Setting up an online business in the Philippines used to be as easy as 1-2-3! One would make a Facebook or Instagram page, upload the photos of their products, and people can buy it already. However, in 2020, BIR ordered online businesses to register, declare past transactions, and pay taxes.
You may think it’s just a hassle, but here are five reasons why you should register your online business.
1. You can avoid fines and jail time.
Registering your online business is mandated by law. According to Memorandum Circular 60-2020, all persons doing business and earning income in any manner or form, specifically those who are into digital transactions through the use of any electronic platforms and media and other digital means, must ensure that their businesses are registered pursuant to the provisions of Section 236 of the Tax Code, as amended, and that they are tax compliant.
If you would not comply with the said memorandum, there is a fine of not less than PHP 5,000 but not more than PHP 20,000 and imprisonment of not less than six months but not more than two years.
Yet, if you register, you can save on these fines and even get benefits!
2. You can get more opportunities.
Business registration opens your door to a lot of opportunities to grow your business. By registering with the Bureau of Internal Revenue, you would be able to bid for government contracts and aid in providing products and services they currently need. You can also transact with big corporations because the registration gives your potential partners confidence in your business. It can even allow you to export your products overseas!
3. You can get access to financial resources.
Most financial institutions require a BIR Certificate of Registration (Form 2303) and a tax identification number to open a corporate bank account. As your business grows, you need to separate your personal and business bank accounts to manage your finances better. In addition, as you prepare for this growth, you might need to take any type of financing. This would require evidence of a stable income, and you can submit your Annual Income Tax Return for it.
4. You can establish credibility with your customers.
One of the biggest hurdles in buying online is the uncertainty of whether the business is legit or a scam. This poses a problem to online businesses, especially when they are still starting their businesses; no one can vouch for the legitimacy of their products through reviews. Yet, with business registration, it can prove that the government is regulating it. Thus, it is safe to buy from them. These proofs can come in the form of official receipts you can give to your customers and include it in your business description on your social media pages.
5. You can market your product freely.
As business registration is mandated by law, if you’re not registered, you would not be able to market your products freely. You cannot grab marketing opportunities that can translate to leads and sales. If the government realizes that you are not registered and are joining marketing efforts, you will face the penalties of not being registered.
However, if you are registered, you can take advantage of partnerships, advertisements, and other marketing campaigns to increase the awareness and sales of your business.
Need help in registering your business? Greenpoint can help you! Contact us at info@greenpointconsultancy.com.
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