Business structures are essential to companies because they emphasize a concrete statement of different aspects of your agency. The structure serves as a basis for your corporate and business practices, where legal matters and potential management issues arise. This includes ownership and other judicial resolutions. And just like any type of business entity, it is subjected to taxation and returns. So you would have to determine these legal certainties first.
Perhaps, you have finally decided to immerse yourself in the field of travel and tourism through providing services for expeditions. Below are the most common types of entities in the Philippines to help you out. The arrangement would help you distinguish which is the most appropriate structure for your corporate management
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Sole proprietorship companies are owned by an individual owner or investor who is responsible for leading the management. It is widely registered for most businesses in the country since there are fewer steps for processing and requirements for formation. Most small businesses have this structure so they could have the authority and control.
Do note that the individual is responsible for all the liabilities and losses if their business suffers from unforeseen challenges. Furthermore, it is important to comply with the Department of Trade and Industry (DTI) or other regional provinces assigned for the location.
If your business is owned and managed by several individuals, it’s time to assess if you should structure your business as a partnership. The Civil Code of the Philippines states that a partnership shall be treated as a juridical person, which would imply that its personal legal activities are separate from the owners of the business.
A partnership structure is classified into two types: general and limited. In a general partnership setting, business partners are entitled to share liability that has an unlimited cap for debts and obligations of the firm. In a limited partnership, on the other hand, some partners will have unlimited liability, while some can only have liability that matches the amount of their capital. If a business exceeds the P3,000 mark for capital, it has to register to the Securities and Exchange Commission (SEC).
A legal entity that’s entirely separate and distinct from its shareholders is called a corporation. A corporation has the privilege to obtain the rights and responsibilities that individuals have. They can have contracts, loans, borrow cash, hire employees, sue and pay taxes. But along with the upsides are also the risk of getting sued.
Under the Philippine law, all corporations must oblige to have the following functions in a corporation:
- Corporate secretary
Before a corporation can legitimately run its operations, it needs to secure necessary permits and certificates provided by the SEC, the local government, and the Bureau of Internal Revenue (BIR).
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