Entrepreneurship: Chapter 3 pt.

2 Creating Enterprise

Forms of Business Organizations

A.) Sole Proprietorship. This is the simplest form of business organization: only one individual owns all the
assets.
B) Partnership. An association of two or more persons to carry on as co- owners of a business for profit.
"By the contract of partnership, two or more persons bind themselves to contribute money, property or
industry to a common fund with the intention of dividing the profits among themselves.
(Art. 1767, New Civil Code)
C) Corporation. A separate body consisting of at least five individuals treated by law as a unit. "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." (Sec. 2, The Corporation Code of the Philippines)

Advantages and Disadvantages of Sole

Proprietorship

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Advantages and Disadvantages of
Partnership
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Advantages and Disadvantages of
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Corporation

Articles of Co-partnership - the agreement among partners maybe oral but agreement in writing is
preferable. The written agreement between partners is called articles of co-partnership. All partnerships
for business are required to file articles of co-partnership with the Securities and Exchange Commission
(SEC), the government agency that regulates this kind of business.

Content of the Articles of Co-Partnership

- name of the partnership
- names of the partners
- place of business
- effective date of the partnership
 - duration of the contract
- nature of the business
- investment of each partner and corresponding capital
- rights, powers and duties of the partners
- accounting period
- profit and loss sharing
- compensation for services offered by partners
- treatment of partners additional investments and withdrawal
- procedures for settlement of partners interest upon dissolutionof partnership
- provision for settlement of disputes

Content of the Articles of Incorporation of a Stock Corporation

- the name of the corporation
- the specific purpose or purposes for which the corporation is being incorporated
- the place where the principal office of the corporation is to be located which must be within the
philippines

ing
- the terms for which the corporation exists
- the names the nationalities and residencies of the incorporators
- the number of trustees or directors which shall not be less than 5 or more than 15
- the names, nationalities and residences of the persons who shall act as directors or trustees until
the first regular directors or trustees are duly elected;
- if it be a stock corporation, the amount of its authorized capital stock in lawful money of the
Philippines, the number of shares into which it is divided, and in case the shares are par value
shares, the par value of each, the names, nationalities and residences of the original subscribers,
and the amount subscribed and paid by each on his subscription, and if some or all of the shares
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are without par value, such fact must be stated.
- The Corporation Law provides that the subscribed capital is 25% of authorized capital stock and
that the paid-up capital is 25% of the subscribed capital.
For example.
Authorized capital P1,000,000
Subscribed capital P 250,000
Paid-up capital P 62,500

(One needs only P62,500 cash or assets to put up a corporation with P1,000,000 authorized
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capital.)
- By-laws are also required of partnerships and corporations. The by-laws enumerate specific
guidelines in the conduct of the functions of partnerships and corporations Available from the SEC
are "express" articles and by-laws which may be filled in "as-is" or modified or adjusted to the need
of the enterprise.

Registering a Business
- The Department of Trade and Industry (DTI) has published "Starting a Small Enterprise”. This
is available in the DT1 website, www.dti.gov.ph. The guide is very comprehensive
- The entrepreneur may browse the website for updates on the topic. It is important for the entity to
follow the rules to avoid penalties from the government This will help in assuring continuity of
business. Many times businesses are closed voluntarily or involuntarily because of the failure to
follow govemment requirements.
- Currently, the government and also the private sector are all out in the promotion of small and
medium enterprises (SMEs). A very good example of this Initiative is the inclusion of
Entrepreneurship in the grade school and high school curriculum.
Registering the Sole Propietorship
- Register the business name with the Department of Trade and Industry (DTI). In choosing a
business name, consider "name recall", meaning a name that is short and can be easily
remembered. The business name is the name other than that of the sole proprietor.
- Partnerships and corporations may not register their business names with the DTI because the
registration of their name is already included in registration with the Securities and Exchange
Commission (SEC).

Registering Partnership and Corporation

- Registration of business names with the DTI is optional for partnerships and corporations. The
registration with the Securities and Exchange Commission (SEC) includes the registration of the
business name. Before the applicant is granted the exclusive right to use a business name, the SEC
sees to it that that name has not been previously granted to another entity. The partnership registers
with the SEC its articles of co-partnership and the corporation registers also with the SEC its articles

ing
of incorporation. By-laws of partnerships and corporations are also filed with the SEC. Applicants
may use express forms which are available at SEC.

After the registration with DTI and/or SEC, the sole proprietorship, partnership and corporation
registers with:
A. Bureau of Internal Revenue (BIR) for
1. Tax Identification Number (TIN)
2. Business/trade name
3. Authority to print books of accounts, invoices, receipts and other accounting records
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4. Books of accounts, invoices, receipts, etc.
B. Department of Labor and Employment (DOLE)
- Mandatory for firms which employ 50 or more workers
C. Mayors' Office
- for Mayor's permit or municipal license D. Other Government Agencies

Cooperatives
RA 9520, the Philippine Cooperative Code of 2008 Art 3 provides a cooperative is an
autonomous and duly registered association of persons with common bond of interest, who have voluntarily
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joined together to achieve their social, economic, and cultural needs and aspirations by making equitable
contributions to capital required, patronizing their products and services and accepting a fair share of the
risks and benefits of the undertaking in accordance with universally accepted cooperative principles.

Important Features of Cooperative

1. Members are natural persons or juridical who receive return on their investment and earnings of the
cooperative.
2. Management is entrusted in the Board of Directors.
3. Documents necessary for registration
a. Articles of Cooperative
b. By-laws
4. Subject to control and supervision of Cooperative Development (CDA)-a government agency.
5. Life of fifty years and renewable for another fifty (50) years in any single
6. Acquires jurifical personality
7. The income of cooperatives is exempted from income tax
8. Cooperatives are exempted from national and local taxes
9. Members have limited liability for the debts of the cooperative.
10. Cooperatives enjoy preferential treatment and assistance from the government.
Registering with other Agencies:
> Bureau of Food and Drugs (BEAD)
For manufacturers of drugs, cosmetics, and food products
> National Food - Regulatory Division
For rice, corn, and flour dealers
> Fiber Industry Development Authority
For and traders of fibers and fiber products
> Bureau of Fisheries Aquatic Resources (BFAR)
For those engaged in the export of fish and fish products and other aquatic products
> Bureau of Animal Industry (BAI)
For exporters of animals and animal by-products.
> Bureau of Plant Industry (BPI)
For exporters of plant and plant products

ing
> Forest Management Bureau
for exporters of forest products (eg, logs, lamber products, plywood etc.)
> National Tobacco Administration
For those engaged in the production or export of flue-cured Virginia-type bc Burley tobacco, and
Turkish Oriental tobacco products
> DTI Beau of Product Standards (BPS)
For commodity clearance for producers, manufacturers or exporters (Their products will be tested to
ensure that they meet established standards.)
> National Subcontractors Exchange (SUBCONEX) DTI-NCR
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For businesses interested in tie-ups with export-oriented firms as sub- contractors/ suppliers
provided they fall under any of the following sectors garments and hand-woven fabrics, gifts and house
wares, furniture and fixtures, footwear and leather goods, fresh and processed foods and jewelry.
> Intellectual Property Office (IPO)
For firms wishing to register patents and trademarks
> DTI-Bureau of Trade Regulation and Consumer Protection (BTRCP)
For enterprises engaged directly or indirectly in the servicing, repair or maintenance of vehicles,
engines and engineering works, electrical components, electronics, air-conditioning and refrigeration, office
machines and data processing, equipment, medical and dental equipment (Technical personnel, eg,
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mechanics or technicians,) are also within the scope of the (BTRCP)