These guides are general information, not legal, tax or financial advice. Requirements change — confirm with the relevant government agency or a licensed professional. See our Disclaimer.
Selling
How to value a small business in the Philippines
PasaloHub PH Guides · 6 min read
The most common reason a listing sits for months is an asking price the numbers can't support. Buyers compare businesses side by side, and the first thing they check is whether the price makes sense against what the business earns. Here's how to get to a number you can defend.
1. Start with what the business really earns
Buyers care about Seller's Discretionary Earnings (SDE): the money the business produces for one full-time owner. Start from 12 months of revenue and subtract your real operating costs — rent, salaries, supplies, utilities, permits, repairs. Then add back costs that won't continue for a new owner, such as your own salary if you pay yourself one, or one-time expenses like a renovation.
Be honest with add-backs. Buyers will ask for receipts and bank statements, and inflated earnings are the fastest way to lose trust.
2. Apply a realistic multiple
Small owner-operated businesses usually sell for somewhere around 1 to 3 times their annual SDE. Where yours falls depends on:
How long it's been running — a 7-year-old bakery is less risky than a 1-year-old one.
How much depends on you — if customers come for you personally, the business is worth less without you.
The lease — a long, transferable lease at a fair rent adds value; a lease ending in six months takes it away.
Clean records and complete permits — they make the numbers believable.
Trend — growing sales justify a higher multiple than flat or falling ones.
3. Check it against the assets
For businesses that don't earn much yet — a new cart, a stall — buyers often price by assets: what it would cost to buy the equipment, fit-out, and inventory new, minus wear. That's usually the floor for your price, and it's why "asset-only" is one of the deal types you can offer on PasaloHub.
4. Sanity-check the payback
Divide your asking price by the yearly profit a buyer can expect. That's roughly how many years it takes to earn the money back. On PasaloHub, buyers see this for every listing. If your payback is much longer than similar businesses, expect questions — or adjust the price.
Quick worked example
A milk tea shop brings in ₱210,000 a month and costs ₱145,000 a month to run, so it earns ₱65,000 a month, or ₱780,000 a year. At 1.1 times annual earnings, an asking price of about ₱850,000 means a buyer earns it back in a little over a year — attractive enough to get serious inquiries.
This guide is general information, not a formal valuation. For larger deals, consider a professional appraisal or an accountant's review.
Buyers are nervous, and nervous buyers negotiate hard. The more you can show, the less they have to guess. Before you list, work through this checklist.
Get your records in order
At least 12 months of sales records — POS reports, sales logs, or receipts.
DTI business name registration (sole proprietorships) or SEC registration (corporations and partnerships).
BIR Certificate of Registration (Form 2303).
Mayor's or business permit, barangay clearance, and sanitary permit or other industry permits (for example, water refilling stations need water quality certification).
Expired permits aren't always a deal-breaker, but a buyer will discount the price to cover the cost and hassle of fixing them.
Talk to your landlord early
For most small businesses the location is the business. Find out whether your lease can be assigned to a new owner or whether the landlord will sign a new one with them. A buyer who can't keep the space may not want the business at all.
Write down how the business runs
Supplier list and terms, recipes or processes, opening and closing routines, staff roles. This shows the business can run without you, which is exactly what a buyer is paying for.
Decide what's included
List the equipment, furniture, inventory, social media pages, phone numbers, and supplier accounts that come with the sale — and what doesn't. Surprises at handover sour deals.
On PasaloHub
Upload your registration documents when you post your listing. Once our team reviews them, your listing can earn a Verified business badge. When a buyer signs your NDA, you pick which documents to share with them from your dashboard — nothing is sent until you choose.
Buying an existing business: a due diligence checklist
PasaloHub PH Guides · 7 min read
Due diligence is simply checking that the business is what the seller says it is. Skipping it is how buyers end up with a business that makes half the money they expected, or with debts they didn't know about.
1. Legal existence and permits
DTI or SEC registration — who legally owns the business? For a corporation, get the latest General Information Sheet (GIS) to see the shareholders and officers.
BIR Form 2303 — is the business registered for tax, and under what tax type?
Mayor's or business permit — current, and for this address?
Industry-specific permits: sanitary permits, fire safety inspection certificate, water quality certificates, and so on.
2. The numbers
Compare the seller's sales figures with bank deposits, POS reports, and supplier purchases. Sales that don't show up anywhere else are a red flag.
Check the tax returns filed. Large gaps between declared income and claimed income need an explanation.
If you can, observe the business for a few days and count customers yourself.
3. The lease
Read the actual lease. How long does it have left? Can it be assigned to you? What does the landlord say? Speak to the landlord directly before you commit.
4. Staff
Are employees registered with SSS, PhilHealth, and Pag-IBIG, and are contributions up to date? Unpaid contributions and final-pay obligations can follow the business. Agree in writing who is responsible for obligations up to the handover date.
5. Debts and liabilities
Ask for a written list of loans, supplier balances, unpaid taxes, and pending disputes. For a corporation, those stay with the company when you buy its shares. Your purchase agreement should say the seller is responsible for anything they didn't disclose.
6. Assets and inventory
Walk through the equipment list and test that it works. Count the inventory close to handover — its value is usually settled separately at closing.
7. Put it in writing
Use a written Deed of Sale (for business assets) or share purchase agreement (for a corporation), ideally reviewed by a lawyer and notarized. It should list everything included, the price and payment schedule, the handover date, and who is responsible for what.
Our legal checklists walk through the BIR, DTI, SEC, and Mayor's permit steps in more detail.
