Cost in Running a Business in the Philippines

Cost in Running a Business in the Philippines

Being one of the continuous economically-growing countries in the world, the Philippines offer a deep variety when it comes to employment opportunities and entrepreneurship. In consonance, maintaining a business enterprise is a hefty, more so significant, job to fill by employers.


Cost and Expenses: What are they?

         These are either recurring or one-time costs an establishment must take into account. These may either manifest through equipment, everyday facilities, vehicles or even land properties. In some cases, establishments conduct preventive maintenance costs to properly sort out what assets stay and what assets go – this is to ensure that all costs are accounted for without misbalancing its annual expense cycle.  


Kinds of Cost and Expense Categories

  • Fixed Costs and Recurring Costs – these are fixed expenses that need to be budgeted in order for the company to continue business-life on a daily basis. The most common expenses establishments keep track of are either related to labor expenses or facilities served.
      • Labor
        • Considered as one of the biggest business expenses an establishment needs to consider, the maintenance of labor is necessary for the life of an establishment. Majorly, this includes the fixed cost for employee salary and wages, training, contractor cost and other expenses attached to their daily wage.
      • Vehicle
        • Vehicle expenses usually incur regularly, so establishments pre-plan its maintenance cost at a fixed amount in order to properly balance the costs attached to it. This includes the cost of oil changes,  tire changes, gas (vehicle fluids) and other necessary maintenance needed to extend its functionality.
      • Equipment and Facility Repairs
        • The property costs incurred by an establishment usually stems from its daily to monthly maintenance of its equipment and facilities. This includes the maintenance cost towards external repairs like production equipment, office equipment, vents, roofs, air conditioning, toilet repairs and other necessary expenses that incurs during the establishment’s productive hours.
        • This will also include office supplies. 
      • Insurance
        • At most, insurance costs often come at a fixed price, thus insurance costs attached to the establishment and its employees are maintained at a fixed rate. Maintenance costs allocated to these insurance plans may stem from commercial, business, health and liability insurances.
      • Third Party Suppliers/Providers
  • Variable Costs – unlike fixed costs, these expenses get affected by performance and productivity levels incurred by the company. Significantly, these variable expenses sometimes cannot be fixed into account due to the nature of its external variables such as employee performance and material necessity.
      • Raw Materials
        • Raw materials bought for production are not at a fixed cost most of the time, as the external factor affecting it is dependent on the production level of the company itself. For instance, an establishment that manufactures sweaters – its raw material used may be wool or cotton, during the hot days, its production diminishes as its demand lowers.
      • Employee Benefits
        • At a fixed cost, employee salary and wages are deemed to be the biggest expense of the company as it involves contracting man-power. However, expenses that depend on the employee’s performance, like their overtime pay and other benefits and bonuses incurred quarterly or annually are not fixed – as these expenses only incur during its nature of necessity.
      • Utilities
        • At par with the cost maintained towards raw materials, the billing cost will also depend on the productivity and active hours of an establishment. This may include the use of electricity, water and other necessary billings incurred during work hours.


For business owners in the Philippines, it is wise to take into consideration the expenses that may incur – as these are a significant factor of the survival of your establishment.

Ready to start your business in the Philippines? Learn more about investing in this country’s promising economy by calling FilePino at 1.806.553.6552 (USA) or +63.917.892.2337 (Philippines).