CHOOSING YOUR

BUSINESS ENTERPRISE

Single Proprietorship,
Partnership and
Corporations
SOLE PROPRIETORSHIP
SOLE PROPRIETORSHIP
- referred to as a sole trader or a
proprietorship — is an unincorporated business
that has just one owner who pays personal
income tax on profits earned from the business.
Many sole proprietors do business under their
own names because creating a separate business
or trade name isn’t necessary.
SOLE PROPRIETORSHIP
A sole proprietorship is the easiest type of business to
establish or take apart, due to a lack of government
regulation. As such, these types of businesses are very
popular among sole owners of businesses, individual
self-contractors, and consultants. Most small
businesses start as sole proprietorships and either stay
that way or expand and transition to a limited
liability entity or corporation.
 Understanding
Sole Proprietorship
If you want to start a one-owner
business, the simplest and fastest way is
through a sole proprietorship. Sole
proprietorship begins when you begin
conducting business. It doesn’t require
filing federal or state forms and has few
regulatory burdens, making it an ideal
way for self-employed people to start
out.
 Types of
Sole Proprietorship

• Independent Contractor
• Business Owner
• Franchisee
Independent Contractor - An independent
contractor is a self-employed sole proprietor
who takes on projects on a contract basis
with clients. They have the freedom to
choose which clients they take on, but they
are often subject to the processes and
methods that the client requires.
Business Owner - can also be self-employed
sole proprietors, but unlike the contractor,
there is much more autonomy in how the
work is completed for clients, and the
operation itself may even be more complex
with employees and/or intellectual property.
Franchisee - Franchise owners
may also be sole proprietors.
The franchisee benefits from
the guidance, brand, business
model, etc. in exchange for
royalties paid to the franchisor.
 How do you start a
Sole Proprietorship?
Sole proprietorships are strapped with big
risks. Increased personal liability, difficulty
raising capital, and a perceived lack of
p ro f e s s i o n a l i s m a r e a f e w p i t f a l l s s o l e
proprietors must navigate. Still, the potential
financial rewards could be more than worth
the risk — especially if you plan thoroughly
before launching a new business and weigh
the benefits and disadvantages.
To start a sole proprietorship:
• You generally just have to launch your
business. It is useful to choose a company
name.
• Depending on your business and local
regulations, you may need to apply for a
permit or license with your city, county,
and/or state.
• If you plan to hire employees, you will
need an employee identification number
(EIN) from the Internal Revenue Service
(IRS).
• If you are going to sell taxable products,
you will need to register with your state
for a sales tax license.
Examples of Sole Proprietorship
1. Web Developer
2. Digital Marketer
3. Virtual Assistant
4. Daycare Operator
5. Freelance Graphic Designer
6. IT Consultant/IT Specialist
7. Freelance Writer
8. Freelance Editor
Examples of Sole Proprietorship
8. Fitness Coach
9. Housekeeper
10. Landscaper
11. Caterer
12. Baker
13. Accountant
14. Freelance Non-Fiction Book Editor
15. Tax Preparer
Examples of Sole Proprietorship
16. Document Assistant
17. Resume and Cover Letter Writer
18. Event Planner
19. Photographer
20. Standardized Test Tutor
22. Translator
 Advantages and
Disadvantages of
Sole Proprietorship
 Advantages of
Sole Proprietorship
• Requires a minimum amount of capital
• Minimal regulations and compliance
requirements from government agencies
• Easy to register
• Sole proprietor has complete control of the
business
• Easy to manage, with no necessary
formalities or regulations about having a
board of directors, committee, or meeting
minutes
• Sole proprietor acquires all assets and profits
of the business and can freely mix business
and personal assets
 Disadvantages of
Sole Proprietorship
• Sole proprietor is subject to unlimited personal
liability for the debts, losses, and liabilities of
the business
• Sole proprietor cannot raise capital by selling
an interest in the business or obtain capital
funding through established channels
• No clear-cut definition between personal and
business income because the sole proprietor is
personally liable for the income tax of the
business
• Sole proprietorships rarely survive the death or
incapacity of their owners and hence do not
retain value
 Disadvantages of
Sole Proprietorship
• Business bankruptcy affects the owner
personally
• Personal lawsuits against the sole proprietor
can potentially consume all their personal
assets and negatively affect the financial
aspects of the business
• Lawsuits filed against the business are also
deemed as lawsuits filed against the owner;
creditors of the owner or of the business itself
can reach both the business and the owner’s
personal assets, and if such lawsuits are
successful, the owner is obligated to pay the
damages with his or her own money
 How to register a Sole
Proprietorship in the Philippines?
• Register a business name with DTI to
acquire a DTI Certificate of Registration
• Register with the Barangay Office where
the business is going to be located to
acquire a Barangay Certificate of Business
Registration;
• Register with the Mayor’s Office to
acquire a Mayor’s Permit; and
• Register with the Bureau of Internal
Revenue (BIR) to acquire a Certificate of
Registration.
 Sole Proprietorship
Tax Forms
Sole proprietors report their
income and expenses on their
personal tax returns and pay
income and self-employment
taxes on their profits.
 BIR Forms for Sole Proprietorship

