Are all sari-sari store in the Philippine subject to tax? If not, what are sari sari store tax exemption 2018? Let's find out. In the Philippines, many entrepreneurs engaged in small business enterprises or small-medium businesses (SMB). One of the common small business is sari-sari store in the Philippines.
Many of these entrepreneurs involved in survival or day-to-day consumption. In the Philippines many small businesses everywhere, you can see either in the streets or the islands there are a lot of sari-sari stores. Let’s talk about the introduction of sari-sari store in the Philippines and its benefits.
What is Sari-sari Store Business?
These are the small businesses explicitly established by a single owner. Usually, it sells essential commodities that are necessary for daily needs like noodles, sugar, coffee, rice, junk foods, shampoo, vinegar, etc.
Many Filipinos are engaged because it is easy to open and less capital. You can buy a small item in sari-sari store compared to the mall or grocery store. If you need anything, you can walk to your neighbor or the nearest sari-sari store.
What are the Sari-sari Store Benefits?
Why many Filipinos open sari-sari store despite the numbers of sari-sari in their community of place. Fortunate, sari-sari store is easy to open; it requires less capital than other business enterprises. However, sari-sari store is not only advantageous, but it has also disadvantaged. One of the disadvantages of sari-sari store is that it quickly close as fast as they open.
How much is the Capital in a Sari-sari Store?
If you don’t have significant capital and you want to start right away, open a sari-sari store. Why sari-sari store is easy to open? Well, at the amount of 3,000 pesos or more you can have your sari-sari store. By having that small amount, you have now your budget for sari-sari store.
You can start your store at a small amount of capital and space. As your customer grows and your capital, you can expand your store by having a bigger space and adding more items to sell. Make sure that your capital is rolling over. Once your store is stable or growing, make sure that the capital you invested must be kept or separated from the total income. Why is it important? It will help you to know how much you earn from your investments.
Assuming you already your place where you can put sari-sari store and capital, the next thing to do is open now. But wait, how can you open sari-sari store?
How to Start Sari-sari Store in the Philippines
I know, it’s easy to open sari-sari in the Philippines, but you have to know these tips. These will help you to start your business with a higher percentage of success. Here are Top seven (7) tips for sari-sari store that will help you to manage your business. It also includes the requirements for sari-sari store business permits and processes.
Tip # 1: Get a Business Permit.
As your business is growing, make sure to register your store in your municipality or city. If you register your business will avoid you in the future during the tax mapping. You might be asking as to how much business permit for sari-sari store in the Philippines? Well, it depends on your business location. Processing fee might be 200 pesos for Barangay, 500 pesos for City and Municipality, 1,000 for Regional and lastly, 2,000 pesos for National.
Aside from the processing fee, you will also pay for documentary stamps and other processing fees. How can you register your sari-sari store in the Department of Trade and Industry (DTI)?
- Make sure your business name processed has no conflict. Check your business name in DTI home page.
- Submit the online application form. Submit at least three (3) business names to have other choices in case your first business name is invalid.
- Submit the application form and other necessary documents.
- Pay the processing fees.
- After the evaluation, you will be informed by the DTI personnel if your Certificate of Business Names Registration is approved.
Once you received the DTI Business Name Certificate and Barangay Permit, you can start to get the Mayor’s Permit. Here are the procedures in getting the Mayor’s Permit:
- Submit your application to the Business Permits and Licensing Office (BPLO) in your location.
- Get approval from the Electrical Department for your building.
- Make your business approved by the Bureau of Fire Protection.
- Secure a Health and sanitation Permit at the Sanitary Office.
- Claim your Fire Safety Permit
- Claim the business plate and Mayor’s Permit.
Tip # 2: Make a Good Records
In every business, success is keeping good records. Keeping records will help to monitor the flow of business income. Make sure to separate the personal expenses from business expenses. What does it mean? You need to make sure that your family members will not get items from your business without paying the cost of items taken. It will help you to know if your business is earning income or losing.
Have an inventory list of all items. This inventory system will help you monitor the date of expiration and the sales in each item.
Tip # 3: Buy Your Items in Wholesaler Store.
Sari-sari store will continue to exist because of the profits. To maximize your earnings is to buy items from the wholesaler or retailer. Purchasing from the wholesalers give a chance to have a more significant amount of mark-up.
