In running a business, you would like for it to continue, especially if the market conditions have been good and you’ve been profiting handsomely from it. So, to keep it running smoothly and legally, make sure to renew your business permit annually. Failing to renew your permit can result in penalties or even a suspension of your business operations.
If you’re new to the concept of business permit renewals, here’s a step-by-step guide on how to do it:
There are three government offices involved in the renewal of your business permit: the barangay hall, the mayor’s office, and the BIR (Bureau of Internal Revenue). Shown below is the breakdown of documents each office issues/renews, as well as the sets of papers you need to submit:
Barangay Clearance
Your Barangay Clearance certifies that your business has followed the requirements of the barangay where your business is located. Here’s what you need:
Barangay Clearance from the previous year
Official receipt of Barangay Clearance payment from the previous year
Duly accomplished application form
Comprehensive General Liability Policy Insurance (CGLP) or local insurance
Official receipt of CGLP Insurance
Renewal fee of P500
Once you have all the documents, head to the permit division of your barangay. Renewing your barangay clearance usually takes a day.
Mayor’s Permit
Once your Barangay Clearance is renewed, next to attend to is the Mayor’s Permit. This certifies that the Mayor’s Office has allowed your business to operate in their locale. Here’s what you need:
Mayor’s Permit from the previous year
Official receipt of Mayor’s Permit from the previous year
New Barangay Permit
Application for new Mayor’s Permit
Financial statements of the previous year
Community Tax Certificate
Contract of Lease
BIR Clearance
SSS Clearance
Comprehensive General Liability Policy Insurance (CGLP) or local insurance
After these requirements, along with the application form obtained from the local Business Permits and Licensing Office of the concerned city hall or municipal hall, are submitted and approved, head to the City Treasurer’s Office for payment of the Mayor’s Permit fees.
You can also ask your local city hall for a complete list of requirements. When it comes to paying for the Mayor’s Permit, you can opt to pay in full or in quarterly installments. Renewing your Mayor’s Permit takes around one to three weeks.
Certificate of Registration
This is also known as BIR Form 2303. Whether you are a freelancer, sole proprietor, partnership, corporation, or cooperative, this document will give you the legal authority to operate your business in the Philippines. Just like your Barangay Clearance and Mayor’s Permit, your business’ Certificate of Registration must be renewed annually, as well.
Accomplished BIR Form 0605
Registration fee of P500
The updated application form can be downloaded here. Once the form has been filled out, pay the renewal fee in any Authorized Agent Bank (AAB) of the BIR.
There are two ways to renew your Certificate of Registration: By going to your designated BIR Revenue District Office (RDO) or by paying online. If you choose to renew online, download the eBIR Forms Package and fill out Form 0605. Renewal of BIR Registration typically takes a day.
In the Philippines, business permits typically expire on December 31, at the end of each year. All Barangay Permits and Mayor’s Permits must be renewed before January 22 of the following year. However, the local government of your business’ location has the authority to change the deadline for renewal. Renewing of your BIR Certificate of Registration, meanwhile, is until January 30.
Since the renewal process takes several days and you’ll be going to a number of government agencies, knowing the deadline and how long the process takes gives you enough time to prepare.
Operating with expired licenses and permits results in a penalty, which can cost around thousands or tens of thousands of pesos. While the penalty is different for each city, the consequences are the same for businesses that don’t comply. The monthly surcharge and interest fees include a 25% surcharge on all unpaid taxes, charges, and fees and a 2% additional interest for every month of delay.
The fine for failing to renew your permit ranges from around P5,000 to P20,000. In extreme cases, the local government may confiscate assets or suspend business operations.
Need help in running a business? Let FilePino help you out. We offer a wealth of experience when it comes to registering a corporation in the Philippines. Call us today at +63.917.892.2337 or send us a message here.
