Complete Guide on How to Start a Virtual Assistant Sole Proprietorship Business

Content a glance:

• Introduction

• Types of Business

• Why Choose a Sole Proprietorship?

• Registration Process

Advantages

Disadvantages

Insurance Protection

Taxes

Transition

Key to Success

What to Avoid

Recap

Many remote workers dream to have their own virtual assistant business, a sole proprietorship business per se. By doing so, it has the potential to be one of the most fulfilling careers you could imagine. As a virtual assistant, you get to make a decent income while being your own boss. Nothing else can be better than this! But, opening a virtual assistant business takes a lot of work… hard work. It won’t be easy, but it’s possible to be a successful virtual assistant business owner.

To make, one must have great skills and discipline for a VA business. Among others, there are a lot of things you need to start it the right way - the legal way. These are licenses, government agencies, a lot of requirements and processes you must complete. In this article, we will discuss the three main types of businesses, some helpful tips to be successful, practices you should avoid, and the steps you must take to start up your own virtual assistant sole proprietorship business.

Types of Business

There are three main types of businesses: corporation, partnership, and sole proprietorship.

• Corporation: Composed of many people who act as a single entity that drives the interest of the corporation with the same rights that individuals given by the law.

• Partnership: Two or more people who share assets and profits.

• Sole Proprietorship: It is also known as a single proprietorship or sole prop. It is the most basic type of business organization. It is the easiest type of business. It can be established by just one person, referred to as a sole proprietor. You are the business. It is an extension of yourself. The assets and liabilities of your business are also your assets and liabilities.

Why Choose a Sole Proprietorship?

If you have a dream of starting your own virtual assistant business, then a sole proprietorship is a great option. As noted above, a sole proprietorship is the simplest form of a business. It can be run by just one person. You will not be required to work for anyone or have anyone work under you. You will be able to keep all the profits on your own. Compare to a partnership or corporation, a sole proprietorship business has fewer regulations, has lower costs of government permits and licenses, and it requires a little amount of capital. A lot of sole proprietors are professionals, freelancers, and virtual assistants who do remote work or work from home.

Registration Process

It is simple. To get started, all you need to do is create a business name and decide on a location for your business. For a remote worker or work-from-home business, it can be your home address then do the following:

1. DTI (Department of Trade and Industry)

Register your business name through the Department of Trade or DTI. Print a registration certificate through https://bnrs.dti.gov.ph known as DTI BNRS Next Gen online or go to your municipality or city DTI Office. Registration requires 5 years validity, an accomplished business name registration form sole (single) proprietorship, TIN (tax identification number), and a list of 5 business names ranked according to preference. You need to complete this within 1-2 days. The registration fee costs about P2000 PHP (national) and P1000 PHP (regional), city/municipality P500 PHP, barangay P200 PHP, plus documentary stamp tax (DST) Php 15.

2. Barangay

After registering your business name through DTI, you need to go to your barangay and get a barangay clearance. Fees are about P800 PHP. You need to complete this within 1-2 days.

3. Mayor’s Office

Once you accomplish your tasks on the DTI and barangay, go to your mayor’s office and obtain a mayor’s permit to operate at the licensing section of your city or municipality. Fees estimate include P900 PHP, sanitary permit fee + 0.2% of capital license fee P2000 PHP, permit fee for businesses engaged in retail P2500 PHP, garbage collection fee P360 PHP, occupational tax P905 PHP, occupational police clearance/health clearance, plumbing inspection fee P1500 PHP, electrical inspection fee P850 PHP, building permit fee P500 PHP, signboard permit fee P400 PHP. You need to complete this within 1-2 weeks depending on the city/municipality.

4. BIR (Bureau of Internal Revenue)

• Go to your municipality or city BIR office to register your TIN. Fee is P500 PHP (registration fee) + P100 PHP (certification fee) and P15 PHP (documentary stamp tax), in loose form to be attached to Form 2303). You need to complete this in 2 days.

• Get Certificate of Authority to Print (ATP). This has no charge. You need to complete this within 1 day.

• Books – buy special books at the BIR office or any bookstore. Four pieces of the books cost about P130 – P150 PHP.

• Print – Print receipts and invoices at a printing press accredited by BIR. P180 PHP per booklet. This can be completed within 1-2 weeks.

• Have books of accounts and Printer’s Certificate of Delivery of Receipts and Invoices (PCD) stamped by the BIR. This has no charge. It can be done within the day.

5. SSS (Social Security System)

Go to the SSS office and register. This has no charge. This can be completed within 1 week.

6. PhilHealth (Philippine Health Insurance Company)

Go to the PhilHealth office and register. This has no charge. This can be completed within the day.

Note: These procedures apply to the Philippines only. Please check with your country’s policies and laws on the registration process because it varies from every country. Also, fees may subject to changes so prepare money.

Advantages of Sole Proprietorship

It is easy to set up, easy to register, and requires a small amount of capital. You do not need a detailed business structure or legal documents, to begin with. You have complete control of your business since you are the sole owner of your business. You do not need a board of directors, shareholders, and other owners. Preparing and filing your income taxes is easy. On your personal tax return, you may add the income/loss from your business to your other income. Because you're adding up your sole proprietor business income/losses on your personal tax return, you can offset your personal income from other sources like your wife’s/husband's salary. To take a maximum loss, prove your business is legitimate and not just a hobby because those losses can lower your taxes.

