COBENTH Lecture Notes: Types of Business

Lesson 2
Types of Business

Business
● Organization where people work together
● Provides services to customers who have access to them for a period of time
● Main purpose is to maximize profit for its owners and stakeholders while maintaining
corporate social responsibility
● Economic activity of production and distribution of goods and services

A. Business Ownership
○ Sole Proprietorship
■ Business owned by only one person
■ Easiest to setup and least costly
○ Partnership
■ Business owned by two or more people
■ Partners contribute resources/assets into the business
○ Corporation
■ Business organization that has a separate legal personality (legally
considered as a person)
■ Incorporators are made up of 5 or more people

B. Business Activity
○ Service
■ Business that provides service
■ Offers Intangible products such as professional skills, expertise, advice,
etc.
■ Example: Jollibee
○ Merchandising
■ Business that buys and sells tangible goods
■ Wholesale or retail prices
■ Ex. Mercury Drug
○ Manufacturing
■ Purchases raw materials and process them to turn into new products
■ Combines raw materials, labor, and factory overhead production process
■ Ex. Microsoft and General Electric

Prepared by: Dr. Cristina Teresa Lim

Associate Professorial Lecturer
DSI Department, RVR College of Business
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 COBENTH Lecture Notes: Types of Business

C. Before Establishing Your Business:

○ Conduct market research to determine if there is an opportunity to do business
○ Make your business plan
○ Look for funding
○ Search for a strategic location
○ Come up with a business structure
○ Create a business name
○ Register your business

D. Register Your Business in the Following Government Offices:

○ Department of Trade and Industry (DTI)
■ Responsible for realizing the country’s goal of globally competitive and
innovative industry and services sector that contribute to inclusive
growth and employment generation

○ Securities and Exchange Commission

■ Governing body over all corporations, partnerships, or associations who
are the grantees of primary franchises and/or a license or permit issued
by the PH government
■ Protects investors, maintain fair, orderly and efficient markets while
facilitating capital formation

○ Bureau of Internal Revenue (BIR)

■ Responsible for collecting revenues for the government; in charge of
administering and the collection of taxes
■ Regulates finance, taxation, and monetary policy in the Philippines
■ Collects internal revenue taxes, fees, and charges and enforces all
forfeitures penalties and fines connected with tax matters for the
Philippine government

○ Republic of the Philippines Social Security Service Offices (SSS)

■ Insurance program mandated by the Philippine government to cover all
income earners or workers in the private sector
■ Beneficiaries and members - can avail benefits for retirement, disability,
sickness, and death

Prepared by: Dr. Cristina Teresa Lim

Associate Professorial Lecturer
DSI Department, RVR College of Business
2
 COBENTH Lecture Notes: Types of Business

■ SSS is for private companies while GSIS is for government offices

○ Home Development Mutual Fund (HDMF/Pag-ibig Fund)

■ Pag-ibig stands for Pagtutulungan sa Kinabukasan: Ikaw, Bangko,
Industriya at Gobyerno (Cooperation for the Future: You, the Bank, the
Industry, and the Government)
■ Government-owned and controlled corporation under the housing and
labor development office
■ Founded by virtue of presidential decree no. 1530
■ Office that regulates and offers the need for a national savings program
and an affordable shelter financing for the Filipino worker
■ Active members should at least contribute for 24 months wherein
contribution is pegged at PHP100

○ Philippine Health Insurance Corporation (Philhealth)

■ Government-owned and controlled and connected with the Department
of Health (DOH)
■ Provides health insurance coverage and ensures affordable, acceptable,
available and accessible healthcare services for all citizens
■ Serves as the means for the healthy to help pay for the care of the sick
and for those who can afford medical care to subsidize those who cannot
■ Both government and private sector employees are required to register

○ Local Government Offices

■ City Hall
● All businesses are required to register their business with the City
Government or the Municipal Government.
● Procedure for the registration may differ depending on the city or
municipality concerned
● List of the general requirements needed to secure a
Business/Mayor’s permit:
a. Barangay Clearance
b. Community Tax Certificate with Gross Receipt
c. Financial Statement (Partnerships and Corporations)
d. BIR Clearance
e. SSS Clearance
f. For new businesses:

Prepared by: Dr. Cristina Teresa Lim

Associate Professorial Lecturer
DSI Department, RVR College of Business
3
 COBENTH Lecture Notes: Types of Business

i. DTI Registration (Sole Proprietorship)

ii. SEC Registration (Partnerships and Corporations)

■ Barangay Hall
● A barangay clearance is a pre-requisite for the issuance of the local
government business permit.

E. Key Considerations in Establishing Your Business

○ Financing
■ Funding for business activities
■ Partner and work with other stakeholders

○ Marketing and Advertising

■ Marketing would be responsible for driving sales
■ Advertising exercises the promotion of company products and services
through different channels

○ Number of Employees
■ Make sure to hire and train the right employees

○ Location
■ Make sure to maximize opportunities and minimize costs
■ Do market research to identify feasibility of business idea as well as
determine the competitors and players within the location
■ See if there is demand for products or services and safety in that
particular location

Prepared by: Dr. Cristina Teresa Lim

Associate Professorial Lecturer
DSI Department, RVR College of Business
4