How business registration transfers when a business is sold
PasaloHub PH Guides · 6 min read
One of the most common surprises for first-time buyers: many registrations aren't transferable. Here's how it generally works, depending on how the business is set up.
Sole proprietorships (DTI-registered)
A DTI business name registration belongs to the person, not the business. When you buy a sole proprietorship, you're really buying its assets — equipment, inventory, the goodwill, and ideally the lease. In practice:
The buyer registers their own business name with DTI (they may be able to use the same name once the seller cancels theirs).
The seller closes their BIR registration for the business — commonly through BIR Form 1905 — and settles any outstanding tax obligations.
The buyer registers with the BIR under their own name and gets their own Form 2303, receipts, and books.
The buyer applies for their own Mayor's or business permit and barangay clearance from the local government.
Corporations and partnerships (SEC-registered)
Here the business itself is a separate legal entity, so it can keep its registrations when ownership changes. Instead of buying the assets, you usually buy the shares:
The shares are transferred through a deed of sale of shares, and taxes on the transfer are settled with the BIR, which issues an electronic Certificate Authorizing Registration (eCAR).
The corporation's stock and transfer book is updated, and a new General Information Sheet is filed with the SEC showing the new owners and officers.
Permits and BIR registration generally stay with the corporation, but updates to responsible officers may be needed with the local government and BIR.
Timing tips
Agree in writing who handles each step and by when.
Don't let the business operate for long under the seller's registration after handover — sales would be recorded under the wrong taxpayer.
Requirements and forms vary by agency and by city. Always confirm with the BIR revenue district office, DTI, SEC, and your LGU.
This is general guidance, not legal advice. For anything beyond a simple asset sale, work with a lawyer or accountant.
Taxes can take a real bite out of a sale, and who pays what is something to agree on before you sign. The rules depend on what's being sold and how. These are the ones that most often come up — confirm current rates with the BIR or your accountant, because they change.
If you sell business assets (typical for sole proprietorships)
Income tax on the gain — profit from selling equipment, goodwill and other assets used in the business is generally treated as business income of the seller.
VAT — if the seller is VAT-registered, selling business assets may be subject to VAT (currently 12%).
Real property — if land or a building is part of the sale, capital gains tax (6% of the higher of the selling price or zonal/fair market value) and documentary stamp tax generally apply, plus transfer taxes and registration fees.
If you sell shares of a corporation
Capital gains tax on the net gain from selling shares not traded on the stock exchange — currently 15% of the net gain.
Documentary stamp tax on the transfer of shares.
The BIR issues an eCAR once these are paid, which is needed to register the transfer in the corporation's books.
Don't forget
Closing out the seller's own tax obligations for the business (final returns, unused receipts) before or at handover.
Local business tax and any unpaid permit fees with the LGU.
Who pays which tax is negotiable — write it into the deed of sale.
Tax rules change and depend on your situation. This guide is not tax advice — speak to a licensed accountant before you close.
Seller financing, kasosyo buy-ins and other deal structures
PasaloHub PH Guides · 5 min read
Every listing on PasaloHub shows which deal structures the seller is open to. Here's what each one means and what to watch out for.
Full acquisition
The buyer pays the whole price — at once or in a few tranches before handover — and takes over the business completely. Simple and clean, but it needs the most cash up front.
Seller financing
The buyer pays part of the price at handover and the rest in installments over an agreed period, directly to the seller.
For buyers: less cash up front, and the seller has a stake in the business doing well after the sale.
For sellers: a wider pool of buyers, often at a better price — but you carry the risk of non-payment.
Protect both sides: put the schedule in the deed of sale, have the buyer sign a promissory note, and agree what happens if payments stop. Post-dated checks and keeping ownership of key assets until the last payment are common safeguards.
Kasosyo buy-in
The buyer buys part of the business — say 30 to 50% — and becomes a partner. It suits owners who want to raise money or bring in help without leaving, and buyers who want to learn the business first.
Agree in writing how profits are shared, who makes decisions, and who does the day-to-day work.
Plan the exit: can one partner buy the other out later, and at what price?
For a larger stake, setting up a corporation or registered partnership keeps ownership clear.
Asset-only
The buyer buys the equipment, fit-out and maybe inventory, but not the business's name, customers, or records. Common for carts, stalls, and businesses that aren't profitable yet. The price is usually close to what the assets are worth.
Open to offers
The seller is flexible on structure. Propose what works for you — and be ready to explain why.
Most sellers are honest owners moving on. But a business sale involves a lot of money changing hands, which attracts scammers. These habits protect you.
Warning signs
Pressure to pay quickly — "another buyer is ready, send a reservation fee today."
Reluctance to let you visit the business, or to meet you there during working hours.
Numbers that are too good — very high profit for a very low price, with no records to back it up.
Documents that don't match — names on permits that differ from the seller, or addresses that don't match the listing.
Asking to move off the platform right away, especially to payment apps, before you've verified anything.
Habits that protect you
Visit in person and see the business operating.
Verify permits yourself with the issuing agency or LGU, rather than trusting a photo.
Check who owns it — DTI registration or SEC General Information Sheet should match the seller.
Talk to the landlord directly.
Never pay before you've inspected the business and documents, and never pay in cash without a receipt.
Sign a written agreement before money changes hands, ideally notarized and reviewed by a lawyer.
On PasaloHub
Look for the Verified user and Verified business badges, keep your conversation in PasaloHub messages so there's a record, and report anything suspicious with the Report button. Read more in Trust & Safety.