While conceptualization is the first step in forming a business, the official start will be registering your business to the proper agencies. While it may seem daunting and tedious to register your business, remember that it is the official step to properly and legally run your business.
Depending on the scale, whether you have a sole proprietorship, individual, partnership, or corporation, there are different steps to register your business.
Sole proprietorship is a business where one individual owns the business itself. As a sole proprietor, the owner takes on full responsibility for the business itself. It is a popular business set up because the owner simply registers the business in their name. They may also register the business with the name of the business but this is not a separate legal entity to the business owner. One distinct disadvantage is if the company runs into financial trouble and lawsuits are filed against them, the owner will be solely responsible for the debts and they will have to pay from their own pockets.
If an individual does not want to register as a sole proprietor for his or her business then they may opt to register as a one person corporation or OPC. In the Philippines, this type of corporate entity was only introduced in 2019 by the Security and Exchange Commision (SEC) as one of the major additions of the Revised Corporation Code. When registering as an OPC, a business owner can separate his own assets with those of his business therefore limiting creditors if the business goes under. Creditors cannot go after the personal assets of the owner only of the company itself.
Partnerships are the next type of business entity. While the name suggests only two owners it may reach more than that. When registering under a partnership, the owners share their capital and also liabilities within the company. Depending on whether your company is of general or limited partnership, certain owners may bear more of the burden should the business go into debt. In general partnerships, the company’s obligations and liabilities are equally shared among the owners of the company while in a limited partnership, some partners will only have limited liabilities depending on their capital contribution.
Corporations are the biggest of all the business entities in the Philippines and they require a minimum of five shareholders and a maximum of 15. All shareholders are required to hold at least one share and the liabilities of each one are limited to the amount of their capital share. Liabilities of the business are separate from the shareholder’s own personal assets.