Starting a business is no mean feat. How do you know what category to register to? If you are a small startup looking to save on capital expenses, enjoy tax breaks, and reap incentives, consider registering as a Barangay Micro-Business Enterprise (BMBE). Let’s take a detailed look at what this registration entails and what it can do for you.
Why Register as BMBE?
The BMBE Law was enacted last November 13, 2002 under former President Gloria Macapagal Arroyo. It recognizes that small businesses and micro-enterprises are crucial components of economic development in the country. They provide livelihoods for Filipinos and improve the quality of life. As such, the BMBE provides the following incentives:
- Income tax exemption from income arising from the operations of the business
- Minimum wage law exemption (note that BMBE employees will still receive the same SSS and Philhealth benefits)
- Access to a special credit window which was established for the financing of BMBEs
- Access to tech transfer, production and management training, and marketing assistance programs
- LGUs may also offer reduction OR exemption of local taxes, fees, and other charges
What are the Eligibility Requirements?
Based on the BMBE law, you can be eligible for BMBE registration under the following criteria:
- Your business centers on trading, services, and producing products, including agro-processing.
- Your total assets must not exceed P3 million, including those arising from your loans but not the land on which your manufacturing plant and tools are located.
- Your business cannot be connected with the exercise of your profession (ex. a professional duly licensed by the government like lawyers or doctors).
- Your operations are not a branch or subsidiary of a larger corporation.
What Documents to Prepare?
Whether you are a first-time BMBE registrant or are renewing, your registration will occur in the Office of the Treasurer of the city or municipality where your business is established. These are the necessary documents:
- Filled out and signed BMBE Form 1 in triplicate
- Three passport size photos
For assets equal to or less than P300,000) add the following:
1. Registration as a business entity in the appropriate government agency (e.g. Securities and Exchange Commission (SEC) registration for corporations; Cooperative Development Authority (CDA) registration for cooperative; Department of Trade and Industry (DTI) business name registration for sole proprietors
2. Mayor’s Permit or City/ Municipal Business Permit.
For assets more than P300,000 and up to P3,000,000.00 include:
1. Registration as a business entity (as above)
2. Taxpayer Identification Number (TIN)
3. Certificate of Registration from the Bureau of Internal Revenue (BIR)
4. Mayor’s Permit or City/Municipal Business Permit
5. Affidavit executed by the sole proprietor or the President of the company stating the business is barangay-based and a micro-business in nature and scope
6. Sworn Statement of Assets and Liabilities with corresponding documents
7. Pictures of your place of business and other assets, other than cash, receivables, and other intangibles
8. Copy of Loan Contract/s (if any) and duly notarized Certification of Amortization Payments on the Loan
9. Income Tax Return (ITR).
Additional Requirements for renewal of BMBE registration for ALL:
- Comply with the documents mentioned above
- Include your Annual Information Return (for the year immediately preceding the renewal of registration) duly filed with the BIR
- Submit required attachments with the tax return
How to Finalize Registration?
The process to fully register as BMBE is as follows:
Step 1: Accomplish BMBE Form 01 in triplicate. Affix your signature.
Step 2: Collect all the required documents and then submit to the Municipal or City Treasurer Office.
Step 3: The said office will evaluate the application, and it will be processed within 15 working days upon submission.
Step 4: Pay administrative costs, if any. The registration and issuance of Certificate of Authority of the LGU should be free of charge, but they are allowed to levy a minimal admin fee of no more than P1,000 to defray expenses.
Step 5: Wait for the release of your Certificate of Authority as proof of registration. This is valid for two years and must be renewed thereafter.
Final Wrap Up
If you are ready to take on the challenge of being a business owner, knowing ways to save money will help you. Starting things right will ensure you establish a solid foundation for your operations. Remember, it takes commitment to grow your business. If you find all these details overwhelming, you can hire professionals to get all the pertinent details accomplished.
Call us for a free 30-minute consultation so we can help you out!