The majority of small firms in the Philippines begin as sole proprietorships and graduate

to other business forms as they grow and profit. Because the Philippines does not
recognize the legal concept of a Limited Liability Company (LLC) or a Private Limited
Company (PLC), as do many other countries such as the United States of America, the
United Kingdom, and Singapore, the closest entity to which Philippine sole
proprietorships commonly transition is a domestic corporation. A domestic or subsidiary
corporation is a group of legal entities incorporated under the Philippine Corporation
Code and governed by the Securities and Exchange Commission (SEC). Domestic
corporations, unlike sole proprietorships, have a separate legal entity from their owners,
hence individual assets are separate from those of the company.