How to Register a Business in the US from Philippines

Step 1: Benefits of starting your US business from Philippines

Starting a US business from the Philippines offers numerous benefits that can significantly contribute to your entrepreneurial success. One major advantage is the cost-effectiveness of operations. The Philippines' lower cost of living and labor compared to the US enables entrepreneurs to minimize expenses on salaries, office space, and other operational costs. This allows you to allocate more resources towards business development and expansion, enhancing your competitive edge in the US market.

Additionally, the Philippines is renowned for its highly skilled, English-speaking workforce. This attribute makes it easier to manage remote teams and maintain effective communication with stakeholders in the United States. The cultural affinity and time zone overlap between the two countries further facilitate seamless collaboration, ensuring that your business operations run smoothly and efficiently. By leveraging the talents and cost advantages of the Philippines, you can drive your US business towards sustainable growth and success.

Step 2: How to start your US business from Philippines

Starting a US business from the Philippines involves several steps that require careful planning and research. Firstly, you'll need to decide on the type of business structure such as a corporation, Limited Liability Company (LLC), or a sole proprietorship. Each has its own benefits and legal implications, so it's essential to choose the one that best suits your business needs. Once you've decided on the structure, you should register your business with the relevant US state authorities. This typically involves filing the necessary formation documents and paying the associated fees. Additionally, most states require the appointment of a registered agent who resides in the state of registration to handle official correspondence on behalf of your business.

Alongside registration, you must obtain an Employer Identification Number (EIN) from the Internal Revenue Service (IRS) which is essential for tax purposes and opening a US bank account. You will also need to consider any state-specific licenses or permits required for your business operations. To facilitate communication and transactions with your US clients, it can be beneficial to set up a US-based mailing address through virtual office services. Finally, it's crucial to stay compliant with US tax laws and regulations, which might necessitate consulting a tax professional familiar with both US and Philippine tax systems. Establishing a robust business plan, understanding legal requirements, and seeking professional advice will significantly enhance your chances of success.

Step 3: Opening a Business Bank Account

A business bank account is a separate account that is used exclusively for business transactions. But why is it important to open a business bank account?

Keeping your personal and business finances separate is crucial. A dedicated business bank account allows you to do just that, making it much easier to track your business’s income and expenses. This clear separation translates to simpler tax reporting come tax season.

But the benefits go beyond bookkeeping. Having a separate account can provide legal protection. It establishes your business as a distinct entity from yourself. In the unfortunate event of a lawsuit or bankruptcy, this separation can help shield your personal assets from business liabilities.

Furthermore, a business bank account can boost your credibility and project professionalism.

It demonstrates to clients and vendors that you take your business seriously and are committed to maintaining accurate financial records. This can be especially important in establishing trust with potential partners.

Finally, a business bank account is essential for accepting payments, even if you utilize a merchant account. Whether you use doola or another service, funneling those customer funds into a dedicated business account is necessary.

doola partners with banks that allow you to open a bank account remotely from anywhere in the world, like Mercury. Shop around and compare different banks’ fees and services.

Look for a bank that offers the features you need, such as online banking, mobile banking, or overdraft protection.

You may also want to consider working with a bank that specializes in small business banking.

Step 4: Understanding Your Compliance Requirements in Philippines

Understanding Compliance Requirements for Running a US Business in the Philippines

Establishing a US business in the Philippines entails navigating a complex array of compliance requirements. These regulations are designed to ensure business practices align with local standards. Below are several key considerations to keep in mind:

1. Business Registration

• Securing Permits: US businesses must secure necessary permits from agencies like the Philippine Securities and Exchange Commission (SEC) or the Department of Trade and Industry (DTI).
• Local Incorporation: Foreign investors must consider the implication of registering as a branch, representative office, or a domestic corporation for different operational scopes.

2. Tax Compliance

• Tax Identification Number (TIN): A TIN from the Bureau of Internal Revenue (BIR) is mandatory for both the business entity and its employees.
• Value-Added Tax (VAT): Businesses earning gross sales over a certain threshold are required to register for VAT.
• Regular Tax Filings: Monthly, quarterly, and annual tax returns must be submitted to the BIR, adhering to specific deadlines and documentation requirements.

3. Employment Regulations

• Labor Code: Compliance with the Philippine Labor Code is essential, covering wages, working hours, benefits, and employee rights.
• Work Permits: US businesses hiring foreign employees must secure appropriate work permits and visas from the Department of Labor and Employment (DOLE) and the Bureau of Immigration.

4. Environmental Compliance

• Environmental Permits: Depending on the nature of the business, environmental clearances may be required from the Department of Environment and Natural Resources (DENR).
• Waste Management: Adhering to local waste management laws and regulations is crucial for operations to avoid penalties.

5. Intellectual Property

• IP Registration: Protecting trademarks, patents, and other intellectual property by registering them with the Intellectual Property Office of the Philippines (IPOPHL).
• Compliance with IP Laws: Ensuring products and services do not infringe on existing Philippine IP laws and registered marks.

These considerations are integral for US businesses looking to expand into the Philippines. Proper adherence to local compliance requirements can help avoid legal issues, foster growth, and build a strong foundation for success in the Philippine market.

doola offers a Total Compliance package, including bookkeeping services, to help you stay on top of your compliance requirements. This ensures your business operates smoothly and adheres to all legal and regulatory standards.

