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Tag: Republic Act No 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.”

  • STEP TWO: NAMING YOUR REAL ESTATE BUSINESS

    “What’s in a name? That which we call a rose by any other name would smell as sweet.”

     – William Shakespeare

    By Ernesto C. Perez II

    If real estate brokerage is your passion then what is the next step on how to register your real estate business? You got to determine the name of your business.

    You have to be more deliberate and circumspect when it comes to choosing a business name. Ian Gordon – the Startupdaddy – has this to say about choosing a name for your business:

    “While you don’t have to factor in things like people in your past that had that name, in-laws, and what will happen to your business on the playground, with your child, once you decide that you like the name, you’re done. Not so with your business.

    “With a business you need to go much further. You need to find out if there are other businesses with that name, and if so, if they are in your industry. Is the trademark available? Is the domain name available? Does it mean the same thing to others as it does to you? The list goes on.”

    In short, Mr. Gordon says to choose a name with meaning. But he adds that you want to avoid anything too generic. You need to strike a balance between creative and descriptive, so when people hear the name, they remember it and they have at least a vague idea about what you do.

    It is so easy to name your business using your name or the initials of your name. There is nothing striking with “Juan Dela Cruz Realty Brokerage” or “JDC Realty & Marketing Enterprise.”

    Hence, I do suggest that you be more creative. You have to think of a name that will stand out to your clients but at the same time means something to you as well as what the business does.

    Take the example of the business name “realttorney.” It is a marriage of two professions – licensed real estate broker and lawyer. I am both that is why I came up with such a name.

    I think it’s catchy and at the same time descriptive of what I do as well as the service I provide. Moreover, in my opinion, I think it distinguishes me from my fellow licensed real estate brokers who are not lawyers.

    Finally, it is very bothersome and also costly to change your business name if you don’t get it right the first time. Once, you register the name you chose with the Department of Trade and Industry (DTI) then there should be no turning back.

    I promise you the time you spent on thinking things thoroughly on this step will pay off big dividends in the future as you grow and nurture your business. Try it out.

  • REMINDERS AS 2012 ROLLS IN

    “By the taxes he pays, a citizen has every right to demand for a good and honest government.”

    – Franklin D. Roosevelt

    By Ernesto C. Perez II

    I wish all licensed real estate service practitioners – brokers, appraisers, consultants and government assessors – a prosperous and abundant 2012. If we are to believe the prognostications made last year, the real estate industry will continue its boom this year.

    This is good for us who can expect more business to come our way this year. As we start a new year, I wish to outline some reminders that need to be performed by all licensed real estate professionals pursuant to Republic Act No 9646 and its Implementing Rules and Regulations (IRR).

    First, in Section 28, Rule IV of the IRR “Real estate service practitioners shall be required to indicate the certificate of registration, professional identification car, Privilege Tax Receipt (PTR) number, AIPO membership and/or receipt number.”

    Therefore, all licensed real estate service practitioners should get a PTR. It cost around P300.00 and you can get this at your City Hall. Just say that you will get a PTR at the Office of the Treasurer. The Privilege Tax Receipt mentioned in the IRR is the same as the Professional Tax Receipt mentioned in the Local Government Code.

    Second, if you are already registered with the Bureau of Internal Revenue (BIR) then you should pay your annual registration fee of P500.00 using the BIR Form 0605. You can remit the payment at the BIR Revenue District Office (RDO) that you registered in or at the Authorized Agent Banks of the concerned RDO.

    Now, if you are still not registered with the BIR then you must do so in order not to be in trouble with the Bureau as they are stepping up their efforts to collect taxes and plug the budget deficit of the country. The BIR has its eye on the professionals this 2012.

    On 27 December 2011, the headline in the article in Philippine Star bannered “BIR targets 15% hike in income tax collection.” The news item said that the Bureau expects more self-employed professionals to comply with the tax rules in 2012.

    Citing data from the Professional Regulation Commission, the BIR said there are some 3 million registered professionals in the country – that it includes licensed real estate service practitioners. The BIR said “the average annual income tax payments of professionals, however, average less than the monthly minimum wage of P8,500.”

    As licensed real estate service practitioners, we should take this as a warning that the BIR means business. In response to this, we should make the necessary steps to be above board and follow the letter of the law, as we swore to during our oath taking as licensed professionals. Sundin natin ang matuwid na daan.

    I will quickly outline below, the steps to register with BIR as a self-employed individual (professional):

    STEP 1: Secure and fill up BIR Form 1901 – Application for Registration for Self-Employed and Mixed Income Individuals, Estates/Trusts.

    STEP 2: Submit the same with the following documentary requirements to the RDO having jurisdiction over the place where you hold office – it could be a home office or a commercial office space.