BIR Form 1901 (Application for

Registration for Self-Employed
and Mixed Income Individuals,
Estates/Trusts)

Before starting your business, you

have to register your venture to BIR
through this form. If you’re about to
open a new branch, you have to
secure this as well.
 BIR Forms for Sole Proprietorship
BIR Form 1601-C (Monthly
Remittance Return of Income
Taxes Withheld on
Compensation)

This is filed by every withholding

agent or employer, who must deduct
and withhold taxes from the
compensation of employees.

Filing date:
January-November- On or before the
10th day of the following month
December- On or before January 15 of
the following year
 BIR Forms for Sole Proprietorship
BIR Form 1601-EQ (Quarterly
Remittance Return of Creditable
Income Taxes Withheld-
Expanded)

This is for employers who must deduct

and withhold taxes from their
employees’ income payments subject
to expanded/creditable withholding
taxes.

Deadline of filing and payment:

Not later than the last day of the
month following the close of the
quarter during which withholding was
made.
 BIR Forms for Sole Proprietorship

BIR Form 1601-FQ (Quarterly Remittance Return of

Final Income Taxes Withheld)

Employers file this form when they have to deduct and withhold
taxes on income payments subject to final withholding taxes (i.e.
payment of dividends).

Deadline of filing and payment:

Not later than the last day of the month following the close of the
quarter during which withholding was made.
 BIR Forms for Sole Proprietorship

BIR Form 1603Q [Quarterly Remittance Return of Final

Income Taxes Withheld (On Fringe Benefits Paid to
Employees Other than Rank and File)

This is for employers who have to deduct and withhold taxes on fringe
benefits their employees received.

Deadline of filing and payment:

Not later than the last day of the month following the close of the
quarter during which withholding was made
 BIR Forms for Sole Proprietorship

BIR Form 1604E (Annual Information Return of Creditable

Income Taxes Withheld (Expanded)/ Income Payments
Exempt from Withholding Taxes)

This is for the taxes deducted on income payments that are subject to
Expanded Withholding Taxes, or compensations that are not subject to
withholding tax but subject to income tax.

Filing date: On or before March 1 of the following year

 BIR Forms for Sole Proprietorship

BIR Form 1604CF (Annual Information Return of Income

Tax Withheld on Compensation and Final Withholding
Taxes)

Private and government employers are required to file this return for
compensations paid to employees that are subject to final withholding
taxes.

Filing date: On or before January 31 of the following year

 BIR Forms for Sole Proprietorship

BIR Form 1606 (Withholding Tax Remittance Return (For

Transactions Involving Real Property other than Capital
Asset including Taxable and Exempt)

Withholding agents and buyers on the sale, transfer, or exchange of

real property must file this form.

