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Tag: RA 9646

  • THE FINAL STEP: PREPARE A BUSINESS PLAN

    “Plan carefully and you will have plenty; if you act too quickly, you will never have enough.”

     – Proverbs 21:5, Good News Bible [Today’s English Version]

    By Ernesto C. Perez II

    You would think that having a creative and distinguished business name as well as an appropriate business vehicle chosen will bring us one step closer to registering our business with DTI and BIR.

    Unfortunately, we still have one more step to go. It is a long process but a necessary step to take. The next step is writing a business plan.

    You may think that preparing a business plan doesn’t apply to you because of the experience you have in the brokerage business. But for those who are still new and inexperienced or those who are engaged full-time because this is the only source of income they have then preparing and having a business plan is essential.

    I am not experienced in preparing business plans. In fact, I have several ventures that have failed mainly because of the lack of such a plan.

    There are numerous websites that guide you through the preparation of a business plan. You can hire a professional to assist you in preparing one. No matter what method you choose the important thing is to make a plan that is thoroughly researched.

    A final note if you will permit me. In the book of Donald Trump and Robert Kiyosaki entitled “Mida’s Touch: Why Some Entrepreneurs Get Rich And Why Most Don’t” they discussed their failures and how they learned from their numerous failures that made them succeed.

    In preparing your business plan, I would suggest that you plan to fail. This is not to say that you have to set small goals for yourself.

    By all means, think big! Plan for your outright success. But temper it with the knowledge that the best laid-out plan does not usually go according to what is written.

    There will be numerous bumps on the road. I am still on the bumpy part. Therefore, plan to make adjustments so that you will not be heavily frustrated when things do not happen as planned.

    Facing disappointments and experiencing failures when you thought you have covered all bases is the worst feeling of all. I am well acquainted with such failures and disappointments.

    You need a business plan that is flexible to give you room to adjust your goals accordingly and know what to do when faced with adversities. Once you have made your business plan you are now ready to register your business.

    I have outlined what requirements are needed when you are ready to register your business with the various agencies of the local and national government. You can read it in my previous post.

    Best of luck to everyone. Kung Hei Fat Choi!!

  • STEP THREE: CHOOSING THE RIGHT BUSINESS STRUCTURE

    “…select the business format that reflects your needs and circumstances. Then… become acquainted with the logistics and procedures for the format you have chosen.”

    – Steve Marr

    By Ernesto C. Perez II

    Currently, most licensed real estate service practitioners practice their profession on their own. It’s a form of business called single proprietorship. It is easier to set up and you are your own boss and not accountable to anyone else.

    The disadvantage of being on your own is that the growth of the business is limited by your financial capacities. Also, since we all have the same twenty-four (24) hours in a day the deals you can work on are likewise limited to how you can effectively manage your time. The demands on the owner’s personal time is so much more demanding.

    But, I want you to consider the possibility of entering into a partnership with fellow licensed real estate service practitioners. Because of RESA, we can now choose to enter into general professional partnerships with our fellow licensed real estate service practitioners and register the same with the Securities and Exchange Commission (SEC). It is the same with that of accounting, engineering and law firms.

    Setting up a partnership is also quite easy. You can have more resources – time and financials – depending on how many partners agree to join the partnership. If you choose this form then you must learn the Law on Partnerships under the New Civil Code of the Philippines.

    The main disadvantage of a partnership is that a rift between any of the partners may cause the dissolution of the partnership. Another disadvantage is the equal profit sharing despite unequal attention and time given by the partners to the business of the partnership.

    The last form of business licensed real estate service practitioners may choose as their vehicle for business is a corporation. If the service that will be provided by the group is more than the usual brokerage or if the professionals would want maximum potential for business growth in the chosen market segment then a corporation may be the best form of business.

    In a corporation, you need at least five (5) individuals to form one. The good thing is that the liability of each stockholder is limited to his share in the capital, unlike that of a partnership and most especially that of a single proprietorship.