    Documentary Requirements:

    1. Birth certificate (Original and photocopy);
    2. Marriage certificate (Original and photocopy); and
    3. Birth certificate of children (Original and photocopy);

    Other documents for submission, if requested:

    1. Mayor’s Permit (Original and photocopy);
    2. Contract of Lease (if renting);
    3. Title/Tax Declaration & SPA/Affidavit of Consent if the location is not owned by applicant (if not renting); and
    4. Sketch of location.

    STEP 3: Pay the Annual Registration Fee (P500.00) at the Authorized Agent Banks of the concerned RDO.

    STEP 4: Pay Documentary Stamp Tax (DST) [loose DST / BIR Form 2000 for DST on Contract of Lease, etc.). Present proofs of payment upon submission of the documentary requirements.

    STEP 5: Submit requirements for Authority to Print (ATP) and registration of books of accounts.

     Documentary Requirements:

    1. Accomplished BIR Form 1906;
    2. Job order from the printer;
    3. Final and clear sample of receipt and invoices (machine printed);
    4. Photocopy of Taxpayer Identification Number Card; and
    5. Photocopy of BIR Form 0605 (payment of registration fee).

     Book of Accounts:

    1. Cash Receipts;
    2. Cash Disbursement;
    3. Ledger;
    4. Journal;
    5. Subsidiary Sales Journal; and
    6. Subsidiary Purchase Journal [last 2 are additional books for VAT Taxpayer].

     STEP 6: Attend the taxpayer’s initial briefing to be conducted by the RDO concerned for new registrants in order to apprise them of their rights and duties/responsibilities as taxpayers.

     STEP 7: Wait for the RDO to issue the Certificate of Registration (BIR Form 2303) together with the “Ask for Receipt” notice, Authority to Print and Books of Accounts.

    For a more comprehensive discussion on the steps enumerated above including the related revenue issuances promulgated by the BIR and codal references in the National Internal Revenue Code can be found in the BIR website (www.bir.gov.ph).

    A final reminder to all brokers reading this article. The tax code states that “all individuals engaged in trade or business shall accomplish and file the application on or before the commencement of business operation or from the day the first (1st) transaction occurred or within thirty (30) days from the application with the LGU for issuance of Mayor’s Permit/Professional Tax Receipt (PTR), which ever comes earlier.”

    I suggest that all licensed real estate service practitioners – in particular, those brokers, appraisers, and consultants – who have not registered with the BIR to do so. In 2005, Atty. Alexander L. Lacson published his book “12 Little Things Every Filipino Can Do To Help Our Country.” You can buy a copy of his book at his website at www.alexlacson.net.

    “PAY YOUR TAXES” is the 10th Little Thing he listed. I end by quoting some portions of what he wrote in pages 75 – 80, which resonates the same message as if it was written last year:

     “Of the many duties of a citizen under our Constitution, paying taxes is one of the most crucial. Because taxes are the lifeblood of our government, of our nation.

     “It is what we use to buy the basic textbooks for our millions of children in the country, or to build additional classrooms in public schools nationwide…

     “Taxes are what we use to buy the most basic of medicines, often generic and cheap, that our Department of Health officials distribute to 34 million Filipinos nationwide who live below the poverty line.

     “It is what we use to pay all our government employees nationwide – our soldiers, our policemen, our public school teachers, among many others.

     x     x     x

     “Viewed in this light, the taxes that you and I pay are actually not lost or wasted completely. A substantial portion of the taxes we pay is still put to good use. Because there are many public servants – not only a few or some – who still do their jobs properly. There are many of them, these honest and faithful ones, but maybe many of them are just in the rank and file, like you and me.

     “But they are there. Among the silent many who hold the center and keep our government from falling apart. They are the ones who keep our public institutions intact through storms and scandals, notwithstanding the misguided ambitions and corruption of some of their leaders.

     “It is for this reason that we should continue paying our taxes. The good ones in the government are still good reason for us to continue paying our taxes properly. The challenge for us is just how to increase the number of these good ones in government.

    x     x     x

     “In 2003, P83 Billion was collected from individual income taxes. But 91% of this amount came from salaried workers from the government and private sector, people who have no choice since their income taxes are withheld mandatorily. Only P7 Billion of P83 Billion (or 9%) came from businessmen and professionals like doctors, lawyers, accountants, architects, and dentists, among others.

     “But how can this be? Guillermo de Joya, spokesman for Filipino-Chinese Chamber of Commerce & Industry, told the Senate on 12 October 2004 that there are at least 50 Billionaires and 42,500 millionaires in the country who do not pay taxes properly.

     “Can you imagine if our businessmen and professionals pay more income taxes? Or if our government is able to collect 21% this year instead of the 14.1% last year, because we all decided to pay 50% more of taxes this year? This means that our government will have more funds to perform its duties and obligations to the public.

    x     x     x

    “But we have to pay our taxes properly. Because we all live in the same country. Because this government, whether we like it or not, is our government. Its cost is a burden we must all share. The task of building this nation is a task that we all must share. We all must contribute to build this kind of nation we dream for ourselves. Each one of us has a role in it. Each one of us has a responsibility to it.”