5 Business Expenses for Business Owners in the Philippines (which you shouldn't miss)

Congratulations! You’ve just unlocked another year as a business owner. I’m sure you’ve learned a lot from the past year, but I’m here to share a few more tips to make sure you’re on top of your game from the get-go. I will cover a list of business expenses for business owners in the Philippines so you can navigate the new year without a hitch.

List of Business Expenses for Business Owners in the Philippines

We will not only go through expenses exclusive for businesses but also general expenses you have to take note of when the year starts. Here are the questions I’ll make sure to answer throughout the article:

What are the expenses I have to pay as a business owner in the Philippines?
What are the BIR expenses I should pay for?
Do I need to hire a professional to file my BIR expenses?
What is amilyar or real property tax?
What business permits should I renew in the Philippines?
What licenses would I renew?
Why should I pay early?

What are the business expenses I have to pay as a business owner in the Philippines?

This article will cover 5 types of expenses that you will need to cover as a business owner in the Philippines.

1. Tax (BIR) Expenses

The Bureau of Internal Revenue has a comprehensive list of tax deadlines you can refer to but here’s a list of basic ones that are usually included for January.

Withholding Tax
Value Added Tax
Percentage Tax
Alphalist of Withholding Tax Compensation
Inventory

FYI: Starting this year (2024), BIR no longer requires the annual registration fee of P500.00 from business owners.

“Pro Tip: Look at your COR’s registered activities for the taxes applicable to your business.”

As for my past filing needs, my bookkeeper friend Gilyn makes sure I don’t miss anything. Penalties can be more taxing than the actual tax when left unchecked.

5 List of Expenses for Business Owners in the Philippines

You can file them on your own by filling up the necessary forms, filing, and paying at a nearby Landbank branch. Facing all the paperwork on your own can be daunting on your own but it’s worth the work when you learn the process.

FYI: Open cases for unfiled taxes can accumulate for several years before the Bureau sends a notice so skipping filing tax returns will surely come back to bite you.

Income Tax Return

ITRs cover all transactions of a business for the calendar year and are required regardless of gross income. Given that it can be a challenge to prepare especially for larger companies, it is made due for filing on April 15th each year. That is ample time to review your books and provide the most accurate data you can provide.

FYI: A duly filed and approved ITR is crucial for businesses that require proof of income and credibility in case of loans and corporate partnerships.

2. Local Business Permits

Local permits in the Philippines are virtually easy to secure. Get them on or before January 20th of each year. You can easily do both on the same day but doing so early will save you from lengthy lines.

Barangay Business Permit

Renew your barangay clearance certificate at the start of the year. Visit your barangay office and bring a copy of your previous permit and request for a renewal. You will need to secure a cedula, too. The whole process takes a few minutes when the signatories are present.

Municipal Permit

After securing a permit at the barangay, you will need to go to your municipal office to renew your business permits. The process will require you to secure fire permits, sanitary clearances, and other clearances that apply to your business. Surcharges and interest will be applied when you don’t apply for renewal on time.

Don’t forget to bring your latest permit to avoid repetitive inquiries.

3. Licenses

Some businesses that involve professionally licensed individuals operate like notarial offices, pharmacies, and construction companies. Make certain that you and your employee’s professional license are renewed on time to avoid legal repercussions.

Sample Professional Licenses in the Philippines

Professional Driver’s License
PRC Identification Cards (Accountancy; Aeronautical, Agricultural, Chemical, Civil, Electrical, etc.)

4. Real Property Tax Expenses

Real property tax or amilyar is a local tax levied on real properties in the Philippines. Some business owners have their business settled in personally-owned properties, thus the need to update dues to avoid unnecessary setbacks later on. But, even if your property is not linked to your business, it is a good habit to settle this expense diligently.

It is due on January 31st of every year but you can settle it in four quarterly installments if you wish to do so. Note, however, that most LGUs offer a discount for property owners who settle their amilyar early.

For the city of Pasig, for example, you can get a 10% discount when you settle your real property tax on or before January 31st in full. Some municipalities can go up to 20% for early payments so make sure to check your local government offices for their existing discount policies.

