Better late than later! Finally, my much-delayed post about my BMBE certification.
I received my BMBE Certificate of Authority for my two registered small businesses back in October. But due to my full schedule, I didn’t get to have my BIR (Bureau of Internal Revenue) status updated until December. That, and because I’m really not fond of going to government offices.
So what is BMBE?
It stands for Barangay Micro Business Enterprise. According to Section 3(b) of RA No. 9178, otherwise known as the Barangay Micro Business Enterprise Act of 2002, a BMBE is “Any business entity or enterprise engaged in the production, processing or manufacturing of products or commodities, including agro-processing, trading and services, whose total assets including those arising from loans but exclusive of the land on which the particular business entity’s office, plant and equipment are situated, shall be not more than three million pesos.”
This Act aims to encourage formalization of informal or underground businesses by giving incentives and benefits to certified BMBEs.
Based on a 2014 data from Philippine Statistics Authority, 99.5% of all businesses in the Philippines are MSMEs or Micro, Small and Medium Enterprises. And from that 99.5%, 89.4% are Micro.
The same data shows that MSMEs provide employment to 65% of the labor force. They are clearly the primary source of livelihood and jobs in the country. Hence, the government’s drive to encourage micro businesses to register and become legal tax paying entities.
Back when I first heard of BMBE, the registration was under the local government units, and businesses were required to pay registration fee. While the amount was minimal (I believe it was set to not exceed Php 1,000.00), it was enough to make really small businesses less enthusiastic about registering. Including myself.
In recent years, the responsibility to issue Certificate of Authority was transferred from the Municipal Treasurer to the Department of Trade and Industry (DTI) through its Negosyo Center. They removed the required registration fee, and the process can be completed in three (3) easy steps:
- Step 1 : Accomplish BMBE Form and submit to the Negosyo Center / DTI Office where business is located with any of the following:
- Certificate of Business Name Registration from the DTI (for sole proprietors)
- Certificate of Registration from the SEC (for corporations)
- Certificate of Registration from the CDA (for cooperative)
- Step 2 : DTI will evaluate the eligibility of the application
- Step 3 : If qualified, within 15 working days, DTI issues Certificate of Authority valid for 2 years
I was fortunate enough to be among those invited by our local Negosyo Center to attend a BMBE orientation.
Who are qualified to register?
- Single Proprietorship, Partnership, Corporation, Cooperative or Association
- Total assets not more than P 3,000,000.00
- Enterprise engaged in:
- Production / Processing / Manufacturing
- Trading
- Services – except government licensed services
Who are not qualified?
- Medical/Dental/Veterinary Clinic
- Notary Public/Law Firm
- Real Estate
- Construction Firm
- Accounting Firm
In short, if you are small business practicing a profession, then you cannot register as BMBE.
Since my services as a virtual assistant are not government-licensed services, I qualified. And my small craft business is engaged in manufacture and retail.
What are the benefits of becoming BMBE-certified?
Tax Exemption
Accredited businesses are exempted from paying income taxes arising from their operating expenses. This, however, does not include the exemption in transaction taxes such as value-added tax (VAT) and other percentage taxes, among others. Furthermore, BMBE-accredited enterprises are still required to regularly file their regular income tax returns.
Minimum Wage Exemption
BMBE-registered enterprises are also allowed to pay below the statutory minimum wage which is otherwise not permitted by law. However, they are still required to pay for their employees’ benefits such as PhilHeath, SSS, and HMDF.
Credit Priority
Financial institutions are given incentives in providing loans to BMBE-registered business enterprises. They are also required to provide a special credit window for BMBEs.
Growth assistance
To provide technical support, the government has allotted funds to agencies supporting BMBEs such as DTI Negosyo Centers, UP Institute for Small Scale Industries (UP-ISSI), and the Department of Science and Technology (DOST).
So for the next two years, I will be exempted from paying the quarterly and annual tax. I will only have to pay the monthly percentage tax, which is 3% of gross income. After two years, I will need to renew my certification, and if I’m still qualified, like if I don’t build a warehouse and acquire equipment worth 3.5 million pesos in the next two years, I will have to get my COR with BIR updated again.
For WAHMs, freelancers, independent contractors, or crafters who are on a fence whether to register their small businesses or not, please read my post on Paying Taxes. Once you are registered, go ahead and visit your local Negosyo Center. It’s so easy to get certified now.
Here’s what a Certificate of Authority looks like.
Do you have questions, comments or feedback about this post?
Please leave a comment below, or post them at my Facebook Page.
Marge, also known as The Happy WAHM, is a virtual assistant who turned her passion for entrepreneurship into a worthy endeavor of offering complete business solutions to CEOs and business owners around the world. She turned her back on a thriving corporate career to become a hands-on mom and created a lifestyle that allowed her to build a homebased career, homeschool her children, and still have time to pursue her passion for arts and crafting.
She only posts her content on her website, TheHappyWAHM.com. If you see this content on someone else’s site then it is NOT by any means authorized.