Filing date: On or before the 10th day of the following month in

which the transaction occurred.
 BIR Forms for Sole Proprietorship

B I R Fo r m 1 9 0 0 ( A p p l i c a t i o n t o U s e L o o s e -L e a f /
Computerized Books of Accounts and/or Accounting
Records)

To be able to use loose-leaf, computerized books of accounts, or

accounting records, you have to submit this to the RDO.
 BIR Forms for Sole Proprietorship

BIR Form 1905 (Application for Registration Information

Update for Updating / Cancellation of Registration /
Cancellation of TIN / New Copy of TIN card / New copy
of Certificate of Registration)

If you wish to update or change your business’ information,

you have to get this form. This includes the closure of
business or transfers to another location or district. This is
also used for Replacement of Lost TIN Card/Certificate of
Registration.
 BIR Forms for Sole Proprietorship

BIR Form 1906 (Application for Authority to Print Receipts

and Invoices)

Your business must secure this first before you can print and issue
receipts or invoices.

BIR Form 1907 (Application for Permit to Use Cash

Register machines/Point-of-Sale Machine)

If you tend to use cash register machines in issuing receipts or invoices,

you have to get this file.
 BIR Forms for Sole Proprietorship

BIR Form 2305 (Certificate of Update Exemption and of

Employer’s and Employee’s Information)

Whenever the employer or employee wants to update or change their

information, they have to accomplish this form. This includes change
of status, change in the type of employment, or acquiring employment
after being registered as engaged in business or exercise of a profession.
 BIR Forms for Sole Proprietorship

BIR Form 2306 (Certificate of Final Income Tax Withheld)

This should be accomplished and issued by the employer to file the

income subjected to final tax. It should state the total amount paid and
the total taxes withheld during the year.

BIR Form 2307 (Certificate of Creditable Tax Withheld at

Source)

This reflects the income subjected to expanded withholding tax settled

by the employer. This serves as income tax credits or advanced income
tax. It must be attached to the 1702 and 1702Q forms.
 BIR Forms for Sole Proprietorship
BIR Form 2316 (Certificate of Final Income Tax Withheld)

Employers must issue this to their employees as well. This certificate

proves that employers filed and paid the accurate income tax on behalf
of their employees.

BIR Form 1701 (Annual Income Tax Return for Self-

Employed Individuals, Estates and Trusts)

This is for individuals who are engaged in trade/business, professionals,

freelancers, and those with mixed income.

Filing date: On or before April 15 of each year

 BIR Forms for Sole Proprietorship

BIR Form 1701Q (Quarterly Income Tax Return)

This form is for your quarterly income tax return. This must be settled
regardless of your gross income.

Filing dates:

1st quarter: On or before May 15 of the current year

2nd quarter: On or before August 15 of the current year
3rd quarter: On or before November 15 of the current year
 BIR Forms for Sole Proprietorship

BIR Form No. 2550M (Monthly VAT Return)

On a monthly basis, it must be filed Value Added Tax (VAT)-registered

person and a person required to register as a VAT payer but failed to
register. VAT is required for persons whose annual gross sales or
receipts exceed the P3.0 million threshold.

Deadline of filing and payment of VAT return: (1) For manual

taxpayers, not later than 20th day following the close of the month or
(2) For eFPS taxpayers, 21st-25th day following the close of the month.
 BIR Forms for Sole Proprietorship

BIR Form No. 2550Q (Quarterly VAT Return)

The monthly gross sales or receipts reported in the 2550M and the 3rd
month of the taxable quarter should be consolidated by the VAT-
registered person in this return. VAT is required for person whose
annual gross sales or receipts exceed the P3.0 million threshold.
The return must be filed and paid not later than 25th day following
the close of each taxable quarter.
 BIR Forms for Sole Proprietorship

BIR Form 2551Q (Quarterly Percentage Tax Return)