Any unpaid dues will be subject to a 2% interest for Metro Manila areas and 1% for provinces outside the Metro, another reason not to wait till it’s too late.

When settling property taxes, make sure to bring your past receipts or clearances for swift processing of payments. If you are a new owner, secure documents that prove ownership such as a title or a notarized deed of sale.

Don’t forget to update your LGU first if your property has newly built structures not yet covered by previous property assessments. It will save you the trouble of a whole lot of probing and document verifications when the municipal assessor inspects your property.

5. Vehicle-Related Expenses

The last on my list of business expenses for business owners in the Philippines are vehicle-related expenses.

Car Registrations

A lot of business owners in the Philippines own and maintain several vehicles either for business or personal use.

Owning a vehicle comes with responsibilities and securing its annual registration is one of them. The LTO (Land Transportation Office) mandates vehicle owners to register their cars to make sure of the car’s integrity and roadworthiness.

The last digit of your plate number indicates the month in which you should register.

1 – January
2 – February
3 – March
4 – April
5 – May
6 – June
7 – July
8 – August
9 – September
0 – October

The second to the last digit specifies the week of the month.

1, 2, 3 – first week
4, 5, 6 – second week
7, 8 – third week
9, 0 – fourth week

Pro Tip: Make sure your vehicle is well-conditioned and you have an early warning device on hand to finish the inspection in one go.

Prepare the necessary documents that you may already have or may need to secure such as:

Copy of OR/CR
Third-Party Liability Insurance
Motor Vehicle Inspection Report (MVIR)

Most people recommend going early to accommodate the long lines but one thing I learned after years of doing the process is to go at around 2-3 PM when the dreaded lines had died down. I finish in the afternoon all the same.

Also, check if there’s a PMVIS (Private Motor Vehicle Inspection Center) in the area. It’s a privately owned automated facility that doesn’t limit the number of vehicles they test for the day, unlike private emission centers in the Philippines.

The one in our vicinity has an LTO satellite office inside so you can have it renewed right after without hopping between establishments. They can also have kiosks where you can renew your TPL insurance.

LTFRB Franchise

For businesses that involve the use of public utility vehicles or delivery in the Philippines, another expense to monitor is franchise renewal. The use of a vehicle without a proper franchise permit from LTFRB (Land Transportation and Franchising Regulatory Board) will bring about a lot of headaches and monetary penalties, not to mention your company vehicle being impounded.

Pro Tip: Make sure your PA (Provisional Authority) date stamp is updated. It’s free.

Comprehensive Insurance

With the abiding concept of protection from life insurance, we want to extend that same concept to our properties, especially those we use for income sustenance.

I recommend having comprehensive car insurance on top of the mandatory TPL insurance because while TPL only covers an injury on a third person during a vehicular accident, comprehensive coverage can protect you from the financial burden of repair fees, hospital bills, and theft.

Accidents happen and it’s a risk you can’t rid of regardless of your field but I wouldn’t want to be caught in a pile of unexpected expenses if I can help it. Emergency funds are meant for actual emergencies.

FAQs

Do I need a professional to make sure I don’t miss tax payments?

It’s possible to manage on your own if you can dedicate time to learning the filing process. Hiring a professional can save you time, though, and establish a more confident output.

Do I have to pay for everything on this list of business expenses for business owners in the Philippines?

No, pick only what applies to your business. Example: A delivery service company will most likely need to cover all mentioned expenses while a ramen shop will only need to cover permits and tax expenses.

Why do I have to pay early?

Paying early gets you more peace of mind and a lot more value for money with all the discounts you can get. A thrifty pinay always promotes a great deal.

The Habit of Planning Ahead

Cashflow management is key. Planning for foreseeable expenses is a good practice for tackling mundane but crucial tasks as a business owner.

We can’t have that mind of yours be filled with worries you can avoid because entrepreneurs need to have enough headspace for revolutionary breakthroughs and that’s what this list of business expenses for business owners in the Philippines article is for.