Launching a food business is already a challenge under the best of circumstances. Doing it in the middle of a global pandemic is a feat—a feat, but not entirely impossible. Many people might think that pursuing the entrepreneurial path under such conditions is wishful thinking but doing so can also potentially open up various opportunities to fulfill the growing demands of the market.
There are quite a lot of emerging business ideas that could thrive during a pandemic, especially businesses that provide customers with the ease and convenience of being able to transact online. As more and more people recalibrate their priorities, interest in entrepreneurship is now at an all-time high.
Whether you’re starting a business out of a love for cooking or for a new income opportunity, having a great concept and enough business know-how can definitely be a driver for success. But to get your restaurant up and running, there are still several legal considerations that you must take a look at. In order to operate properly, filing all the government requirements should be one of the top priorities on your list.
Evaluating your kitchen
Before you begin complying with all your legal business requirements, you need to decide first what type of entity you want your food business to be. This is important because your business structure will affect everything from how you pay your taxes, what permits to apply for, and to what extent your liabilities are as the owner.
To help you out, here are the different business structures that you can choose from under Philippine law:
A Sole Proprietorship means the business is owned solely by one individual who is responsible for all of the assets and obligations. In this case, you get to enjoy all of the profits, but at the same time, shoulder all the possible losses as well. If you want to have full control and authority over the business, this is the business structure for you.
Sole Proprietorships must be registered with the Department of Trade and Industry (DTI) and must apply for a business name.
If you prefer to operate a business with other individuals who have the skills to complement your own, then you should go down the Partnership route. Under the Civil Code of the Philippines, a Partnership's legal personality is separate from its owners.
Go for a General Partnership if you and your partners are willing to share the unlimited liability of the business. But if you prefer an arrangement where only some partners get unlimited liability then a Limited Partnership is something you can look into.
Consult with the Securities and Exchange Commission (SEC) regarding the registration of your Partnership.
If you plan to open a bigger restaurant, then you might want to consider starting a Corporation. With a minimum of five and a maximum of 15 shareholders, your liabilities are only equal to the number of your shares in the business. Similar to a Partnership, a Corporation is treated as a separate entity from its owners, and must always be registered under the SEC.
In the end, it is up to you to determine which legal structure would best suit the business that you have in mind. Getting to the bottom of it all takes a whole lot of planning, evaluating, and assessing so if you're finding it difficult to make up your mind, consulting a business advisor would be of great help.
Processing the legal requirements
Once you've sorted out your legal business structure, it's now time to secure all the requirements needed to legally and successfully operate your business.
Here are the following legalities you, as a new food business owner, should familiarize yourself with:
Register with DTI/SEC
The most pressing question especially for entrepreneurs looking to set up an online food business is: Do I really need to register? The answer is yes! Even if you’re offering your services entirely online, you still need to apply for certain registrations and acquire certain permits.
Where you register your business, whether with SEC or DTI, would depend on whether your business is a Sole Proprietorship, Partnership, or Corporation.
For Sole Proprietors, you can register your business name with DTI here.
Corporations and Partnerships can check out the requirements from the Securities and Exchange Commission website.
Apply for business permits and licenses
In order to secure a Tax Identification Number, you must first obtain a Mayor's Permit. Processes and requirements vary depending on your municipality, so it's best to consult your Local Government Units. But some of the most common requirements are:
- Barangay Clearance from the local Barangay where your business is located. A photocopy of your SEC/DTI/CDC Registration and a contract of lease is required.
- DTI Business Name Certificate for sole proprietors and Certificate of SEC Registration for corporations and/or partnerships.
- Community Tax Certificate or CEDULA obtained at the City Treasurer’s Office.
- A Sanitary Permit is required to make sure establishments follow the standards of the Sanitary Code of the Philippines. You would usually be asked to provide a Chest X-Ray and 1×1 picture of your employees and a medical certificate issued by the City Health Officer.
- Contract of Lease if you are leasing space, a copy of the Transfer Certificate of Title (TCT) or Tax Declaration if you own the place.
Register with the BIR and SSS
BIR registration is an important prerequisite to doing business in the Philippines. No business is allowed to operate without a tax identification number (TIN). Customers will also likely view your business as trustworthy if it is registered with the BIR.
Get your application forms here.
Aside from working to keep the business afloat, a business owner is also responsible for his/her employees. That means giving them their salaries on time and registering with the Social Security System. To register with the SSS, you must accomplish the Employer Registration Forms together with the Specimen Signature Card (SS Form L-501). Other requirements depend on what legal personality your business falls into such as Single Proprietorship, Partnership, or Corporation.
Click here for more information on how to register with SSS.
Align business with FDA regulations
For detailed information regarding licensing, registration, and regulations, please visit the Food and Drug Administration website.
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