Department of Education

10 National Capital Region

SCHOOLS DIVISION OFFICE
MARIKINA CITY
MALANDAY NATIONAL HIGH SCHOOL

STVEP – Information and Communication Technology

Entrepreneurship
Third Quarter– Module 1 Part B
Legal Obligations of a Small Business
(Business Plan Booklet P3)

Writer: Meien Grace C. Salvador

Cover Illustrator: Christopher E. Mercado

City of Good Character

DISCIPLINE • GOOD TASTE • EXCELLENCE
 What I Need to Know

This module was designed and written with you in mind. It is here to help
you develop knowledge, skills, and attitudes in the performance of
Entrepreneurship tasks. The scope of this module permits it to be used in many
different learning situations. The language used recognizes the diverse vocabulary
level of students. The lessons are arranged to follow the standard sequence of the
course.

The module is composed of five lessons, which are:

Lesson 1 – Legal Forms of Business Ownership
Lesson 2 – Legal Obligations of a Small Business
Lesson 3 – Organizational Structure
Lesson 4 – Staffing Requirements

After going through this part of module, you are expected to:
1. identify the legal obligations of a small business
2. discuss the legal obligations of your proposed business

Definition of Terms:

1. Administrative – referring to that of the administration

2. Business – a profitable venture or undertaking
3. Cost – amount that is projected to be spent
4. Expense – amount used for consumption; amount spent for something
regularly being paid
5. Legal – the quality of adhering to the law
6. Obligation – legal responsibilities
7. Organization – the means by which management blends human and
nonhuman resources
8. Ownership – right of possession of the business
9. Pre-Operation – relating to activities prior to the actual business operations
10. Staff – people employed in the business organization
11. Structure – the arrangement of an organization showing the authority and
employee functions

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 What I Know
Read the questions carefully. Write True if the statement is correct and
False if the statement is not true. Write your answers on the answer sheet
provided.

1. The business will collect taxes in the form of customers’ purchases and
forward them to the government’s tax agency.
2. When you hire permanent employees, you need to contribute to the pension
fund (SSS), the health insurance program (PhilHealth), and to the Home
Development Mutual Fund (Pag-IBIG).
3. A business is required to gain clearances and permit to operate from the
barangay or municipality where the business will be situated.
4. If you insure your business, you will have some financial security against
losses that are caused by accidents, disasters, or other types of incidents.
5. In the Philippines, sole proprietorship businesses register with the SEC,
partnership and corporation businesses register with DTI, and cooperatives
register with the CDA.

What’s In
The business enterprise is an economic activity. Its main function is to earn
profits. To earn profits means to be able to understand and meet the needs and
wants of the consumers. While understanding the perspective of your consumers
and meeting their demands to earn a profit, the employees earn the profit as well in
terms of incentives. Thus, the economic growth of an enterprise is not restricted to
itself but affects the society as a whole.

What’s New
Read the question. Write your answers on the answer sheet provided.

What do you think are the responsibilities

that come with running an enterprise?

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 What is It

Legal Obligations of a
Lesson 2
Small Business
There are legal obligations for small businesses which varies depending on
the nature of the business. To avoid problems in the future, it is important to
understand your obligations. Typically, most business will have some legal
responsibilities relating to:

• Taxes
Your business will collect taxes in the form of customers’ purchases and
forward them to the government’s tax agency, for example, sales tax or value
added tax. The business is also responsible for deducting and forwarding to
the tax authority income taxes from employee salaries. Other taxes are paid
by the business itself. If the business is profitable, the government tax
authority will tax a percentage of the profit. When your business buys goods
or services from other businesses, it is responsible for paying sales tax or
value added tax to those businesses which will then forward that amount to
the tax authority.

• Employees
Find out what labor laws and regulations apply to your line of business. For
instance, in our country, when you hire permanent employees, you need to
contribute to the pension fund (SSS), the health insurance program
(PhilHealth), and to the Home Development Mutual Fund (Pag-IBIG).

• Licenses and permits

In the Philippines, sole proprietorship businesses register with the DTI,
partnership and corporation businesses register with SEC, and cooperatives
register with the CDA. Aside from those, a business is required to gain
clearances and permit to operate from the barangay or municipality where
the business will be situated. For some businesses, there may also be
special permits needed to operate. Find out if it applies to your business.
You may also refer to 1st Quarter Self-learning Modules 12 and 13 to
review the government agencies you need to register your business with.

