SOLE PROPRIETORSHIP

By:

JONES MELLOW BUENA

GILBERT CALDERON
SOLE PROPRIETORSHIP
The sole proprietorship is the oldest and simplest form of business
ownership. A sole proprietorship (or “sole prop”) is a form of business in
which an individual starts a business under his or her own name. It's a
one-person business; if there is more than one owner, your business can't
be a sole proprietorship. In a sole proprietorship, you are the business;
that is, the business is not a separate entity from you.
A sole proprietor someone who owns an "unincorporated business by
himself or herself)." That means the business isn't a corporation or a
single-owner limited liability company (LLC).
How Does a Sole Proprietorship Get Started?

Since the law treats the owner and the business as the same, the sole proprietor only
needs to register his or her name with the Department of Trade and Industry (DTI) and
secure local licenses and permits to commence business operations.

Here’s a step-by-step process for registering a sole proprietorship in the Philippines:

● Register a business name with DTI to acquire a DTI Certificate of Registration;

● Register with the Barangay Office where the business is going to be located to
acquire a Barangay Certificate of Business Registration;
● Register with the Mayor’s Office to acquire a Mayor’s Permit; and
● Register with the Bureau of Internal Revenue (BIR) to acquire a Certificate of
Registration.
Or you can do this On-line
The advantages of a sole proprietorship include:
 Requires a minimum amount of capital
 Owners can establish a sole proprietorship instantly, easily and inexpensively.
 Minimal regulations and compliance requirements from government agencies
 Sole proprietorships carry little, if any, ongoing formalities.
 A sole proprietor need not pay unemployment tax on himself or herself (although
he or she must pay unemployment tax on employees).
 Easy to register
 Sole proprietor has complete control of the business
 Easy to manage, with no necessary formalities or regulations about having a
board of directors, committee, or meeting minutes
 Sole proprietor acquires all assets and profits of the business and can freely mix
business and personal assets
The disadvantages of a sole proprietorship include:

 Sole proprietor is subject to unlimited personal liability for the debts, losses, and liabilities of
the business
 Sole proprietor cannot raise capital by selling an interest in the business or obtain capital
funding through established channels
 No clear-cut definition between personal and business income because the sole proprietor is
personally liable for the income tax of the business
 Sole proprietorships rarely survive the death or incapacity of their owners and hence do not
retain value
 Business bankruptcy affects the owner personally
 Personal lawsuits against the sole proprietor can potentially consume all their personal assets
and negatively affect the financial aspects of the business
 Lawsuits filed against the business are also deemed as lawsuits filed against the owner;
creditors of the owner or of the business itself can reach both the business and the owner’s
personal assets, and if such lawsuits are successful, the owner is obligated to pay the damages
with his or her own money
Most small businesses in the Philippines start as sole
proprietorships and progress to other business structures as they
mature and increase profit. Since the Philippines does not adopt
the legal concept of Limited Liability Company (LLC) or Private
Limited Company (PLC) like many countries such as the United
States of America, United Kingdom, and Singapore, the closest
entity that Philippine sole proprietorships commonly
transition to is a domestic corporation.
THANK YOU AND GOD BLESS

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