The past pandemic was a struggle for food cart businesses, with many having to close their doors when local governments enforced city-wide lockdowns.
Two years and massive vaccine rollouts later; restrictions have begun to ease, opening the doors to tourists, public events, and mass gatherings. As the economy starts to pick up pace, now’s the best time to kickstart or pick up where you left off in your food cart business.
Today, we’ll be looking into this booming industry, including tips on how to start and grow your food cart business in the Philippines.
From Filipino Fiestas to Foodies: Why Start a Food Cart Business Today
Starting a food cart or food truck business is an ideal venture for budding entrepreneurs. Aside from a low initial investment and operational costs, food trucks have more freedom to experiment with their locations and offerings.
And let’s not forget, Filipinos love these three things: Fiestas, fun, and food!
The best celebration of Filipino culture is the country’s abundance of festivals. All over the country, there’s a festival that celebrates everything from one’s faith to fishing.
These events draw crowds by thousands. Take a look at how many people flock to Iloilo for Dinagyang or how the world-renowned Sinulog festival in Cebu has people chanting “Pit Senyor!” in the streets.
Where there are people and celebrations, there are huge opportunities to build businesses and sell products and services, especially food. One of the best bets to serve this market is through the employment of food cart/food truck businesses!
Registering your Food Cart Business
Remember to consider the kind of products you’re going to want to sell. From finger food, like fries to chicken wings or ice cream, to culturally-diverse food like Japanese or Chinese food, or even drinks, like coffee and milk tea – there are endless options for you out there.
It’s necessary to think about these things so that you can consider the more technical aspects of your business, such as the storage and equipment needed, and the food cart/food truck needs in general.
With these taken care of, we can then proceed to start securing the legal requirements of a regular food cart/food truck business. Here are the following requirements to take into account:
- Food Truck / Food Cart Registration – Register your food cart/food truck name through the Department of Trade and Industry (DTI).
- Business Permits – Consider where you plan to operate in, what city specifically, so that you may approach and request from the Local Government Unit (LGU) the Business Permit that you need. These are to be renewed every year, with its renewal period in the first month of the calendar year.
Some requirements to take note of:
- DTI/SEC Certificate
- Contract of Lease
- Clearance Fee
- Barangay Micro Business Enterprise (BMBE) Application – There are many benefits that come from being a recognized BMBE, such as being exempt from taxes (income tax) and from the Minimum Wage Law coverage.
Other benefits include a special credit window that serves the financing needs of the registered BMBEs, and a Development Fund shall be endowed by the Philippine Amusement and Gaming Corporation (PAGCOR) and administered by the SMED Council.
To apply, the DTI Certificate and Mayor’s Permit is submitted to the Office of the Treasurer. A Certificate of Authority is issued by the LGU and effectiveness lasts for a period of two years, with the renewal period being every 2 years.
- Taxpayer Identification Number (TIN) – Apply for your TIN in the Revenue District Office (RDO) and fill out BIR Form 1901. Provide a valid government-issued ID (e.g. passport, birth certificate, etc.) and the DTI Certificate to the New Business Registrant Counter (NBRC). There are fees to be paid and an initial briefing that you must attend in order to receive the different documents that contain your TIN.
- Sanitary and Health Requirements – To avoid unforeseen disease outbreaks and other sanitation related illnesses, it is important to be issued a Sanitary Permit and Health Card.
Taxes that apply to your food cart business
Here are taxes you’ll need to take note of when operating a food cart business.
Income Tax practically covers almost all taxpayers that earning compensation. File BIR Form 1701 if you are a mixed-income individual, earning from a profession/business (your food cart/food truck, for example) and as an employee.
If you’re earning purely from your food cart/food truck business, use BIR Form 1701A.
The Annual Income Tax Return (ITR) is filed on or before the 15th of April of each year covering income for the preceding taxable year.
Hold on, though! That’s not the only Income Tax you need to comply with, as that just covers the Annual ITR. You’ll also need to submit your Income Tax quarterly using BIR Form 1701Q.
There are two (2) kinds of VAT forms you need to be familiar with if you are VAT-registered and exceed Php 3 million annually in revenue:
- BIR Form 2550M (Monthly Value-Added Tax Declaration)
- BIR Form 2550Q (Quarterly Value-Added Tax Return)
Between the two forms, the only significant differences lie in the filing period, the VAT payables and the month/s covered.
BIR Form 2550M is filed monthly and not later than the 20th day from the end of the month; whereas, BIR Form 2550Q is filed quarterly and not later than the 25th day from the end of the last month of the quarter. The former covers all the VAT payables of that particular month. The latter covers the cumulative VAT amount payable for the quarter.
If you are not VAT-registered and do not exceed the Php 3 million annual revenue, you are entitled to file and pay Percentage Tax.
BIR Form 2551Q is a business tax imposed on your business’s sales for the quarter. The Quarterly Percentage Tax, as it is known as, is filed quarterly not later than the 25th day following the end of the taxable quarter.
Deadlines of each quarter would be on or before April 25, July 25, October 25, and January 25.
Withholding Tax on Compensation
Remitting the Withholding Tax on Compensation to BIR is the employer’s responsibility. BIR Form 1601C and BIR Form 1604C are what you need to keep in mind.
BIR Form 1601C is filed monthly, taking into account the total taxes withheld from all the employees, on or before the 10th of the month following the month where taxes are withheld. It is worth noting that December is exempted, and the filing would be on or before the 15th of January the following year.
BIR Form 1604C is filed on or before January 31 of the succeeding fiscal year. This is to compile the entire amount of withholding tax on compensation for the year.
Manage taxes for your food cart business with Taxumo
Running a food cart business is no easy task. To ensure that your venture remains profitable, you’ll always need to stay on top of operations. Not to mention, you’ll have to take care of marketing and diversifying your menu to stay competitive.
Tax compliance is another story. As tempting as it is to skip on paying your taxes, don’t.
Failing to pay your taxes and comply with business registration can hurt your business in more ways than you think. You can face hefty fines and even jail time if you neglect your taxes.
Fortunately, tax compliance doesn’t have to be a tedious process. Taxumo lets you automate tax calculations, filing, and payments. Sign up for free or join any of our live sessions to see how it works today.