3 Types Of Business Ownership in the Philippines
February 24, 2022
What are the types of business ownership in the Philippines?
- Sole Proprietorship
Entering the world of business means that you have to be well-informed of the ins and outs of the industry. But before you get to that knowledge, you need to first establish yourself properly. In other words, you should know yourself first. To do this, you should also know about the types of business ownership in the Philippines.
When you are starting from the ground up, are you doing it on your own or with peers? If it’s the latter, how will you handle the ownership of the business? These are questions that you should be able to answer to avoid any future conflicts. Talk about it with the people you’re working with to come to an agreement. The three common formats in the Philippines are sole proprietorship, partnership, and corporation. To help you understand them and let you make your choice, we’ll take a closer look at each of them below. Keep reading!
If you’re one of the brave souls who are working on their startup on their own, then your business would become a sole proprietorship. This type of ownership means that the business belongs to only one person, giving them authority over all business decisions and operations. And while they don’t have to share the assets and profits, they are also solely responsible for all the company’s liabilities. Any incurred debt and losses will be on the owner’s shoulders. With a sole proprietorship, the business and the owner are considered as one taxpayer in the Philippines, so they would share a single TIN. Registration for a sole proprietorship is done at the Department of Trade and Industry (DTI).
Partnerships are formed between two (or more) people who agree to own a business together. They are generally expected to invest money, property, and industry in the business. The two types of partnerships are general and limited partnerships. General partnerships require all co-owners to be responsible for all of the company’s assets and liabilities. In limited partnerships, each partner is only responsible depending on the amount of capital they contribute. For partnerships in the Philippines, you register with the Securities and Exchange Commission (SEC).
A corporation is a business that is owned by multiple people, a minimum of 15 people in the Philippines. Each co-owner is called a shareholder, and their identities are separate from that of the business. A shareholder should be able to contribute at least ₱5,000 to the capital. Their responsibilities would depend on their contribution. Like partnerships, corporations are registered at the SEC.
Before launching your business venture, figure out which of the types of business ownership in the Philippines your startup falls under. That way your structure would be solid and you would avoid any conflicts with your co-owners (if ever) in the future.
Want to know more about ownership, businesses, and entrepreneurship in the Philippines? Benito Keh Ferrotech owner can help! Benito T. Keh is an experienced businessman who has been in the industry for many years now, and he has made it his personal mission to help budding entrepreneurs such as you! If you’re interested, contact him here today!