’ share food contribution for employees to the agency. This
agency provides members with an adequate housing saving scheme.

DISCUSSION POINT 6:
6 Steps to Successfully Launch an Enterprise

Before launching your business, here are six steps to ensure a successful start.

1. Go beyond the business plan.

Planning carefully before launching a new business is not limited to preparing a business
plan. "While preparing a business plan is generally a valuable exercise, there are other ways to
plan carefully," he says. Bachenheimer recommends three planning methods.

 The Apprentice Model: Gaining direct industry experience, as the founders of Tender
Greens did.
 The Hired-Gun Approach: Partnering with experts who have in-depth knowledge and
experience.
 The Ultra-Lean School of Hard Knocks Tactic: Figuring out a way to rapidly test and
refine your model at a very reasonable cost.

2. Test your idea.

Sixty percent of new businesses fail within the first three years, according to Victor
Green, a serial entrepreneur and author of How to Succeed in Business by Really Trying. "Too
often people rush into business without carefully checking out their idea to see if it will work," he
says. "Research is essential."

While the internet makes it possible to conduct research without leaving your desk,
Green says Googling isn't enough. "Talk to real people who are in the business you want to go
into. Talk to people who might be your customers and get their views and opinions," he says.
"Test your ideas if possible."

3. Know the market.

Ask questions, conduct research or gain experience to help you learn your market inside
and out, including the key suppliers, distributors, competitors and customers, Bachenheimer
says. "You also have to really understand the critical metrics of your market, whether it's as
simple as sales per square foot and inventory turnover, or an esoteric measure in a highly
specialized niche market," he says.

4. Understand your future customer.

In most business plans, a description of potential customers and how they make
purchasing decisions receives much less attention than operational details such as financing,
sourcing and technology. But in the end, it will be the customers who determine your success or
failure.
5. Establish cash resources.

"Cash is king, so you must take steps to adequately capitalize the business and secure
ready sources of capital for growth."

"A good cash-forecasting tool is critical so that you can plan for the sources and uses of
cash on a rolling basis."

6. Choose the right business structure.

From the beginning, it's crucial to select the appropriate corporate structure for your
business, which will have legal and tax implications. The structure you choose can also ensure
the success of future decisions, such as raising capital or exiting the business.