Professional Documents
Culture Documents
STRUCTURE
Owned by one person and it is easy to form and offers complete
control to the owner. They also own all the assets of the business and
the profits generated by it.
As a sole proprietor you can operate any kind of business as long as
you are the only owner. It can be full-time or part-time work. This
includes operating a:
• Shop or retail trade business
• Large company with employees
• Home-based business
• One-person consulting firm
WHERE TO REGISTER A SOLE PROPRIETOR BUSINESS?
1. GENERAL PARTNERSHIP
Partners divide responsibility for management and liability, as well as the
shares of profit or loss according to their internal agreement. Equal shares
are assumed unless there is a written agreement that states differently.
3. JOINT VENTURE
Acts like a general partnership, but is clearly for a limited period of time or a
single project. If the partners in a joint venture repeat the activity, they will
be recognized as an ongoing partnership and will have to file as such, and
distribute accumulated partnership assets upon dissolution of the entity.
There are minimal costs and requirements in the formation.
There are more funds contributed from the investment of the partners.
There is infusion of more knowledge, experience, and skills, from two or more partners.
There can be division of labor between or among partners.
The partners are liable for actions of each partner as a result of mutual agency.
A general partner has unlimited liability if the other partners are limited partners or are
insolvent.
Disagreement between partners can lead to the withdrawal of one or more partners.
The death, retirement, withdrawal, or incapacity of a partner results in the dissolution of the
partnership.
Admission of a new partner depends upon the approval of the other partners.
Pottery Barn & Sherwin-Williams - the two brands created an exclusive product line of paints,
and then added a new section of Pottery Barn’s website that helped customers easily select
paint colors to complement their furniture choices.
Bonne Belle & Dr. Pepper - Dr. Pepper-flavored lip balm. Bonne Belle forged their first flavor
partnership with the timeless Dr. Pepper brand.
Uber & Spotify - when riders are waiting for an Uber ride, they’re prompted to connect with
Spotify and become the DJ of their trip. Users can choose from their own playlists to
determine what they’ll listen to.
Corporation is a business that has a life on its own
(business entity concept) which means that it can
represent itself to other personalities, can be taxed and
sued, and can enter to contractual agreements.
Whether you intend to be a sole proprietor or a corporation, you should make sure that
no one else is using the name you have selected for your company. If you register a
limited liability company (LLC) or a corporation, a name check is required, but be
certain the name is available before you design a website, have a logo made, or print
business cards.
2. Not Choosing a Business Structure
While you're dreaming up the concept for your startup business, you're probably not focused
on how you should structure your business. Setting your business up as an LLC or a
corporation from the start can save you money on taxes and also help to clarify your
ownership structure.
Take some time to consider your options, which include sole proprietorship, partnership, LLC,
and corporations (both S and C corporations) and choose the option that makes the most
sense for your business startup. Keep in mind that you are planning for your startup to grow,
so you will want to put a structure in place that can accommodate your big plans. When
starting an LLC or partnership, be sure to have member or partner agreements in place as
well, so everyone's role and share is clearly designated.
3. Not Having a Standard Contract
When you start a business you likely don't have a lot of customers, but since you
intend to see a lot of growth, you should develop a standard contract to use with
all of your customers. This will streamline things and ensure that you protect
yourself. Take a look at contracts your competitors are using. Draft a contract that
is easy to understand and not overly long. Talk with an attorney to ensure you
create a contract that is favorable for your business and fair to your customers.
4. Not Having a Nondisclosure Agreement
When you are exploring how to start a startup, you will likely be talking to a lot
of people and sharing a lot of information about your business idea as you try
to get advice, hire people, get estimates, and retain professionals. A
nondisclosure agreement, or NDA, will help ensure that the information you
share with others remains private.
Grit PH (2020). How to Register and Form a Corporation in the Philippines. Retrieved from https://grit.ph/register-corporation/
Tomacruz, S. (2017). 8 Philippine companies among world's largest listed firms. Retrieved from
https://www.rappler.com/business/philippine-companies-forbes-list-world-largest-listed-firms
Cruz-Manuel, Z,V., Financial Accounting & Reporting for Services & Merchandisers, 26th ed., San Andres Manila: Cruz Manuel,
2020, 6-7 pp.
Ong, F. L. (2016). Fundamentals of Accountancy, Business, and Management 1. Quezon City, Philippines: C & E Publishing Inc.,
13-15 pp.
Sember, B. (2019). Top 8 Legal Mistakes Made by Startups. Retrieve from https://www.legalzoom.com/articles/top-8-legal-
mistakes-made-by-startups