Also, buying from the authorized distributors will give more significant volume discounts. A bigger volume discounts and less mark-up will provide higher returns.
Tip # 4: Unique Products to Sell
If your neighbor is selling beauty products, don’t sell the same items. Having unique items from other competitors will give you a more significant income or profits. If your items are different, you will have more customers and higher profits.
Tip # 5: Have a Complete Package
To attract more customers, make sure you have completed items that you’re customers need. If a customer wanted to cook spaghetti, make sure that you to have all the ingredients in cooking spaghetti. In that way, you will avoid them not to buy to your competitors.
Tip # 6: Make Sure to Have Enough Stocks Always
In the business world, readiness is always vital. Make sure to have enough supply of your inventories. If your business has out of stock, it will affect your business reputations. Running out of stocks will lose numbers of customers. So next time, make sure you always check your inventory if you still have enough items to sell to your community.
Tip # 7: Say No to Credits
Many small businesses in the Philippines survive because of borrowing money from lending companies or any other financial institutions. If you want your business to survive in the long run or longer period, make sure you must say no to credits when somebody approaches you.
When to register your sari sari Store?
A person is required to register the business when the annual gross sales exceed 100,000 pesos. If your sari sari store has a gross sales more than 100,000 but less than vat threshold of 3,000,000 is required to register as a non-vat business. A non-vat business is subject to percentage tax of three percent (3%) on the gross sales.
Is Sari-sari store Taxable?
If you have a sari-sari store, are you wondering if what tax should you pay? In the Philippines, there are different taxes, and it might confuse the taxpayer as to what tax they are required to pay.
What are the taxes for Sari-sari Store under Train Law?
All small businesses, including sari-sari store, are not subject to tax provided that the income does not exceed 250,000 pesos per year. If the income from sari-sari store exceeded the said amount, the business would be subject to percentage tax or value-added tax. If your sari-sari store is not a value-added registered, then you have to pay percentage tax.
Is Sari-sari Store Considered as Small Medium-size Business?
What is the small and medium-sized business? Any business with 100 or fewer employees while with 100-999 employees are considered the medium size. Does it mean that sari-sari store owner belongs to small business for less than 100 employees? The answer is No.
A small sari-sari store is not for gaining profits but only for subsistence or livelihood. Therefore, a sari-sari store is not considered a small business in the Philippines.
What is the tax rate for Sari-sari Store Train Law 2019
Under the new tax system, the train tax law will exempt those who are earning less than 250, 000 pesos. This train law will exempt the owner of the sari-sari store business as long as the income is less than the exempted amount of profits. Therefore, the new income tax under train law will exempt the sari-sari store in the Philippines.
Is Sari-sari Store Subject to Business Tax?
Are all sari-sari store subject to business tax? The answer is No. If no, what is the business tax for sari-sari store? Income generated from a sari-sari store is a Marginal Income Earner or Compensation (MIC). Marginal Income Compensation is an individual whose gross sales from their business does not exceed 100, 000 annual income. (RMC No. 7-2014)
Besides, the activities of Marginal Income Earner should focus principally for subsistence or livelihood. These earners shall include but not limited to, the following:
- Agricultural growers or producers
- Direct seller to the ultimate consumers
- Small sari-sari store
- Small carinderias or turo-turo
- Drivers or operators of a single unit tricycle
MIC is also not subject to value-added tax (VAT) and other percentage tax in the Philippines.
Person Engaged in Sari-sari Subject to Individual Tax?
All persons who earn an income is subject to tax. How about a person engaged in a small sari-sari store is still exempted from individual income tax? Yes, if the total income does not exceed the 250, 000 as the thresholds. To learn more, you can read things you should know more about de minimis benefits under TRAIN law 2018. It has an illustration on how to compute tax after the individual thresholds.
How about those who are earning income as an individual at the same time with a sari-sari store? Do I need to file a mixed-income? The answer is NO. An employed person should file individual tax if the other income is taxable. Since income from small sari-sari is not subject from any tax, therefore, profit from your sari-sari store is not included in your tax.
Therefore, any person who has a small sari-sari store in the Philippines is not subject to any business tax. It is not also subject to an individual tax provided only for subsistence or livelihood only. So as to the question as to sari-sari store exemptions 2018 and 2019 are still the same. Any small sari-sari store will be exempted provided that the total sales should not exceed 250,000.