Post Business Registration in the Philippines: Labor Compliance
A company is considered a formed legal entity once the certificate of registration with BIR is acquired. This will allow the organization to onboard employees.
After going through the business registration process and securing the necessary documents from the government agencies, the company must now comply with several labor-related requirements to hire employees. Below are the most crucial prerequisites to complete for proper compliance:
- Employer Registration with Social Security System (SSS), PhilHealth and HDMF
Registration documents for these three (3) labor welfare agencies are submitted on or after the hiring date of the 1st employee. Ideally, the company hires at least one (1) employee to begin the registration process.
Registration to these agencies usually takes a month to be completed. Therefore, it is advisable to onboard the rest of the employees once the registration certificates are obtained to avoid penalties due to late payment of contributions.
- Get the Log-in Details for SSS Portal
After receiving the Registration Certificate from SSS, the company should register with the SSS portal to get its Log-in information. The SSS Portal is the system used to generate monthly payment forms for contributions and loans. The same is also being utilized to view payment status, approve loans and benefits, and reimbursement from SSS. Here’s a link to the SSS website to register.
- Get the Log-in Details for PhilHealth’s Electronic Payment and Remittance System (EPRS)
Similar to SSS, EPRS is vital to generate monthly payment forms, updating employee details, and viewing payment status. Unlike SSS, there are no options related to the availment or approval of benefits here. Also, obtaining the Log-in details can be done via email through your company’s assigned PhilHealth Officer.
- Activate Your Bank’s Online Payment Facility
Once the bank is set up, the company should advise the bank officer to activate the online Payroll Facility and link the bank to the Government portals. To avoid additional bank charges and ensure timely payment of salaries and remittances to the government, disbursement is highly recommended to be done through the Company’s bank. This has been the best solution to ease doing admin work from check preparation to payment over the counter.
- Reporting of Employees to SSS, PhilHealth and HDMF
As the employer, the company will be the withholding agent and, therefore, responsible for remitting the necessary contributions to the Government on behalf of their employees. To reflect these contributions under each employee’s account, reporting them as employees of the company is necessary. By doing so, employees can be eligible to use their benefits such as loans, sickness claims, maternity claims, or hospitalization. You may check our previous article as a guide: Steps in Reporting of Employees.
- Withhold and File Taxes on Compensation
Salaries paid to employees are usually taxable in nature. Therefore, as a withholding agent, the need to compute the accurate income tax and reporting the same to the tax authority is necessary. Amongst other government agencies, penalties for non-compliances and late payment charges under this bureau are significantly higher. Thus, the following should be taken into consideration:
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- Compute taxes based on the updated withholding tax schedule by the BIR.
- Maximize the allowable Non-taxable benefits to reduce tax and make sure to withhold taxes on remunerations that are taxable.
- You may check Revenue Memorandum Circular No. 50-2018 for the detailed list of the taxability of each payroll item.
- File and Pay the BIR Form No.1601C (Monthly Remittance Return of Income Taxes Withheld on Compensation) on or before 10th of the following month
- Conduct Tax Annualization at the end of the year to determine the correct tax rate applicable to the total earnings of each employee.
- Prepare the BIR Form No. 2316 for each employee, Alphalist Schedule, and other related requirements and submit to the BIR on or before Feb 28 of each year.
Complete Labor Related Compliances to Seamlessly Hire Employees
Post-registration labor compliance often presents challenges for newly registered companies, not due to a lack of commitment, but because of the complexity and volume of overlapping government requirements. Failure to complete registrations on time or delays in remittances can result in penalties, particularly from the Bureau of Internal Revenue (BIR), which imposes notably higher charges compared to other welfare agencies.
Ascentium Philippines alleviates the complexities of post-registration labor compliance, enabling your business to seamlessly onboard employees and focus on core operations. Our comprehensive services are designed to manage every aspect of compliance, ensuring accuracy and adherence to regulatory timelines.
- Employer Registration with SSS, PhilHealth, and Pag-IBIG (HDMF): We handle the preparation and submission of all necessary registration documents with precision and punctuality. This process is carefully aligned with the hiring date of your first employee to ensure compliance and avoid any penalties for delayed contributions.
