Department of Allied Business Courses

College of Business and Accountancy

Ateneo de Naga University

Subject Code: BHP102 Section: HM11

Course Title: Environmental Scanning Class Schedule: TTh / 12NN – 1:30PM

TOPIC 1: BRIEF BACKGROUND ON BUSINESS

DEFINITION/S:

- economic unit that controls resources and engages in buying and selling of goods and services.(Accounting)
- provides for the needs, wants and demands of the economy.(Economics)
(Source: Zenaida Vera Cruz-Manuel, Accounting for Business 2010; Marcelino et. Al, Principles of Economics 2010)

IMPORTANCE:

• largest contributor of revenue to the economy • supply goods and services

• works with the government for progress and
• research, development, and innovation
development(taxes)
• job creation • income generation
• contribution in the development of education, science
• contribution to social development
and technology
• development of international relations • provides convenience

4 FORMS OF BUSINESS ENTERPRISES: (SPCC)

1. SINGLE or SOLE PROPRIETORSHIP

- a form of business owned by a single person, known as the proprietor.
- easiest enterprise to set up
ORGANIZING A SOLE PROPRIETORSHIP
1. Register the business name in Department of Trade and Industry.
*Come up with three (3) business names
*Search in DTI’s website (BN Search engine)
*If business name is available, fill up Business Name Application Form
*Submit completed BN application form to DTI’s office/branch
*Wait for your DTI Certificate of Registration

***After acquiring a DTI Certificate of Registration you may now proceed and register to LGU such
as Barangay and Mayor’s office

2. Apply for a business permit from Local Government Units where your business is located:
*Barangay Clearance
- Go to the barangay where your business is located to secure and fill up application form
- Submit completed application form with the ff:
>Certificate of Business Registration from DTI
>Two (2) valid IDs
>Proof of address such as contract lease (if rented) or Certificate of Land Title (if owned)
- Claim your Barangay Certificate of Business Registration
*Mayor’s Office
- Go to the municipal office where your business is located to secure and fill up application form
- Submit completed application form with the ff:
>Certificate of Business Registration from DTI
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 >Barangay Clearance
>Two (2) valid IDs
>Proof of address such as contract lease (if rented) or Certificate of Land Title (if owned)
- Claim your Barangay Certificate of Business Registration

***Location map of business

***Community Tax
***Sanitary Permit
***Fire/Police clearance
***Building occupancy permit

When you already got all the certificate and permits from DTI and LGUs you may now register to the BIR.
3. Secure a permanent record file number of Tax Identification Number from Bureau of Internal
Revenue and register the DTI approved business name, secure authority to print books of accounts,
invoices, receipts and other accounting records.

- Go to the Regional District Office (RDO) where your business is located.

- Fill up BIR Form 1901 – application for registration (for Sole Proprietor)
- Submit completed registration with the ff:
> Certificate of Registration from DTI
> Barangay Clearance
> Mayor’s Business Permit
> Proof of address such as contract lease (if rented) or Certificate of Land Title (if owned)
> Valid IDs, if applicable
- Pay the Registration Form (Form 0605)
- Register your book of accounts and receipts invoices
- Claim your Certificate of Registration (BIR Form 2303)
4. If you have employees, you need to register to the following:
*Social Security System (you register your business as an employer, yourself as a self-employed
or as employee, and your workers)
*Department of Labor and Employment (if you employ 5 or more, register here)
*Philippine Health Insurance Corporation (RA 7875 as amended by RA 9241 requires all
employers of the gov’t and private sectors and their employees to register with this agency)
*Home Development Mutual Fund (RA 7742 requires all SSS members earning at least Php4,000
a month to register with this agency)

ADVANTAGES:
1. It is easy to organize.
2. Its organization and operation only involves
few business requirements.
3. The single proprietor is the boss.
4. Financial operations are not complicated.
5. The owner acquires all the profits.
DISADVANTAGES:
1. Limited liability to raise capital.
2. The sole proprietor has unlimited liability.
3. Limited ability to expand.
4. Business is entirely a responsibility of the
owner.