Under the TRAIN Law, VAT-exempt taxpayers with annual revenues

not exceeding P3M must file their percentage tax on a quarterly basis.
For this, you have to accomplish the BIR Form 2551Q, which means
the Form 2551M is out of the picture.
 Key Takeaways
• A sole proprietorship is an unincorporated business
with only one owner who pays personal income tax
on profits earned.
• Sole proprietorships are easy to establish and
dismantle due to a lack of government involvement,
making them popular with small business owners and
contractors.
• Most small businesses start as sole proprietorships and
end up transitioning to a limited liability entity or
corporation as the company grows.
• One of the main disadvantages of sole
proprietorshi ps i s that they do not have any
government protection, as they are not registered.
This means that all liabilities extend from the business
to the owner.
• Sole proprietors report their income and expenses on
their personal tax returns and pay income and self-
employment taxes on their profits.
PARTNERSHIP
 PARTNERSHIP
A partnership is a for-profit business organization comprised
of two or more persons. State laws govern partnerships.
Under various state laws, "persons" can include individuals,
groups of individuals, companies, and corporations. As
such, partnerships vary in complexity. Each partner shares
directly in the organization's profits and shares control of the
business operation. The consequence of this profit sharing is
that partners are jointly and severally liable for the
partnership's debts.
 Federal Laws
Federal law plays a minimal role in
partnership law except in the context of
a diversity action, or in instances where a
partnership ag reem ent contains an
e f f e c t i v e c h o i c e - o f- l a w p r o v i s i o n
designating the application of federal law.
Federal law also governs whether a
partnership exists for federal tax purposes.
 Taxation
The partnership itself does not
pay business taxes. Instead,
taxes are passed through to the
individual partners to file on
their own tax returns, often via
a Schedule K.
 Schedule K-1
Schedule K-1 is a federal tax document
used to report the income, losses, and
dividends of a business' or financial
entity's partners or an S
corporation's shareholders. The Schedule
K-1 document is prepared for each
individual partner and is included with
the partner’s personal tax return. An S
corporation reports activity on Form
1120S, while a partnership reports
transactions on Form 1065.
 HOW TO FORM
PARTNERSHIP IN THE
PHILIPPINES
The Philippine Civil Code provides for a definition of a
partnership as follows:

Art. 1767. By the contract of partnership two or more

persons bind themselves to contribute money, property,
or industry to a common fund, with the intention of
dividing the profits among themselves.

Two or more persons may also form a partnership for the

exercise of a profession.
A partnership is different from a corporation in many
ways. First, there is no time limit for the existence of the
partnership as this depends on the agreement of the
parties. On the other hand, a corporation can exist for a
period not exceeding fifty (50) years. Second, as to the
beginning of juridical personality, a partnership becomes
a juridical person from the time the contract begins while
in a corporation, it only becomes a juridical person upon
registration with the Securities & Exchange Commission
(SEC).
Third, although a partner may transfer his interest in a
partnership to another, the transferee does not automatically
become a partner unless all the other partners give their
consent. However, in corporations, when the shares of stock
are transfer r ed to another, the tr ansfer ee b ecomes a
stockholder of the corporation. Fourth, as to liability to third
persons, partners may be held liable with their private and
personal property while in corporations, the stockholders are
generally liable only to the extent of their subscribed capital
stock. Lastly, a partnership may be dissolved due to the
insolvency, civil interdiction, death, insanity or retirement of
any of the partners while such grounds do not dissolve a
corporation.
Like a corporation, a partnership has a separate juridical
personality. Even if the partnership failed to register with
the SEC, it still has a separate juridical personality. Thus,
the partnership, as a separate person can acquire its own
property, bring actions in court in its own name and
incur its own liabilities and obligations. A partnership
action is embodied in a Partners’ Resolution which is
similar to a corporation’s Board Resolution.
Partnerships are recorded with the Securities & Exchange
Commission (SEC). The following requirements must be
submitted with the SEC:

1. Name Verification Slip with the reservation of the

partnership name
2. Articles of Partnership
3. Registration Data Sheet
4. Affidavit of a partner undertaking to change
partnership name
5. Certificate of Bank Deposit
If a partnership has foreign partners, the following
additional requirements must be filed:

1. SEC Form No. F-105

2. Bank certificate on the capital contribution of the
partners
3. For foreign partners who want to register their
investments with the Bangko Sentral ng Pilipinas, proof of
the remittance
The following information should also be provided:

1. Name of the partnership

2. Principal office address
3. Telephone number of the partnership
4. Name, citizenship, address, birthday and TIN of the
partners
5. Capital contribution of the partners
6. Purpose of the partnership
A partner has certain rights in the partnership. Thus, he
has a share in the profits of the partnership and has the
right to a specific partnership property. As a partner, he
has a right to participate in the management, inspect
partnership books and can in fact, demand for a formal
accounting. However, rights have corresponding
obligations. Hence, a partner is obligated to give his
contribution and share in the losses.
 Types of Partnership
1. General Partner 6. Liquidating Partner
2. Industrial Partner 7. By estoppel Partner
3. Capitalist Partner 8. Continuing Partner
4. Limited Partner 9. Surviving Partner
5. Managing Partner 10. Sub Partner
Advantages and
Disadvantages of
Partnerships
Advantages of
Partnerships
• two heads (or more) are better than one
• your business is easy to establish and start-up
costs are low
• more capital is available for the business
• you’ll have greater borrowing capacity
• high-calibre employees can be made partners
• there is opportunity for income splitting, an
advantage of particular importance due to
resultant tax savings
• partners’ business affairs are private
• there is limited external regulation
• it’s easy to change your legal structure later if
circumstances change.
 Disadvantages of
Partnerships
• the liability of the partners for the debts of the
business is unlimited
• each partner is ‘jointly and severally’ liable for
the partnership’s debts; that is, each partner is
liable for their share of the partnership debts as
well as being liable for all the debts
• there is a risk of disagreements and friction
among partners and management
• each partner is an agent of the partnership and
is liable for actions by other partners
• if partners join or leave, you will probably
have to value all the partnership assets and this
can be costly.
 Article 1767-1867 of the
New Civil Code of the Philippines
 Articles of Partnership
Articles of partnership is a contract that forms an
agreement among business partners to pool labor
and capital and share in profit, loss, and liability.
Such a document acts as a rule book for limited
partnerships by outlining all the conditions under
which parties enter into a partnership.
Articles of partnership should indicate who has what duties,
but it doesn't have to delegate every task that could
conceivably come up. It should assign certain key duties,
such as who is responsible for keeping track of income and
expenses and who will manage inventory, and specify
what decisions can be made by whom. In addition, you
should consider including clauses discussing whether
partners are allowed to work for other companies outside
the partnership or whether there should be a non-compete
agreement if one partner leaves the business.
 Chapter 1
General Provision
Article 1767 – 1783

Chapter 2

Sec. 1 Obligations of the Partners

Article 1784 – 1809

Sec. 2 Property Rights of a Partner

Article 1810 – 1814
 Chapter 3
Dissolution and Winding Up
Article 1828 – 1842

Chapter 4

Limited Partnership
Article 1843 – 1867
 Special Considerations
Several items related to the formation of a partnership are
covered in a typical articles of partnership. They include:

• The names of the parties in the partnership

• The partnership's principal place of business
• The purpose of the partnership's business
• The terms of the partnership
• When the partnership will begin and, if not infinite,
when and how it will end
• Each partner's capital contribution
• Each partner's percentage of interest in the partnership
• How the partnership's profits will be distributed (equally
is the default, but there may be special conditions)
• How the partnership will be managed
• How salaries (if any) will be distributed
• How and under what conditions partnership rights can
be transferred or sold
Key Takeaways (Articles of Partnership)

• Articles of partnership formalize an

agreement among business partners to pool
labor and capital and share in profit, loss,
and liability.