    Furthermore, petty quarrels or differences will not dissolve the corporation unlike that of a partnership. There is an increased chance that the group can all help together to consummate more transactions compared to a single proprietorship and partnership.

    Finally, it can be said that a corporation provides a better tax shelter for individuals in comparison to sole proprietorship and partnerships.

    However, the process of setting up a corporation is more tedious than the first two business forms we discussed above. Also, earnings from a particular transaction may not be immediately “cashed in” by the stockholders. They need to undergo another tedious process of declaring a cash dividend. For that, a lawyer must be consulted to prepare the necessary documents.

    So, whatever particular form of business you choose to practice our profession one thing is certain, the level and quality of service we provide will be the ultimate barometer of success.

    For further tips on the choosing the appropriate business type you can read the book of Steve Marr, the Author of “Roadmap to Success: Building Your Business God’s Way.”

  • STARTING A REAL ESTATE BUSINESS IN THE PHILIPPINES: THE REASON WHY

    By Ernesto C. Perez II

    “Bakit ako magpaparehistro sa BIR? Eh, dati naman kahit nung nasa DTI pa lisensyado ang brokers hindi naman kailang iyan?”

    That was the reaction of a fellow licensed real estate broker when I explained to her that under Republic Act No. 9646 – the Real Estate Service Act of the Philippines (RESA) – ALL licensed real estate service practitioners (brokers, appraiser/valuers, and consultants) are mandated to “establish and maintain a principal place of business and such other branch offices as may be necessary.”

    I was in the middle of preparing to submit my documentary requirements for registering my real estate business at the Indang Municipal Hall. Thereafter, I was to proceed to the Revenue District Office of the BIR at Trece Martires City.

    In order to refresh everyone’s memory, Section 33, RA 9646 states the following:

    “Section 33. Display of License in the Place of Business. – Every registered and licensed real estate service practitioner shall establish and maintain a principal place of business and such other branch offices as may be necessary, and shall conspicuously display therein the original and/or certified true copies of his/her certificate of registration as well as the certificates of registration of all the real estate service practitioners employed in such office.”

    Prior to the passage of RA 9646, any Tom, Dick and Harry – or for that matter any Anne, Jane or Matilda – can act as an agent of a party in a real estate transaction for the buying or selling of real properties for a “commission.” In such a transaction, “laway lang ang puhunan” as the saying goes.

    Then you hear stories of so-called pseudo-brokers fight over the piece of the “commission” pie even before the sale is consummated. You also hear stories of unscrupulous pseudo-brokers defrauding their clients. There was no Code of Ethics being followed.

    However, the passage of RA 9646 did not fully address this situation. But it was a step forward in the right direction – professionalize the practice, hold accountable erring licensed professionals and prosecute pseudo-brokers that still proliferate to this date.

    RESA does not only require licensed professionals like us to establish a place of business, it also requires us “to indicate the certificate of registration, professional identification card, PTR number, and APO receipt number, and the date of issuance and the duration of validity on the documents he/she signs, uses or issues in connection with the practice of his/her profession.”[1]

    In my previous blog (Reminders As 2012 Roll In), I reminded my fellow professionals to get their Professional Tax Receipt from the Office of the Treasurer of the local government unit where they reside, as a first step. The rest of the steps listed there are on how to register with the BIR. Do check it out for your reference to know the most important reason why we should register with the BIR.

    RESA imposes on us the requirement to establish and maintain a principal place of business in order to legitimize our profession as a business and main source of livelihood for some. And, when we are required by law to establish our place of business then we should follow the regulatory processes of having our business registered with the appropriate government agencies.

    In a 2008 report “Doing Business in the Philippines” the World Bank pointed to the need to improve the efficiency of local business and other regulatory processes —such as the issuance of business permits, licenses and the imposition and collection of business taxes—which currently serve as disincentives to many businesses. Typically, these processes involve numerous procedures that are not only inefficient but also create opportunities for corruption.

    Notably, the Philippines ranks very low among East Asian countries in terms of ease of doing business; it only ranked higher than Cambodia, Lao PDR and Timor-Leste. Singapore followed by Hong Kong, Thailand, Malaysia, Taiwan, Mongolia, Brunei, Vietnam, and Indonesia ranked higher.