- Establishment of Online Payment Portals: Our team facilitates your company’s registration on essential platforms such as the SSS portal and PhilHealth’s Electronic Payment and Remittance System (EPRS). Additionally, we coordinate with your bank to activate the payroll facility and integrate it with government systems, ensuring efficient and seamless payment processing.
- Employee Data Reporting: We take charge of submitting employee information to SSS, PhilHealth, and Pag-IBIG, ensuring their contributions are accurately recorded. This step is critical to enabling your employees to access their entitled benefits, such as loans and various health-related claims.
- Management of Monthly Withholding Tax Compliance: We calculate employee compensation taxes in accordance with the latest BIR guidelines and ensure the timely submission of BIR Form 1601C by the required monthly deadline. This service minimizes your risk of incurring penalties associated with late filings.
- Year-End Tax Reconciliation and Reporting: Our services include conducting comprehensive tax annualization to ascertain the correct tax rates for each employee. We also prepare the required year-end reports, including BIR Form 2316, the Alphalist, and supporting documents, ensuring their submission by the February 28 deadline.
For both local and foreign investors, the most effective way to prevent penalties is to approach compliance with a structured and proactive calendar rather than a reactive approach. Our consultants meticulously monitor all deadlines on your behalf, transforming potential administrative challenges into a seamless and worry-free process.
With extensive regulatory expertise and a dedicated team of HR and payroll professionals, we ensure your business remains compliant, avoids penalties, and is well-positioned for growth in the Philippines.
Labor Compliance FAQ: Post-Business Registration in the Philippines
What labor compliance requirements come after registering a business in the Philippines?
Once you secure your BIR Certificate of Registration, your company becomes a legal entity that can hire employees. You must then register as an employer with the SSS, PhilHealth, and Pag-IBIG (HDMF), set up online payment facilities, report your employees, and withhold and remit taxes on compensation.
Do I need to register my business with SSS, PhilHealth, and Pag-IBIG before hiring employees?
Yes. Employer registration with the SSS, PhilHealth, and Pag-IBIG (HDMF) is mandatory once you hire your first employee. These registrations are submitted on or after the first employee’s hiring date, and the process typically takes about a month to complete.
When should I onboard the rest of my employees?
It’s best to onboard your remaining employees only after you receive the registration certificates from all three agencies. Since processing takes roughly a month, hiring early can expose your company to penalties for the late payment of contributions. Timing your onboarding carefully protects you from avoidable charges.
Should I use my company bank account for salaries and government remittances?
Yes. Ask your bank officer to activate the online payroll facility and link your account to the government portals. Paying salaries and remittances directly through your company’s bank reduces additional charges, ensures timely disbursement, and cuts down on manual admin work like check preparation and over-the-counter payments.
Why do I need to report my employees to SSS, PhilHealth, and Pag-IBIG?
As the employer, you act as the withholding agent responsible for remitting contributions on your employees’ behalf. Reporting each worker links these contributions to their individual accounts. This step allows your employees to access benefits such as loans, sickness claims, maternity claims, and hospitalization coverage.
What is tax annualization and when do I need to do it?
Tax annualization is the year-end computation that determines the correct tax rate applied to each employee’s total earnings for the year. You conduct it at the close of the year to reconcile the taxes withheld against the actual tax due, correcting any over- or under-withholding before final reporting.
Can foreign-owned companies hire employees in the Philippines?
Yes. Once a foreign-owned company completes its business registration and secures its BIR Certificate of Registration, it can legally onboard employees. The same labor compliance requirements apply, including employer registration with SSS, PhilHealth, and Pag-IBIG, employee reporting, and withholding tax on compensation.
What happens if I miss labor compliance deadlines?
Missing deadlines exposes your company to penalties, particularly for late contribution payments and late tax remittances. The BIR imposes notably higher charges than the welfare agencies. Staying on top of every filing date and registration step is the most reliable way to keep your business in good standing.
Know More About Labor Compliance After Business Registration
With our large pool of human resource services, our team of consultants can help you navigate the processes of the compliances post business registration easily.
