Have you registered your company? Every well-established CEO recognizes the importance of legitimizing their corporation with the relevant authorities. After all, it’s a legal requirement to operate in the Philippines. More than that, it opens up numerous opportunities for growth and expansion, which are valuable for up-and-coming entrepreneurs like yourself.
8 Benefits of Corporate Registration in the Philippines
The Philippine business landscape is highly competitive, so give your company a fighting chance and reap the following benefits through proper registration.
1. Legal protection
Legally speaking, an unregistered business doesn’t exist, meaning your company’s assets are your personal assets as the owner. However, it also means any risk your venture faces affects your financial well-being as well. If your unregistered company incurs significant debt and can’t repay it, the court may seize your private assets to satisfy business liabilities.
Conversely, registering your business separates your finances from your business’s. Limited liability is a fundamental aspect of corporate law, offering you peace of mind knowing that your personal assets are safe from seizures.
2. Market credibility
A registered company is a legitimate one. Customers, suppliers, and investors can trust your registered corporation because it signals your commitment to success and upholding regulatory standards. This advantage is vital in a highly competitive business environment where reputation and trust make you stand out.
Ultimately, credibility gives your company a better chance of attracting new customers, forging long-lasting partnerships, and taking advantage of previously unavailable opportunities.
3. Customer trust
Trust is the foundation of any successful relationship, and registering your corporation makes consumers more likely to trust you. It also informs your target audience that you’re ethical and willing to be accountable for your actions. The legal frameworks governing business transactions become applicable to your now registered business, so customers feel safer transacting with your company.
Moreover, formalizing your corporation lets you establish legally binding terms and conditions and privacy policies, further enhancing your trustworthiness. These documents can set you up for long-lasting customer relationships, especially in an environment where brand reputation primarily depends on trust.
4. Business financing
Business owners and executives often delay registration because they want to generate stable income first. However, achieving this goal is exponentially challenging without proper registration because you can’t access business loans, venture capital, credit lines, and other financing avenues without it. In other words, registration is crucial to profitability.
Lenders and investors are more willing to fund registered corporations because they have legal protection from theft and fraud. Registration also makes your business eligible for government grants, subsidies, tax-advantaged benefits, and other incentive programs to bolster your funds. These financial opportunities can fuel your growth and expansion, so jump on any chance to maximize them.
5. Issuance of stock
Registration allows you to sell shares of your company to investors in exchange for money. It’s another way to fund expansions, research and development, and other strategic initiatives. With it, you can start scaling your business without incurring debt or diluting ownership control.
Believe it or not, you may also issue stock as employee compensation through stock options, restricted stock units (RSUs), and other equity-based incentives. Doing so aligns your staff’s interests with those of shareholders, spurring their commitment to the company’s success.
Lastly, issuing stocks enables shareholders to buy, sell, or transfer their ownership stakes. These practices make owning a part of your company more appealing as an investment. This then boosts the demand for its value, which is especially good if you ever decide to sell your business in the future.
6. Tax advantages
Like other specialized business structures, registered corporations are subject to unique tax treatment, such as the opportunity to deduct business expenses like salaries, wages, and rent. You can cut your taxable income and lower your overall tax burden by managing your expenditures strategically.
Registration also provides access to the following tax incentives—and more—under the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act, provided that your business activities are “strategic” per the Strategic Investment Priority Plan (SIPP):
- Four- to seven-year income tax holiday (ITH)
- A 10-year 5% corporate income tax (CIT) on gross income to replace domestic taxes and five-year deductions for qualified enterprises, following the ITH mentioned earlier
- Customs duty exemptions
- VAT exemptions on importation and domestic purchases
- Additional two years of ITH for corporations in areas recovering from disasters or armed conflict
Lastly, registration provides access to tax-deferred retirement accounts, employee benefit plans, and other tax-advantaged vehicles to incentivize your staff while reducing your tax obligations.
7. Internal conflict prevention
Unregistered businesses usually don’t follow legally established corporate structures. As such, they often have vague leadership, creating internal conflicts among executives, heads, and subordinates. Conversely, proper registration establishes clear structures and decision-making processes according to tried-and-tested guidelines.
When you register your company, you might need to choose independent directors and set up board committees to oversee different parts of your business. These help keep things fair and prevent any one person from making all the decisions or using their power unfairly.
A legally established structure also provides mechanisms to address conflicts of interest, ensuring every decision you and your colleagues make is in your company’s best interest.
8. Business growth and expansion
Registering your corporation lays the groundwork for lasting growth. It provides the legal, financial, and operational infrastructure necessary to support your objectives.
With better access to capital and favorable tax treatment, you may freely pursue growth opportunities as they come. You can enter new markets, diversify revenue streams, and capitalize on emerging trends to position your business for sustainable success, even in competitive landscapes. The bottom line is that registering your company is necessary to realize your goals.
Legitimize Your Corporation
Proper business registration lets you reap the advantages we’ve discussed, among many others. Formalizing your business structure and adhering to legal requirements safeguard your interests and set the stage for long-term growth, expansion, and prosperity for all stakeholders, including you. However, the complex process of corporation registration in the Philippines might be putting you off, especially if you’re new to entrepreneurship. That’s why seeking guidance and expertise from experienced business consultants is crucial. They can provide tailored advice and support to ensure your compliance and maximize the benefits of proper registration.