2. PARTNERSHIP
- a business organization that is an association of at least two or more persons who agree to place money,
property, or industry in a common fund with the aim of sharing the profits among themselves.
ORGANIZING A PARTNERSHIP
1. Register the business name in Department of Trade and Industry.
2. Have the partnership agreement (Articles of Co-partnership) notarized and registered with
Securities and Exchange Commission.
3. Obtain a Tax Identification Number for the partnership from the Bureau of Internal Revenue.
4. Obtain pertinent municipal licenses from the local government.
5. Obtain the VAT or Non-VAT number from the Bureau of Internal Revenue.
6. Register books of accounts and the business forms to be used with the BIR.

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 ADVANTAGES: DISADVANTAGES:
1. Easy to form. 1. Partners have unlimited liability for partnership
debts.
2. Flexibility of operations. 2. It has a limited life or it lacks stability.
3. Efficiency in operations. 3. Limited ability to raise capital.
4. Partners are expected to have great interest in 4. Conflicts and quarrels between/among
the operation of the partnership. partners
5. Possibility of bigger resources.

3. CORPORATION
- “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.”
(According to Sec. 2 of the Corporation Code)
ORGANIZING A CORPORATION
1. Verification of corporate name with Securities and Exchange Commission.
2. Drafting and execution of the Articles of Incorporation.
3. Deposit of cash received for subscribed shares of stocks in a banking institution in the name of the
temporary treasurer, in trust for and to the credit of the corporation
4. Filing of the Articles of Incorporation together with the following:
*Treasurer’s affidavit
*Statement of assets and liabilities of the proposed corporation
*Authority to verify bank deposits
*Certificate of deposit of cash paid for subscription
*Personal information sheet of the incorporators
*Commitment to change corporate name if it is found similar to another corporate name
5. Payment of filing and publication fees.
6. Issuance by SEC of the certificate of incorporation.
7. Registration of the corporate name with the DTI.
8. Obtaining municipal licenses from the local government.
9. Obtaining the VAT or Non-VAT account number from the BIR.
10. Registration with BIR of books of accounts and accountable forms.

ADVANTAGES:
1. It has a legal capacity.
2. It has continued and more or less permanent
existence.
3. Management is centralized.
4. It has the most efficient management.
5. Shareholders have limited liability.
6. Shareholder’s freedom.
7. Ability to raise more capital.
DISADVANTAGES:
1. Complicated to maintain and not easy to
organize.
2. Governmental intervention.
3. Subject to higher tax.
4. It has limited powers.
5. Abuses of corporation officials.
6. Some corporation are engaged in questionable
activities.
7. There is a very impersonal or formal
relationship between the officers and
employees of a corporation.

4. COOPERATIVES
- “Only organizations composed primarily of small producers and consumers who voluntarily join together to form
business enterprises which they themselves own, control and patronize.”
(According to PD #175)
ORGANIZING A COOPERATIVE
1. Get organized. You must have at least 15 members to do that. At once determine the common problems
you would want solved and the basic needs you would want provided for through a cooperative. You may
want to include increasing your production, marketing your produce, credit assistance, power generation,
banking or insurance and other similar needs. Determining your problems and needs will also help you
classify the kind of cooperative you will be organizing. Even before a cooperative is set up, a dedicated core
group people who will do all the organizational and paper works is a must. From this core group, working

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 communities may be formed to set things moving. These committees may include membership, finance,
executive, secretariat to name a few.
2. Prepare a general statement called an economic survey. This statement will help you measure your
cooperative’s chances of success.
3. Draft the cooperative’s by-laws. The by-laws contain the rules and regulations governing the operation of
the cooperative.
4. Draft the articles of cooperation. Mandatory contents of the articles of cooperation are the following: (a)
the name of the cooperative, which must include the word “cooperative”; (b) the purpose or purposes and
scope of business of the cooperative; (c) the term of existence of cooperative;(d) the area of operation and
the postal addresses of the registrant cooperators; (e) the common bond of membership; (f) the names of
the directors who shall manage the cooperative; (g) the amount of share capital; (h) the names and
residences of its contributors, and (i) the type of cooperative, whether it is primary, secondary or tertiary.
5. Secure bond for accountable officer(s). The accountable officers normally are the Treasurer and the
Manager. The amount of the bond is to be decided upon by the Board of Directors, based on the initial net
worth of the cooperative which includes the paid-up capital, membership fees and other assets of the
cooperative at the time of registration.
6. Register your cooperative with the Cooperative Development Authority (CDA). Submit the following
required documents: • Four (4) copies each of the Economic Survey, Articles of Cooperation and By-Laws
duly notarized; • Bonds of accountable officer(s) (any directors, officers and employees) handling funds,
securities, of properties in behalf of the cooperative; • Sworn statement of the treasurer duly notarized
showing that at least 25% of the authorized share capital has been subscribed, and at least 25% of the total
subscription has been paid. The paid-up capital must not be less than Php 2,000.00.
Objectives and Goals of a Cooperative