Under Sole Proprietorship, can I apply my Consumer Goods Store to BMBE
Yes. 🙂
just read your article and i actually have started processing my bmbe. was a a mayor’s or municipality’s business permit a requirement when you processes your bmbe certification? i was asked by dti to process it first as part of the requirement.
also as a freelancer did you also got a separate certification? how did you do it?
hope you would answer. this post has been a big help.
Yes, you need to have a business permit to qualify for the BMBE program.
Hi. I am a real estate salesperson and now setting up my consultancy business. I already have a COR from my real estate profession. My question is this: Do you have any idea whether I can use/apply the filed COR for the consultancy services business as well? I already have printed receipts because of the COR and just renewed it, too, last January. Thank you for taking the time to answer this query!
As far as I know, you need to file separately if your businesses are under different industry classifications.
Hello! Thank you for sharing this, but I just have a question regarding BIR Registration, isn’t it that the BIR requires having mayor’s and barangay permit first? What did you do to register first in BIR as sole proprietor before registering it in your barangay and mayor’s office? Thank you!
Hi James,
I believe I replied to you on my FB page. 🙂 Thanks for dropping by!
I also have the same question. We have the Cert of Authority from DTI. And i’m now lost what to do next.. Do I need to go to BIR and what should I file? Or the Authority is enough na, it’s our first business. Thank youuuu.
Yes, you should go to your Municipal Office to apply for a business permit, and then to BIR.
Hello! why can’t a construction firm register as bmbe? is it all construction firm or those having less than 3M can register as bmbe? thanks!
Hi Ching,
Your question will be best addressed to your municipality’s DTI representative. They have a list of what qualifies as a BMBE. Thanks!
Hello, did you file for a mayor’s business permit prior to registering on BIR so you can issue receipts?
Actually, the business permit was the last thing I did. I registered with DTI, registered with BIR, then registered with the municipal office. Part of the BIR registration process was the printing of receipts.
Hello regarding printing of receipts. After printing pinapatatakan pa ba yun sa BIR? Needed pa ba ng ledgers and journal reports?
For as long as your receipt was printed by an accredited printer, no need to have it stamped. Just make sure that you have the authority to print from BIR.
Hi. What bir forms do you accomplish monthly? Quarterly? Yearly? Do you need to do books of accounts ang financial statement? Thanks
I’m registered as a sole prop. So annually, I renew my registration with Form 0605. I file my monthly with 2551Q, my quarterly with 1701Q and the 1701 every April.
Hi, I am checking on sites for the nearest Negosyo Center, I can’t find one. Also, I am residing at San Jose del Monte, Bulacan but my milk tea shop is located at Bagong Silang, Caloocan. Can I get anywhere?
Aina, please try to message them on Facebook. https://www.facebook.com/NC.CSJDM/ They will assist you.
I’m a freelance writer and I don’t earn beyond 3 million (I wish I did!). Income fluctuates, but do I still count as a possible BMBe tax filer?
Yes, you are qualified for BMBE certification. Just go to your nearest Negosyo Center and inquire with your DTI representative. They are usually pretty accommodating.
Hi, I would like to ask if commercial stall rentals can be registered under Bmbe. Thanks in advance.
Hi Ching! I’m not sure about the classification of commercial stall rentals, but the best thing to do is to go to your nearest Negosyo Center and inquire with the DTI representative assigned to your area. The DTI peeps are very accommodating.
Hi, appreciate the tips and information in the blog. Did you apply only once for the 2 small businesses? or did each different business require a separate application? Thank you!
Hi Mark! I only registered my craft business for BMBE. But if you have two businesses that you want to register, then there will have to be two applications.
Hi, I am not sure if you’ll be able to read this but just want to ask because you posted the bmbe for you virtual assistance services but you said in this reply that you only applied bmbe for your craft business. Also, we are the same situation too, I am a VA and have a craft store, did you register a separate business permit for these two small businesses? It is different line of business kasi. Hope you’ll be able to read this. Thank you!
I’m so sorry for the very late reply. I went on a writing hiatus… again!
To answer your question… Yes, I registered the two businesses separately with DTI and in the municipal office, but since I only have one TIN, I file the taxes for both businesses together. Both businesses were registered as BMBE.
Hi, did you register your business din to BIR? thanks for answering x
Hi, JK! Yes, I registered the biz with BIR so I can issue receipts. 🙂
How do you issue receipts? With VAT? Tax? Sorry, just a newbie.
Hi Aina… I’m registered as a sole proprietor, non-vat.
Hi! I would like to ask if I can switch my existing business (sole prop) to bmbe. My total assets is less than 3M. Thanks!
Definitely! That’s what I did, actually.
Just go to your municipality’s Negosyo Center. The DTI representatives are super accommodating. 🙂
Hi, I have a home-based printing business, do you think I can register my biz under BMBE too?
Thanks
Hi Toni,
It will depend on the capitalization of your printing business. But I strongly recommend that you drop by your local Negosyo Center so you will be better guided about registration requirements.