    The Philippines also requires a much larger number of entry procedures (15) to start a business compared to other East Asia countries and consequently entails higher transaction costs.

    This fact should not be a hindrance to us in trying to follow such regulatory procedures. As a group of professionals, we should suggest ways to improve and make efficient such regulatory process. But in the meantime, we follow what is required of us to do in registering our business – from procuring the Mayor’s (Business) Permit to registering with the BIR.

    Tomorrow we shall discuss the steps to starting your real estate business.

    [1]Section 38, RA 9646.

  • MY NEW WEBSITE

    Hi Everyone,

    I invite you to check out my very own website at www.realttorney.com.

    It’s where I publish my latest posts. However, it is still under construction to improve its contents and look. I hope you like it. Your comments and suggestions are most welcome. Thanks. 

  • Real Estate Practitioners Took Oath

    CONGRATULATIONS to everyone who took their oath yesterday during the 3rd Oathtaking Ceremonies of Real Estate Service Consultants, Appraisers and Brokers (under Section 20 of RA 9646) and the 1st Oathtaking Ceremonies of New Real Estate Brokers at the Philippine International Convention Center in Pasay City yesterday.

    Although the time indicated in the souvenir program was 1:00PM, the actual ceremonies officially started at 2:37PM (according to my watch). We thank Hon. Eduardo G. Ong, Chairman of the Board of Real Estate Service for welcoming the inductees and giving us an update of the latest activities of the Board in service for all of us professionals.

    According to our Chairman, as of March 31, 2011 the numbers of licensed real estate professionals are as follows: Consultants – 24; Appraisers – 552; and Brokers – 4,033. And just this week, the Board of Real Estate Service signed Resolution No. 6, Series of 2011 approving 1,202 applications of the individuals for registration without examination as Real Estate Consultants, Appraisers and Brokers.

    Add to these numbers, 3,185 new licensed real estate brokers who passed the first Real Estate Broker Licensure Examination given by the Board of Real Estate Service last March 27, 2011.

    Chairman Ong also announced the upcoming schedule of licensure examinations for Real Estate Appraisers – on July 31, 2011; and for Real Estate Consultants – on October 2 and 3, 2011. Most importantly, the chairman confirmed that there will be another Real Estate Broker Licensure Examination on November 27, 2011.

    Finally, Chairman Ong reported that the Board of Real Estate Service will be releasing the implementing guidelines for the recognition of the Accredited and Integrated Professional Organization (AIPO) by the Board, subject to the approval of the Professional Regulation Commission (PRC), sometime in the month of May 2011.

    These guidelines have been very much anticipated by existing associations of real estate service practitioners. We hope for the immediate release of the said guidelines sooner rather than later.

    The ceremonies officially ended at 5:02PM. However, the poor planning and lack of organization by the PRBRES and the PRC became manifest again. After enduring more than 90 minutes of disorganized queuing system to gain entry to the venue, the releasing of the PRC Identification Card proved to be more disastrous than the previous early afternoon chaos.

    It took more than 120 minutes before we (my father, my wife and I) received our PRC ID card from the poor PRC staff that was over-matched against brokers who were tired and hungry at that time.

    Maybe next time, the Board will better plan the release of the ID cards by (1) increasing the number of PRC staff manning the tables that release the ID cards; or (2) releasing the ID cards at the PRC office based on a pre-determined schedule – date and time, like what PRC did when it registered the 3,185 passers of the 1st Real Estate Broker Licensure Exam.

    If there is a lack of staff to man the distribution points of the ID card after the oath taking ceremony then I am sure that the various local boards of PAREB can find some volunteers to assist in the releasing process to minimize if not eradicate the chaos that we experienced yesterday. All the Board has to do is to ask.

    We hope that the same will not be repeated in the succeeding oath taking ceremonies. Other than the chaos before and after the event, we laud the Board for its efforts and hard work in making the oath taking ceremonies a success.