7 Benefits of Making your Business Legal 2 years ago

The next step after starting a business is ensuring you operate legally. With that, you must register your business with different agencies to avoid legal problems.

But is it worth the time and effort? What are the benefits of making your business legal?



Issue Official Receipt

A business must apply to the Bureau of Internal Revenue (BIR) to have a Tax Identification Number (TIN) and issue receipts.

Issuing a BIR registered official receipt shows a client that you and your business are legitimate and that any payments to you can be used as a tax deduction for them.

On your end, by registering your business, you can also claim tax deductions for all your business expenses.
 

Access to financing sources 

If your company is legally established and necessary legal documents are in place, it would be a lot easier to apply for loans or find investors to improve your operation and expand.

A corporation can issue shares of stock, making capital raising generally simpler as investors will own equity in your company. 

Access to new revenue streams

Aside from financing, government agencies and large corporations often only do business with registered companies. For example, a digital marketing agency aiming to secure large contracts must ensure it is legally registered to meet vendor requirements.

If you aim to bid for large contracts, you will have to get registered so you can comply with their vendor requirements.

Protect your intellectual property

For instance, when someone violates your copyrighted property or uses your brand, you may only be able to take legal action against them if you have legally registered them.

Legally hire employees

Apart from raising capital and protecting your intellectual property, Registering your business allows you to hire employees and pay them in compliance with the Labor Code. This includes the payment of employees’ SSS/Phil-health/Pag-Ibig benefits.

Build Credibility

When your business operates according to the law, you are entitled to confidence in marketing your company because you won't be working in secret out of concern that you'll be penalized by the government for running an unregistered business.

Prevent lawsuits

Lawsuits can cost your business a lot of money and time. If you are registered as a corporation, lawsuits would be against the corporation and not you. Read Startup Guide: Sole Proprietorship or Corporation?

People suing you cannot go after your personal assets like your house or car. Make sure that even as a startup, you are aware of the laws that apply to your company and are knowledgeable about their requirements. 

You may contact a lawyer or a consultant to address a specific concern. 

Starting a business is challenging enough, and without having to prepare legal documents and forms, it can be daunting. While others simply have no idea where to look for information or how to begin registering their business, you may check Digest.ph to find resources that will be helpful to your startup.