The primary objective of every cooperative is to help improve the quality of life of its members. Towards this
end, the cooperative shall aim to: 1. Provide goods and services to its members to enable them to attain
increased income, savings, investments, productivity, and purchasing power, and promote among themselves
equitable distribution of net surplus through maximum utilization of economies of scale, cost-sharing and risk-
sharing; 2. Provide optimum social and economic benefits to its members; 3. Teach them efficient ways of doing
things in a cooperative manner; 4. Propagate cooperative practices and new ideas in business and
management; 5. Allow the lower income and less privileged groups to increase their ownership in the wealth of
the nation; and 6. Cooperate with the government, other cooperatives and people- oriented organizations to
further the attainment of any of the foregoing objectives.

3 TYPES OF BUSINESS OPERATIONS: (SMM)

1. SERVICE – a business which provides services, for a fee, to clients or customers.
Example: beauty parlor, travel agency, internet shop

2. MERCHANDISING – a business which buys and sells goods, or merchandise.

Example: shoe store, bookstore, pharmacy

3. MANUFACTURING – a business which buys raw materials forms it into finished products and then sells the
finished products to customers.
Example: garment factories, food processing companies

COMMON CHALLENEGES ENCOUNTERED:

1. UNCERTAINTY ABOUT THE FUTURE: being able to predict customer trends, market trends
2. FINANCIAL MANAGEMENT: good with ideas but less good in cash flow, financing, etc.
3. MONITORING PERFORMANCE: use of meaningful and rounded performance indicators
4. REGULATION AND COMPLIANCE: shift of rules and regulations – risk of fines or non-compliance
5. COMPETENCIES AND RECRUITING THE RIGHT TALENT: finding the right people and developing the right
skills and competencies
6. TECHNOLOGY: adaptability to new technologies
7. EXPLODING DATA: managing, keeping safe and extracting insights from the ever-increasing amounts of data
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 8. CUSTOMER SERVICE: instant customer service
9. MAINTAINING REPUTATION: monitor and maintain online reputations
10. KNOWING WHEN TO EMBRACE CHANGE: when to embrace change and when to stay in the course

STEPS IN STARTING A BUSINESS:

Look Within: Do you have what it takes?

Look Outside: What are the helping/hindering factors?

Determine your product/service line and type of business

Write you Business Plan: Marketing Plan, Production Plan, Organizational Plan & Financial Plan

Raise Capital

Seek other sources of assistance if necessary

Choose your business location

Register your business

Hire/Train personnel

GOVERNMENT AGENCIES INVOLVED:

1. DEPARTMENT OF TRADE AND INDUSTRY
2. SECURITIES AND EXCHANGE COMMISSION
3. COOPERATIVE DEVELOPMENT AUTHORITY
4. LOCAL GOVERNMENT UNIT
5. BARANGAY HALL
6. BUREAU OF INTERNAL REVENUE
7. SOCIAL SECURITY SYSTEM
8. DEPARTMENT OF LABOR AND EMPLOYMENT
9. HOME DEVELOPMENT MUTUAL FUND
10. PHILIPPINE HEALTH INSURANCE CORP.

Activity:
What are your observations on businesses that are being put up around Naga City?
Does it entice you to put up your own business or does it stop you from engaging into business?

Sources:
Manuel, Z. 2010. Accounting for Business: Basic Concepts and Procedures. Raintree Trading & Publishing, Inc. Quezon City, Philippines.
Marcelino, et al. 2010. Principles of Economics (with Taxation and Agrarian Reform) Simplified. Cacho Hermanos, Inc. Mandaluyong City, Philippines.
Lapid, D. & Sotto, P. Go Negosyo: 21 Steps on How to Start Your Own Business. Philippine Center for Entrepreneurship Lodestar Press, Inc. Phil.
http://mpm.ph/register-a-sole-proprietor-business/
www.hiscox.co.uk

Prepared by: Mrs. Pamela P. Barker, MBA candidate

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