Characteristics & Legal

Bases of a Business
Entrepreneurial Characteristics

The following are foundational skills entrepreneurs need to run and operate a
successful business:

 Persistent
 Creative  Self-Confident
 Responsible  Risk-Taking
 Inquisitive  Restless
 Goal-Oriented  Action-Oriented
 Independent  Enthusiastic
 Self-Demanding
Entrepreneural Skills

 Communication Skills
 Human Relations Skills
 Math Skills
 Problem Solving & Decision Making Skills
 Technical Skills
 Basic Business Skills
Do You Have the Potential to be a Successful
Entrepreneur?

 Read articles and books about entrepreneurs

 Write about individuals who overcame obstacles to achieve success
 Watch films about business people, athletes, or others who are
achievement-oriented
 Practice case studies that involve goal-oriented behavior, creativity, and
moderate risk-taking
Business Entities
Business Entities

 Corporation
 Partnership
 Sole Proprietorship
 Branch
 Representative Office
 Regional Headquarters
Corporation

 a company or group of people authorized to act as a single entity

(legally a person) and recognized as such in law. Most jurisdictions now
allow the creation of new corporations through registration. Registered
corporations have legal personality and are owned by shareholders
whose liability is limited to their investment.
 Shareholders do not typically actively manage a corporation;
shareholders instead elect or appoint a board of directors to control the
corporation in a fiduciary capacity.
Partnership

 In a partnership, two or more persons contribute money, property,

ideas, and other things of value to a common fund, with the intent to
divide the resulting profits among themselves.
 A partnership is either general or limited, depending on the liability of
the partners. It is general if all the partners are personally liable for the
obligations of the partnership when its assets are exhausted. It is limited
if at least one partner has limited personal liability. In the latter case, at
least one other partner must have unlimited liability.
 A partnership has a legal personality separate from that of each partner.
However, it does not enjoy the right of succession; consequently, the
death of a general partner dissolves the partnership.
Sole Proprietorship

 A sole proprietorship is a one-person form of business organization

common among small businesses. The sole proprietor has unlimited
liability and is therefore accountable for all debts incurred by the
operation.
 Foreign investors may establish sole proprietorship if they observe the
applicable Philippine laws. This form of organization is, however,
advisable for small-scale enterprises only.
Other entities commonly used
by foreign investors
Branches

 A foreign corporation may conduct business or engage in trade in the

Philippines through a branch, which is a mere extension of the legal
personality of the foreign corporation. Because a branch does not have
an existence independent from the foreign corporation, the assets of the
head office are exposed to the liabilities of the branch.
 Contracts between head offices and their branches are not allowed
under the single-identity concept. The operation and liquidation of a
branch are similar to the operation and liquidation of a corporation.
Representatives Office

 The activities of a representative office are limited to information

dissemination, promotion of products, and facilitation of orders of the
head office’s customers. A representative office is not allowed to
intervene or take part in any manner in the pricing or distribution of the
products of its head office. It is also not allowed to derive income from
within the Philippines. Accordingly, a representative office is not subject
to Philippine income tax.
Regional Headquarters

 A foreign firm engaged in international trade with affiliates, subsidiaries,

or branch offices in the Asia-Pacific region may establish its regional
headquarters in the Philippines.
 A regional headquarters serves as a supervisory, communication
and coordinating center for the firm’s affiliates, subsidiaries, or branches
in the region. It is not allowed to participate in any manner in the
management of any subsidiary or branch office that the foreign entity
may have in the Philippines.
Legal Bases of Business
Register the Business Organization

 The first step is to register the business with the appropriate

government agency depending on the type of business
organization one wants to establish.
Obtain a Mayor’s or Business Permit

 All businesses are required to secure a mayor’s permit or business

permit from the local government of the city or municipality where the
business is located.
 Different cities and municipalities have different registration procedures
and requirements. The following are the general requirements for
securing a permit for a new business:
Application forms

 DTI registration or SEC registration, whichever is applicable

 Lease contract or title covering the property where the business is
located, whichever is applicable
 Locational or zoning clearance
 Building permit and occupancy permit
 Public liability insurance
 Barangay clearance
 Fire safety certificate
 Other requirements specific to the type of business to be carried out
Register with the Bureau of Internal Revenue (BIR)

 All businesses have to register with the BIR before the commencement
of operation for taxation purposes.
 The registration process involves obtaining and registering a tax
identification number (TIN), obtaining BIR-registered official receipts and
invoices, registering the business’s books of accounts, and paying the
applicable fees.
Register with the Social Security System (SSS)

 All businesses that have employees must be registered with the SSS.
The registered employer will be assigned an employer number, which
will be used as reference for the remittance of monthly contributions,
composed of the employee’s contribution and the employer’s share.
 SSS coverage is compulsory for all employees not over sixty years of
age and their employers.
 The SSS provides replacement income for employees in times of
disability, sickness, maternity, and old age. It also provides assistance
during death and for funeral expenses.
Register with the Philippine Health Insurance
Corporation (PhilHealth)

 All employers are required to register themselves and their employees

with PhilHealth, the government health-care system. Upon registration,
an employer shall be issued an employer number.
 Under the PhilHealth system, the monthly contribution is divided equally
between the employer and the employee. It is deducted and withheld
automatically by the employer from the employee’s salary then remitted
to PhilHealth.
Register with the Home Development Mutual Fund
(Pag-IBIG Fund)

 All employees who are or ought to be covered by the SSS are also
covered by mandatory membership in the Pag-IBIG Fund. The Pag-IBIG
Fund provides various types of housing loans to employees.
 Members make their contributions to the Pag-IBIG Fund through salary
deduction. The employer has the responsibility to deduct the
contribution from the employee’s salary. Together with the employer’s
share of the contribution, the employee contribution is remitted to the
Pag-IBIG Fund on a monthly basis.
Common Position by Hierarchy
Board

 The board of directors are at the 'top' of the ladder. They represent a
group of people who participate actively in approving the goals and
direction of the organization. They usually appoint the CEO of the
company and other high ranking positions. The board is usually made up
of leaders from within the organization and executive officers from other
top companies that have a successful track record in business.
Executive Officers

 The executive officers, like CEO, COO, and CFO, are basically responsible
for success and functioning of the organization. All the employees report
to the executive officers who focus on creating the organizational goals
& policies, and on hiring other high-level officers for the organization
Vice Presidents

 These are individuals who are in charge of the departments in the

organization, like marketing, human resources, IT and sales. They are
responsible for implementing the policies of the organization and
working towards the achievement of goals as decided by executive
officer.
Directors and Managers

 Below the vice presidents of the organizational, there are the directors
and managers who are in charge of leading the everyday functions in a
particular department. they are responsible for communicating directly
with employees and executing the tasks assigned to them to help carry
out the strategies and goals of the company.
Employees

 This group level in a corporate hierarchy who actually perform the

everyday tasks in the organizational. these could be analyst,
administration and staff positions. these people are hired for their skills
and they work for the organizational as directed by management.
End.