by Atty. Jessica Los Baños

Are you complying fully with the law? Here’s a checklist of the basic legal requirements that your business should be following.

Because MSMEs have great potential for growth and contribute significantly to economic development, they are subject to simple registration and compliance procedures, provided with ready bank financing, and afforded easy access to government services and assistance.

However, this preferential treatment does not mean that MSMEs are no longer required to comply with government rules and regulations. As MSMEs, you must manage your legal issues and concerns in the same manner that your larger counterparts do.

Business Registration

MSMEs must register their businesses, whether operated as sole proprietorships, partnerships or corporations. For sole proprietorships, you must obtain a business name registration from the Department of Trade and Industry. MSMEs that are established as partnerships and corporations, on the other hand, must register with the Securities and Exchange Commission.

Tax Compliance

MSMEs must also register with the Bureau of Internal Revenue. You have to secure a Tax Identification Number as well as a Value Added Tax (VAT) or Non-VAT certification.

HR Benefits Compliance

MSMEs must also observe existing labor laws and regulations on compensation and legally mandated benefits.

To enable you to comply with these rules and regulations, you need to obtain from your employees their Tax Identification, SSS, PhilHealth, and Pag-IBIG numbers.

You are also oblige to pay your employees a 13th month pay, equivalent to one month’s salary. These laws are mandatory, and non-compliance entails the payment of a fine or imprisonment, or both.

Exemption fro Minimum Wage Orders

A major concern for MSMEs is the payment of wages and salaries. Payment of minimum wages is mandatory, except for household and domestic workers, and in establishments that are distressed or determined by the National Wage and Productivity Council’s Board to be exempt.

The full article appears in the September-October 2006 issue of SME Insight, the magazine for small and medium enterprises. For subscriptions, call 759.2022 or 813.4396 loc. 816 or e-mail hipcards@hip.ph.