• Insurance
If you insure your business, you will have some financial security against
losses that are caused by accidents, disasters, or other types of incidents.
Risks such as a drop in the demand for your good or service are part of
running a business, but other types of risks can be offset through
insurance, for instance:
• property, machines, stock, and vehicles can all be insured against
theft,
• property can be insured against damage caused by fire or
accidents, and

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 • your employees, your family, and you can all be insured against
accidents and medical expenses.

• Social Responsibility
It is the self-regulation of a business to become socially accountable. It is
said that there is no right way to practice social responsibility, however, all
social responsibility practices strive to provide positive contribution to the
public, the economy, and/or the environment. By being socially responsible,
the business also makes a positive image for the company which makes
customers and consumers more drawn to the business. The three broad
categories of social responsibility includes:

• environmental efforts – refers to any steps a business can

take to reduce its carbon footprint
• philanthropy – refers to donating money and products or
services to social causes and nonprofit organizations.
• volunteering – refers to participation in local causes or
volunteering time in community events and thus expressing
the business’ concern and support for specific issues and
causes

In writing about your legal responsibilities as a business,

1. think about what legal responsibilities apply to your business:
a. taxes – sales tax or value added tax; employee’s income tax; tax
on business profit
b. employees – minimum wage; allowable number of working
hours; holidays, occupational safety and health; sick leave;
benefits required by the government
c. licenses and permits – business license; barangay clearance;
mayor’s permit
d. insurance – property; damage
e. social responsibility – environmental efforts; philanthropy;
volunteering;
2. think about social responsibility practices which you may apply to
your business.

You may add things to the list if necessary.

Let us take a look how the

City Garbage Recyclers and
Tosama Cloth Bags have defined
their legal responsibilities.

John and Mary have

contacted the Municipal office to
find out what legal requirements
apply to their business. They write
down what they have learned in
their Business Plan.

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 Jane has also
contacted other people in
business to find out about
legal requirements and its
costs. She writes down what
she learned in her Business
Plan.

*Note: May vary depending on

barangay, city, or municipality.
Also varies depending on the
type of business and/or the area
size of the business.

What’s More
Answer the following questions. Write your answers on the answer sheet.

(1) Why is it important for an entrepreneur

to fulfill its legal obligations?

(2) Why is it important for a business

to conduct social responsibility efforts?

What I Have Learned

Complete the paragraph. Choose your answer from the box provided on the
next page. Write your answers on the answer sheet provided.

There are (1) obligations for small businesses which (2) depending on the
nature of the business. To avoid (3) in the future, it is important to understand
your (4) . Typically, most business will have some legal (5) relating to:
(6) , (7) , (8) , (9) , and (10) .

Moreover, it will be beneficial for a business to conduct (11) responsibility

practices. As it provides a positive contribution to the society, economy, and
environment, the business creates for itself a (12) image to the consumers in

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general. The three categories of social responsibility efforts are: (13) efforts, (14) ,
and (15) .

employees environmental insurance legal licenses

obligations permits philanthropy positive problems

responsibilities social volunteering taxes varies

Assessment
Read the questions carefully. Write True if the statement is correct and
False if the statement is incorrect. Write your answers on the answer sheet.

1. The business will collect taxes in the form of customers’ purchases and
forward them to the government’s tax agency.
2. When you hire permanent employees, you need to contribute to the pension
fund (SSS), the health insurance program (PhilHealth), and to the Home
Development Mutual Fund (Pag-IBIG).
3. A business is required to gain clearances and permit to operate from the
barangay or municipality where the business will be situated.
4. If you insure your business, you will have some financial security against
losses that are caused by accidents, disasters, or other types of incidents.
5. In the Philippines, sole proprietorship businesses register with the SEC,
partnership and corporation businesses register with DTI, and cooperatives
register with the CDA.

Additional Activity
To further enrich your knowledge from this module, read and understand
the direction below and accomplish the activity. The rubric for the activity is
provided for your reference.

Online/Offline Activity:

Make a poster about the planned social responsibility effort/practice of

your business. There should be pictures and may have descriptions in the said
infographic. You may use any coloring materials/medium and create your
infographic inside the box found on the answer sheet; or you may use any
computer applications that you are comfortable with then save the file in JPEG,
PNG, or GIF format. Follow instructions for uploading your work output.