• Articles of partnership should spell out who

has what duties, but it doesn't have to
delegate every task that could conceivably
come up.
 Key Takeaways
• A partnership is an arrangement between
two or more people to oversee business
operations and share its profits and liabilities.
• In a general partnership company, all
members share both profits and liabilities.
• Professionals like doctors and lawyers often
form a limited liability partnership.
• There may be tax benefits to a partnership
compared to a corporation.
CORPORATION
 CORPORATION
REPUBLIC ACT NO. 11232 - AN ACT PROVIDING FOR THE
REVISED CORPORATION CODE OF THE PHILIPPINES

A corporation is an artificial being created by

operation of law having the right of succession
and the powers, attributes and properties
expressly authorized by law or incident to its
existence.
 Understanding
Corporations
Another form of business entity, and arguably the
safest way to conduct business, is by way of a
corporation. However, registration of a corporation
with the SEC is more difficult because of the
documentary requirements. Furthermore, running a
corporation is more complex because each corporate
act must be supported by a board resolution. There
are also maintenance requirements which must be
submitted annually, in default of which the
corporation would be subjected to fines or even
cancellation of registration by the SEC.
Components of a Corporation
1. Corporators – are those who composed a corporation, whether as
stockholders of members. The term includes incorporators, stockholders
or members.
2. Incorporators – are those stockholders or members mentioned in the
articles of incorporation as originally forming and composing the
corporation and who are signatories thereof.
[Link] or shareholders – are those corporators in a stock
corporation.
4. Members – are those corporators in a non-stock corporation.
5. Promoters – is a self-constituted organizer who finds an enterprise or
venture and helps to attract investors, form a corporation and launch it
in business, all with a view to promotion
profits
 Types of
Corporation

• Stock Corporation
• Non-Stock Corporation
• Stock corporations - a corporation with capital stock
divided into shares and authorized to distribute to the
holders of such shares, dividends or allotments the
profits of the business based on equity of shares

v Domestic Corporation (organized under Philippine

laws)
v 100% Filipino-owned
v 60% Filipino-owned and 40% Foreign-owned
v 40.01% to 100% Foreign-owned (subject to
certain provisions under Foreign Investments
Act)
v Foreign Corporation (organized under the laws of
the corporation’s country of origin)
v Branch Office
v Representative Office
v Regional Area Headquarters (RHQ)
v Regional Operating Headquarters (ROHQ)
 Ownership Structure
•Domestic corporations are required to be formed by at least
five (5) but not more than fifteen (15) incorporators who must
have individual subscriptions of at least one (1) share in the
company; incorporators are stockholders or members
mentioned in the Articles of Incorporation as originally
forming and composing the corporation and are signatories
thereof
•For a foreign corporation to be granted a License to Operate
in the Philippines as a business entity, it is required to
appoint one (1) resident agent who shall accept all summons or
legal processes served, arising out of any business or transaction
which occurred in the Philippines, to the corporation
•Non-Stock Corporation – a corporation
that neither generates profit nor issues
shares of stock to its members, and could
have any of the following purposes:
• Charitable;
• Religious;
• Educational;
• Cultural;
• Civic service; and
• Other similar purposes, such as
chambers or combinations trade,
industry or agriculture
EXAMPLES OF CORPORTION IN
THE PHILIPPINES
EXAMPLES OF CORPORTION IN
THE PHILIPPINES
Advantages and
Disadvantages of
Corporation
 Advantages of a corporate form of business
organizations

• The capacity to hold property, to contract, to sue

and be sued as a legal unit or distinct entity
• Exemption of shareholders from individual
liability
• Business security and perpetuity
• Access to capital
• Centralized management under a board of
directors
• Standardized methods of organization,
management and finance for the protection of
shareholders and creditors under statutory
regulations.
Disadvantages of a corporate form of business
organizations

• Lengthy application process & Rigid formalities,

protocols and structure
• - Forming and maintaining a corporation in
good standing requires a significant amount of
paperwork, record keeping and accounting.
need to draft and maintain corporate bylaws,
appoint a board of directors, create a
shareholders ownership change agreement,
issue stock certificates, and take minutes during
meetings.
• Expensive
• Double taxation
 Government Agencies Involved in the Registration
Process:

q Securities and Exchange Commission (SEC) (for the creation

of juridical entity of the corporation)
q Bureau of Internal Revenue (BIR) (for corporate taxation)
q Local Government Units (LGUs) of the location where you
want to establish your business
qBarangay Hall
qMayor’s Office
qBusiness Permit and Licensing Office (BPLO) of the
Municipal/City Hall
q If employing individuals, a corporation should register with
the following agencies:
qSocial Security System (SSS)
qPhilippine Health Insurance Corporation (PhilHealth)
qHome Development Mutual Fund (Pag-IBIG Fund)
 STEPS OF THE COMPANY
INCORPORATION PROCESS
Step 1: Reservation of Business Name with
the Securities and Exchange Commission
(SEC)
• Step 2: Submission of Documents to
SEC

