CHOOSING YOUR

BUSINESS
ENTERPRISE
Single Proprietorship,
Partnership and
Corporations
GROUP 1
Casquejo, Pauline
Valdez, Mary Majela R.
 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 professionalism
are a few pitfalls sole 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

BIR Form 1900 (Application to Use Loose-Leaf /

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 proprietorships is
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 agreement contains an effective
choice-of-law provision 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 transferred to another, the
transferee becomes 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.
CORPORATIO
N
 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.
3.Stockholders 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

Domestic Corporation (organized under Philippine laws)

 100% Filipino-owned
 60% Filipino-owned and 40% Foreign-owned
 40.01% to 100% Foreign-owned (subject to
certain provisions under Foreign Investments Act)
Foreign Corporation (organized under the laws of the
corporation’s country of origin)
 Branch Office
 Representative Office
 Regional Area Headquarters (RHQ)
 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:

 Securities and Exchange Commission (SEC) (for the creation of

juridical entity of the corporation)
 Bureau of Internal Revenue (BIR) (for corporate taxation)
 Local Government Units (LGUs) of the location where you want to
establish your business
Barangay Hall
Mayor’s Office
Business Permit and Licensing Office (BPLO) of the Municipal/City
Hall
 If employing individuals, a corporation should register with the
following agencies:
Social Security System (SSS)
Philippine Health Insurance Corporation (PhilHealth)
Home 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
Step 4: Registration with the Bureau of Internal 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
 Juridical personality separate and distinct from the
individuals composing it.
 Act only through its agents
 Composed individuals. of an aggregate of
individuals
 Distribute profits those who to contribute to capital
 May be organized only when there is a law
authorizing it
 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 at Partners (By a minimum

(Number of parties) least five (5) incorporators of two (2) persons)

Types Stock corporations, Non- general partnership,

stock corporations limited partnership,
limited liability
partnerships
 Corporation
Structure Members of a corporation
have to act in accordance
with the corporation's charter.
More structured, less flexible.
Easier to transfer ownership
of part of a corporation.
Term of May be established
existence for any period of time
stipulated by the partners
Governing
Laws Corporation code
Partnership
Partnerships have to adhere to
a partnership agreement.
More flexible, less structured.
Each part of the business has
to be individually transferred
or sold.
May not be formed for a
term in excess of 50 years
extendible to not more than
50 years.
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.