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 Rubric for Social Responsibility Infographic
10 7 4
Output The output includes The output is missing The output is not in
Content and discussed some of the required any way related to the
Originality information in an information as business idea
exceptional manner. discussed. previously discussed.
The output is a The content and the
product of a student’s concept is somewhat
original concept. original.
Principles of The output is visually The output is The output is not
Design and appealing in an somehow visually appealing. Final
Work Quality exceptional manner. appealing. The work product does not show
Quality of output was done with effort, and quality is
(This criterion will exceeds expectations. satisfactory effort. not acceptable. It is
only be applicable
Contains no keying or Contains 1-3 keying evident that the work
if the content is
appropriate.) grammar errors. The or grammar errors. was rushed. Contains
output is clear, and The output is more than 4 grammar
concise. somewhat clear and errors. The output is
concise. not very clear.

What I Can Do
Recall the business idea you have been discussing in the activities (What I
Can Do) last 2nd Quarter. Remember, the business idea will guide you as you write
the rest of the Business Plan. Accomplish this Part 3 of your Business Plan Booklet
found on the next page. Discuss the legal responsibilities of your business.

Make sure to keep a back-up copy of this activity. The rubric for the activity
is provided for your reference.

Rubric for the Activity

10 7 4 2
Content Content is Content is Content is either Content is
The writeup accurate and all accurate but questionable or inaccurate or
contains required some incomplete. not in any way
appropriate information is information is Information is related to the
information presented in a missing and/or not in a logical business idea
appropriate to logical order. not presented in order. previously
assigned topic. a logical order. discussed.
Mechanics 10 7 4 2
Spelling, No spelling, A few (2-3) No more than 7 More than 7
grammar, and grammar, or errors in spelling, spelling,
punctuation in punctuation spelling, grammar or grammar or
any text on the errors in the text. grammar or punctuation punctuation
poster is Text is in the punctuation. errors. Most of errors. Text is
accurate. student’s own Most text is in the text is not in copied or not
words. student’s own own words included.
(This criterion will
only be applicable if
words. and/or no text
the content is included.
appropriate.)

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Name: ________________________________________ Subject: STVE Entrepreneurship
Grade-Section: ________________________________ Teacher: Meien Salvador

BUSINESS PLAN BOOKLET

9. LEGAL RESPONSIBILITIES OF THE BUSINESS

(Organizational Plan)

The following taxes apply to the business:

____________________________________________________________________________
____________________________________________________________________________

The following regulations apply to the employees:

____________________________________________________________________________
____________________________________________________________________________
____________________________________________________________________________

The business will need the following licenses and permits:

Cost

The business will have the following insurance:

Cost

Other legal and/or social responsibilities of the business:

____________________________________________________________________________
____________________________________________________________________________
____________________________________________________________________________
____________________________________________________________________________

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 STVE – ENTREPRENEURSHIP 10
ANSWER SHEET

Name: ____________________________________________ Date: __________________

Grade-Section: ___________________________________ Teacher: Meien Salvador

What I Know
1. ____________ 2. ____________ 3. ____________ 4. ____________ 5. ____________

What’s New
__________________________________________________________________________________
__________________________________________________________________________________

What’s More
(1)______________________________
________________________________
________________________________
________________________________
________________________________
(2)______________________________
________________________________
________________________________
________________________________
________________________________

What I Have Learned

1. ____________ 4. ____________ 7. ____________ 10. ____________ 13. ____________
2. ____________ 5. ____________ 8. ____________ 11. ____________ 14. ____________
3. ____________ 6. ____________ 9. ____________ 12. ____________ 15. ____________

Assessment
1. ____________ 2. ____________ 3. ____________ 4. ____________ 5. ____________

Additional Activity

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 References

E-BOOK
International Labour Office. (2015). “Part VI: Organization and Management” in
Start Your Business: Manual. Start and Improve our Business (SIYB)
Programme. Switzerland. ILO Publications

For inquiries or feedback, please write or call:

Schools Division Office-Marikina City

Email Address: sdo.marikina@deped.gov.ph

191 Shoe Ave., Sta. Elena, Marikina City, 1800, Philippines

Telefax: (02) 682-2472 / 682-3989

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