• Articles of Incorporation and By-Laws

• Treasurer’s Affidavit (signed by the
incorporators for notarization)
• After complete submission of
requirements, you will be issued by the
SEC with a Certificate of Incorporation, a
document that legitimizes the existence of
your company and enables you to legally
engage in business as well as become
entitled to certain corporate rights in the
Philippines
Step 3: Registration with Local Government Units (LGUs)
of the location where you want to establish your business
-You will be required to secure the following:
•Barangay Clearance from the Barangay Hall
•Mayor’s Permit form the Mayor’s Office
•Business Permit from the Business Permit and Licensing
Office (BPLO) of the Municipal/City Hall
S t e p 4 : Re g i s t r a t i o n w i t h t h e B u r e a u o f I n t e r n a l
Revenue (BIR) for corporate taxation
-Requisites for acquiring a BIR Certificate of Registration:
•0605 Form (for payment of Annual Registration Fee)
•DST 2000 Form (for payment of subscription of shares for
domestic corporations)
•DST 2000 Form (for payment of lease for all types of
company formation)
• This requires a notarized copy of the lease contract of
your office address
-Along with the BIR Certificate of Registration, you also
need to secure the following:
•Certificate of Registration of Books of Account
•Cash Register Machine (CRM), Point of Sale (POS)
Machine or Authority to Print Receipt/ Invoices (Manual
Receipts)
Step 5: Registration with
other Government
Agencies (for employer
registration if employing
individuals)

Social Security System (SSS) for

social security benefits of
employees
Philippine Health Insurance
Corporation (PhilHealth) for
health insurance benefits of
employees
Home Development Mutual
Fund (Pag-IBIG Fund) for
housing benefits of employees
Similarities between a partnership and corporation
Ø Juridical personality separate and distinct from
the individuals composing it.
Ø Act only through its agents
Ø Composed individuals. of an aggregate of
individuals
Ø Distribute profits those who to contribute to
capital
Ø May be organized only when there is a law
authorizing it
Ø Subject to income tax.
 Distinction between a partnership and corporation
Corporation Partnership

Manner of Creation By law or operation of By mere agreement

law of the parties

Ownership Stockholders (Requires Partners (By a minimum

(Number of parties) a t l e a s t f i v e ( 5 ) of two (2) persons)
incorporators

Types Stock corporations, general partnership,

Non-stock corporations l i m i t e d p a r t n e r s h i p ,
limited liability
partnerships
 Corporation Partnership

Structure Members of a corporation Partnerships have to adhere

have to act in accordance to a partnership agreement.
with the corporation's More flexible, less
charter. More structured, structured. Each part of the
less flexible. Easier to business has to be
transfer ownership of part individually transferred or
of a corporation. sold.
Term of May be established May not be formed for a
existence for any period of time term in excess of 50 years
stipulated by the partners extendible to not more
than
50 years.

Governing
Laws Corporation code Civil Code
 Key Takeaways
An important business decision for any
enterprise, whether new or existing, is choosing
the form of business entity. Therefore, it would
be wise for an entrepreneur, especially one
who is just starting, to weigh as early as
possible the pros and cons of each type, and
perhaps for future expansion, consider what
type of protection the law would afford them.
 Key Takeaways
Incorporating your business is not a decision to be taken
lightly or without the proper analysis of your company's
circumstances. A legal professional can help you determine
whether incorporating makes good business sense or
whether you should consider another type of entity such as
partnership or single proprietorship. Like a corporation,
these two entities have advantages and disadvantages, so it's
a good idea to learn about all three before deciding what
legal form your business should take.