Step 5: Understanding Your Tax Obligations in Philippines

Understanding Tax Obligations for Running a US Business in the Philippines

Running a US business in the Philippines requires a clear understanding of various tax obligations. Below, we'll outline key considerations to help navigate the complexities of international taxation.

1. Double Taxation Agreement

The Philippines and the United States have a Double Taxation Agreement (DTA) designed to prevent businesses from being taxed twice for the same income. This agreement outlines where different types of income are taxable and offers relief mechanisms.

• Dividends: Subject to reduced tax rates under the DTA.
• Royalties: Specific types may benefit from reduced withholding taxes.
• Interest: Certain interest income can qualify for lower withholding tax rates.

2. Corporate Income Tax

US businesses operating in the Philippines need to pay corporate income tax on their profits. The current corporate income tax rate in the Philippines is 25%, but various incentives and special tax rates may apply to specific industries or investments.

3. Value-Added Tax (VAT)

VAT is imposed on the sale of goods and services in the Philippines. The standard VAT rate is 12%. However, some transactions may be zero-rated or exempt from VAT, particularly if they involve exports or specific economic zones.

4. Withholding Taxes

Withholding taxes must be considered for payments made to both local and foreign entities. These taxes often apply to dividends, interest, royalties, and other forms of income.

1. Dividends: Typically subject to a 15% withholding tax under the DTA.
2. Interest: May be subject to a lower withholding tax rate under specific conditions.
3. Royalties: The rate can be reduced if covered by the DTA.

5. Registration and Compliance

US businesses must register with the Bureau of Internal Revenue (BIR) in the Philippines. They need to secure a Tax Identification Number (TIN) and comply with regular tax filings, including annual income tax returns, quarterly VAT returns, and other necessary submissions.

6. Transfer Pricing

The Philippines has transfer pricing regulations that require businesses to ensure that transactions with related parties are conducted at arm's length. Documentation justifying transfer pricing policies must be maintained and submitted when requested by tax authorities.

7. Tax Incentives

The Philippine government offers various tax incentives to attract foreign investments, such as income tax holidays, special economic zones, and reduced tax rates for certain industries. Exploring these incentives can lead to significant tax savings.

Understanding and adhering to these tax obligations is crucial for successful business operations in the Philippines. Consulting with tax professionals familiar with both US and Philippine tax laws is recommended to ensure compliance and optimize tax efficiency.

It’s a good idea to consult with a tax professional or an accountant (or to hire these roles in-house) to make sure you’re not missing anything.

doola's Total Compliance package can handle your tax filings for you, ensuring you remain compliant with federal, state, and local tax requirements.

Step 6: How doola Can Assist

doola simplifies the incorporation and setup process for your company, ensuring you’re ready to charge customers, hire your team, and raise funds as quickly as possible.

Fill out your company details in the doola form in less than 10 minutes. Then, we’ll incorporate your company in any of the 50 US states, get your IRS tax ID (EIN) for you, and file your 83(b) tax election if needed. 

doola can also help you open a bank account and start accepting payments even before the IRS assigns your tax ID.

doola founders also gain access to exclusive discounts at leading software partners, one-click onboarding with select partners, and free CPA consultations.

The doola Application

It takes less than 10 minutes to fill out the details of your new company. You’ll choose your company structure (C corporation, limited liability company) and pick a company name.

Our instant company name checker will let you know if it’s available before you submit your application. You’ll add an address and phone number and review and sign your EIN SS4 letter in one click.

Forming the Company

doola will review your application and file your formation documents in the state within one business day. doola charges $297 for our Starter Plan and your first year of registered agent services (a state compliance requirement), and $297 each year thereafter to maintain your registered agent. 

You can also opt for our Total Compliance plan.

Getting Your IRS Tax ID (EIN)

After your formation in the state is complete, doola will file for your company’s IRS tax ID. Founders who provide a US Social Security number, US address, and US phone are eligible for expedited processing. All other users will receive standard processing. 

For standard orders, doola will fax your form SS4 to the IRS and then call the IRS to retrieve the EIN for you to expedite the process if we can, using real-time IRS data to determine when your filing is likely to be available.

Filing Your 83(b) Tax Election

Many startup founders choose to file an 83(b) tax election to potentially save on future personal taxes. doola can file and mail your 83(b) tax election in one click for both US and non-US founders — no trip to the post office required.

We’ll file it using USPS Certified Mail with tracking, and you’ll get a copy of your signed 83(b) election and proof of filing in your Dashboard.

Partner Perks and Discounts

doola partners with a range of third-party tools to offer special pricing or access to founders. We offer discounts on engineering, tax and finance, compliance, and operations tools, including Amazon Web Services.

doola also partners with Mercury to provide faster, automatic onboarding using your doola company information so you can get ready to bank and fundraise even faster.

Founders may also access discounts on other doola products, including up to one year of free credits toward payment processing.

Read our guides for startup founders, or learn more about doola and how we can help you set up your new business quickly and easily.

Turn your entrepreneurship dream into reality today!

We do our best to provide accurate and up to date information, however the information provided here are just guidelines. Please speak with a tax and compliance professional in your country