BUSINESS OWNERSHIP

AND
ORGANIZATIONS
Business ownership refers to
legal control over a business. It
gives the owner the legal right to
make certain business decisions.
A business organization is one or more
businesses controlled in common by a person
or group of people. An organization may have
one or more businesses. A business may not
have more than one organization.
Definition, Types, and
Composition of
Business Organization
Sole proprietorship- If we split the word, sole means only and
proprietor means owner. That is, a business in which there is
only one owner who owned, controlled, and managed the
whole business, then that business will be called business
under sole proprietorship. For example- A shop owner. In this,
all the profits and loss are enjoyed by only one person.
A partnership is a type of business in which two or more members control and manage the
business. In partnership members should not be less than 2 and more than 100. If the
members exceed 100 then it will no longer be called a partnership, it will be called a
company.
A limited partnership (LP) is a business entity formed
by two or more individuals comprising one or more
limited partners and at least one general partner. The
general partner runs the business, and the limited
partners function like investors.
 ADVANTAGES
1. Capital Amount is Quite Generous
Since a partnership comprises more than one individual, the amount contributed as capital is quite large. When a
business goes into operation with a generous amount of funding, the scope for the business automatically
increases. This results in greater flexibility and a surge in profit. A large capital amount forms a strong pillar for a business
to stand on and is, therefore, critical to the development of a business.
2. Limited Partner Faces Limited Liability for Losses
One of the major advantages of running a limited partnership business is the sharing of responsibility among
partners. Also, limited partners are not personally liable for the debts that the business runs into. They cannot be held liable
beyond the amount they contribute to the business. This reduces the risk of putting personal assets in the line for
repaying debts and obligations.
3. Shared Responsibility of Work
Working with partners provide the advantage of sharing the workload. Various partners will bring a variety of
abilities and expertise to the table. Therefore, the workload can be split according to the skills, reducing the workload for each
partner. The end product after combining the work of each partner would be a complete and detailed entity that is highly
effective. Apart from the workload, the decision-making for companies also rests on the partners equally. This reduces the
responsibility on any individual while maintaining a smooth workflow.
 DISADVANTAGES
1. Breach in Agreement
With partners, every individual’s opinion matters and should be taken into consideration. Partners may not agree in certain
decisions and this could result in disputes. If such disagreements pile up and take a serious turn, then it could result in a
breach in the agreement. Such a situation puts the entire business at risk. It might even lead to dissolving of the business
altogether.

2. General Partners Bear Maximum Risk in Case of Debts

For a limited partnership, a general partner is personally liable for the debts that the partnership runs into. Therefore, in
case the business goes bankrupt or is sued, general partners are at maximum risk since the entire responsibility falls on them.
This puts general partners at a greater disadvantage than limited partners.

3. Limited Partners Do Not Have Much Say in Decision-making

Since the amount of liability that rests on the limited partners is quite less, their role in running the company is limited.
Even though the limited partners exercise a fair share of power in the business, they do not have complete say in business
decisions. This could lead to inconsistencies in decision-making and eventually, disputes may arise putting the entire partnership at
risk.
A corporation is a legal entity created by individuals, stockholders,
or shareholders, with the purpose of operating for profit.
A nonprofit organization
also known as a non-
business entity, or nonprofit
institution, is a legal entity
organized and operated for
a collective, public or social
benefit, in contrary with an
entity that operates as a
business aiming to
generate a profit for its
owners.
A co-op is a legal business
structure that is owned and
governed by, and functions
for, the benefit of those who
use its services.
Cooperatives are owned by
those who work for it, are
served by it, or both.
The members are all
owners and managers in
the business, sometimes
called user-owners.
 GENERAL REQUIREMENT AND
PROCEDURES FOR REGISTRATION,
DEALING WITH LGU, AND OTHER
GOVERNMENT AND PRIVATE BODIES
1. Register business name with SEC

Doing Business in the Philippines: Business Registration Process

1. You can register your company name with the Securities and Exchange Commission (SEC) in two
methods:
1. Personal visit to SEC’s office
2. Reserving online through SEC’s Company Registration System (CRS) webpage
2. Prepare documents* for submission to SEC
Articles of Incorporation and By-Laws
Board Resolution authorizing the registration of the Philippine entity (for foreign corporations)
Valid IDs of individual incorporators, directors, and officers
*If you have documents signed abroad, you must have them Apostillized or authenticated by the
Philippine embassy/consulate of the country where they were signed.
3. Obtain business permits from the Local Government Unit (LGU) of your business address
Secure a Barangay Clearance from the Barangay Hall
Secure a Mayor’s Permit from the Mayor’s Office
Secure a Business Permit to Operate from the Business Permit and Licensing Office (BPLO)
4. Process with the Bureau of Internal Revenue (BIR)
Secure the following from the BIR:

 BIR Certificate of Registration

 Certificate of Registration of Books of Accounts
 Cash Register Machine (CRM) or Point of Sale Machine (POS) or Authority to
Print Receipt/Invoices (Manual Receipts)
5. Register with relevant government agencies

 Social Security System (SSS) (for social security)

 Philippine Health Insurance Corporation (PhilHealth) (for health insurance benefits)
 Home Development Mutual Fund (Pag-IBIG Fund) (for housing benefits)
Different cities require different documentary requisites, depending on your business entity, business
activity, and size. Below are the general requirements you need to secure prior to your business permit
application.

 Applicable Business Registration Documents

 Certificate of Business Name Registration for single proprietorship
 Articles of Partnership for partnerships
 Articles of Incorporation for corporations
 Certificate of Registration for foundations, associations, and cooperatives
 Barangay Business Clearance
 Contract of Lease (for businesses renting commercial spaces)
 Transfer Certificate of Title and Tax Declaration (If the business owned the property
 Certificates
 Fire Safety Inspection Certificate
 Sanitary Permit
 Building Permit and Electrical Inspection Certificate
 Certificate of Occupancy
 Locational Clearance
 Electric Utility Connection
 Sketch and photos of the location
 Zoning Clearance
 Occupancy Permit
 Public Liability Insurance
 Authorization letter/Special Power of attorney if registered by an authorized
representative
Every successful entrepreneur always makes a proper
plan before taking any action as he knows the value of
time, money and efforts that he and his employees will
put in to make it work. He devises a complete strategy
about how he can make his new plan a success.