Disadvantages of the Sole Proprietorship

Like any other business form, sole proprietorship has disadvantages too. Your personal finances and your businesses are the same. This only means that you are liable for any debts or obligations of the business. If your business cannot pay its bill, creditors or lawsuits can access your personal bank accounts, assets, or property. You need to file both personal and business bankruptcy, which means involving your assets. You cannot file a business bankruptcy alone. The involvement of personal assets and issues of personal liabilities is bothersome to some businesspeople, so forming an LLC (limited liability company) or corporation is their best option. Also, a sole proprietorship business cannot raise capital by selling interest in the business.

Insurance Protection

Get liability and property insurance to protect your personal assets. Also get business insurance, if your business involved in a liability lawsuit.

Taxes

Check with Tax and Legal Professionals before starting your sole proprietory virtual assistant business. Even if you have a very small one-person business, you should check with your tax and legal advisors before settling on a business form. There may be other things you need to consider before you start a sole proprietorship business.

In the Philippines, by law, an 8% tax applies to self-employed individuals like sole proprietors and professionals engaged in sales or services where business expenses are normally minimal and whose gross receipts or sales for the year does not exceed P3,000,000 PHP (three million pesos) VAT “value-added tax” threshold. It is simplified taxation where he/she does not need to pay a separate income tax and percentage tax. For example: if the sole proprietor or self-employed individual is earning purely business income, he/she simply needs to add up his/her gross sales or receipts then deduct the non-taxable P250,000 PHP then multiply the difference with the 8% to arrive at his/her tax payable to the BIR.

Transition

Are you planning to shift your sole proprietor business to a company or corporation? If so, take note that the Philippines does not adapt the LLC (limited liability company) or PLC (private limited company) legal concepts of business-like other countries does such as the United States, the United Kingdom, and Singapore. So, it commonly transitions from a sole proprietorship to a domestic corporation. A domestic or subsidiary corporation is guided by law under the SEC and Corporate Code of the Philippines.

Key to Success

Once you completed the first steps in getting your sole proprietorship business up and running, you need to focus on ways to grow your VA business. You need the following:

a. Strategy/Plan – The very first thing you need to do is to execute a SWOT analysis then analyze your VA business strengths, weaknesses, opportunities and threats. Knowing your strategies and plans will help you succeed. Also, make a vision and mission statement of your VA business as well as write your business model, marketing models, and financial projects. Having this written will determine your business success. After doing so, you need to define your target market. Remember, you cannot be “everything” jack-of-all-trades to every customer. Focusing your efforts on your targeted market will help you establish a successful virtual assistant business.

b. Website – In our type of business as freelancers and virtual assistants, having a killer website is a must. We are in the digital age. People more often than not search for companies and services online through Google, so without a website, your business does not exist at all.

c. Clients Reviews – A lot of people rely on online reviews before they purchase products or services. So, ask your clients to go to your website’s review page, Facebook Page, and Google My Business page to write a short review of their experiences working with you.

d. Online Presence – Establish a strong social media presence on Facebook, Twitter, LinkedIn, Instagram, Pinterest, YouTube, and others. Interact with your clients and potential customers through these channels. By doing so, will help you establish a good rapport with your clients and possibly get more referral clients in the future.

e. Advertise – A lot of start-up small businesses shy away from advertising because they do not have enough funds, to begin with. So, they do mini steps by relying on small social media campaigns or sending emails. Take note, advertising can help you generate leads, potential clients in the future.

f. A lawyer – It is a must to get a reliable lawyer in your area. They come in handy when you need them, especially if your small business gets into liability lawsuits, bankruptcy, or you plan to transition your business form which requires legal advice.

What to Avoid?

• Do not ever skip out on brainstorming your business SWOT, plan and strategy. Without a concrete plan in place, it will be hard for you to succeed.

• Also, do not ever pay your bills late. Bills can incur interest which you do not want to happen. Or the worst thing is not paying your bills at all which could force your business to close.

• You must know who your clients will be your target customers. Take note, you can’t wear too many hots. As a freelancer or virtual assistant, focus on a few skills that you can do best for your targeted clients.

• Do not shy away from borrowing money. Every business owner needs to have a small capital or investment to get started. In our type of business, our investments are our skills, computer devices (laptop, phone, tablet), internet service provider, utilities (power), our home or office, and other equipment. There’s nothing wrong with lending money if you can repay your debts.

• Avoid skipping your planning phase, paying your bills late, not knowing your clients, fear of business loan, being a jack-of-all-trades, expecting to get rich fast.

• Avoid wearing too many hats. You can’t do everything for every client. Being a jack-of-all-trades will lead you nowhere. Focus on skills you can do best, the ones you can apply to your client's needs. If you are already fully booked, you need to outsource in exchange for a commission or percentage. A VA sole proprietorship business can outsource other services to other freelancers or virtual assistant.

Recap

To set up and legalize your business, you will need a Certificate of Registration from the DTI, Barangay Clearance Certificate, Mayor’s Permit, BIR Certificate of Registration, SSS, and PhilHeath. We have pointed out some advantages and disadvantages of a sole proprietorship, mentioned some tips to be successful, and things to avoid.

Remember, having a virtual assistant sole proprietorship business will not help you to earn a 6-figure salary overnight. But it is possible. I did it! It can only be achieved through hard work.

SO, WHAT'S NEXT?

Hi, I'm Paul. If you enjoyed reading this article you might like to read also:

Contract for Virtual Assistant

Or check Notes from a VA - The Ultimate Guide to a Successful Virtual Assistant Career for more helpful tips.

I would greatly appreciate if you could kindly share this article to people whom you know will be interested to read this through social media, email, text, or message.

Finally, subscribe to my newsletter to get a free sample page of my book and email updates so you're never out of touch.

Thank you.

signature