ENTREP [SEM1Q2] - LESSON 3

Business Compliance

Refers to the process of following the laws, regulations, and internal policies that govern how a company operates. It ensures that businesses meet legal requirements related to employment, taxes, workplace safety, financial reporting, and industry specific rules.

compliance

In a workplace setting, ___ shapes how companies hire employees, manage payroll, handle workplace safety, and protect employee rights. It also helps organizations avoid legal penalties and maintain professional standards.

1. business registration

2. baranggay clearance

3. business/mayor’s permit

4. registration as employer (SSS, PAGIBIG, PHILHEALTH)

5. BIR Registration Form 2316

Process in Establishing a Business

Business Registration

The first step in establishing your business is to ___ it with the proper government agency. This ____ gives your business a legal identity, allowing you to open bank accounts, enter into contracts, and conduct transactions officially. It also provides your customers and partners with confidence that your business is legitimate and properly structured.

• Department of Trade and Industry (DTI)

• Securities and Exchange Commission (SEC)

• Cooperative and Development Authority (CDA)

what are the government agencies for business registrations?

Baranggay clearance

certifies that your business complies with local community regulations. This ___ is needed to secure a business permit and other permits from the local government. You’ll obtain this document from the ___ where your business is located.

Requirements may include your business registration, identification, and sometimes a sketch of your business location.

What are the requirements that might be included in getting a baranggay clearance?

Business/Mayor’s Permit

your official approval from the local government to operate within your city or municipality. Having a ____ means your business meets local regulations, and it reassures customers and partners that you’re fully authorized to operate

To secure this permit, you’ll need to submit a variety of documents, including your

• business registration

• valid ID

• proof of property lease or ownership

Depending on your business type, you may also need a

• fire safety inspection certificate or sanitation clearance.

Fees vary depending on location and business size. This permit usually requires annual renewal.

What are the requirements to secure a business/mayor’s permit?

Registering with SSS, PhilHealth, and Pag-IBIG is essential if you have employees

These registrations ensure that both you and your employees are covered by social security, health insurance, and housing benefits.

Completing these registrations demonstrates that you value your employees’ welfare and comply with government labor requirements. It also enhances your business’s reputation and employee satisfaction

SSS

provides retirement, disability, and other social benefits

PhilHealth

covers healthcare needs

PAGIBIG

supports savings and housing programs

BIR Registration Form 2316

a certificate issued by employers to employees. It details total compensation, taxes withheld, and other relevant deductions.

You’ll need to provide this form to your employees each year so that they can use it for personal tax records, loan applications, or other similar purposes. Issuing ___ correctly ensures transparency, helps employees file accurate tax returns, and reflects well on your business as an organized and responsible employer.

• Avoids fines and penalties

• Strengthens brand reputation

• Builds customer and partner trust

• Mitigates liability exposure

Benefits of Business compliance to regulatory requirements

Avoids fines and penalties

Prevents costly regulatory infractions, legal sanctions, and government-imposed shutdowns

Strengthens brand reputation

Positions the organization as a reliable, responsible market player, which attracts new clients and top talent.

Builds customer and partner trust

Demonstrates transparency and ethical standards, making consumers and corporate partners more willing to transact or buy in high volumes

Mitigates liability exposure

Lowers the likelihood of employment lawsuits, data breaches, or third-party liability, and can help shield leadership from personal penalties

1. Local government

> operating without a permit —> deemed illegal

> local fines and closure —> compromise fine, daily administrative surcharges, and immediate shutdown through Business Permits and Licensing Office (BPLO)

2. BIR

> Failure to register —> 5k to 20k fine + potential 0.5-2 years imprisonment

> failure to issue receipts/invoices —> 1k to 50k fine with possible 2-4 years imprisonment under section 264 of the national internal revenue code (NIRC)

3. SEC

> Late or non-filing or reportial documents - failing to report Audited Financial Statements (AFS) or General Information Sheet (GIS) will face updated monetary penalties under SEC Memorandum Circular No. 6, Series of 2024

Outline of penalties for non-compliance to business regulations:

Local government

> operating without a permit —> deemed illegal

> local fines and closure —> compromise fine, daily administrative surcharges, and immediate shutdown through Business Permits and Licensing Office (BPLO)

Penalty under the local government

BIR

> Failure to register —> 5k to 20k fine + potential 0.5-2 years imprisonment

> failure to issue receipts/invoices —> 1k to 50k fine with possible 2-4 years imprisonment under section 264 of the national internal revenue code (NIRC)

Penalty under Bureau of Internal Revenue (BIR)

Late or non-filing or reportial documents - failing to report Audited Financial Statements (AFS) or General Information Sheet (GIS) will face updated monetary penalties under SEC Memorandum Circular No. 6, Series of 2024

Penalty under Securities and Exchange Commission (SEC)