ENTREP

• Business organization


  An entity formed for the purpose of carrying on commercial enterprise. Such an organization is predicated on systems of law governing contract and exchange, property rights, and incorporation.
• All business entities are not the same
• Business entities


  • Some provide owners a lot of flexibility in management and control and some do not
  • Some provide owners a significant degree of protection from liability and some do not
  • Some are heavily regulated, and some are not
  • Our tax code provides different tax treatments for different business entities
• Forms of business organizations

  • Sole proprietorship
  • Partnership
  • Corporation
  • Cooperative
• Sole proprietorship


  An unincorporated business that one person owns and manages. As the business and the owner are not legally separate, it is the simplest form of business structure. It is also known as individual entrepreneurship, sole trader, or simply proprietorship.
• Sole proprietorship


  • Low initial costs
  • Income is only taxed once instead of being taxed as a company and then again as a personal source of income
  • Subjected to less taxation and regulation compared to other types of businesses
• Sole proprietorship


  • Single individual always owns
  • Owner owns all assets and properties
  • Owner bears all the risks
  • Business comes to an end at the will of the owner or upon their death
• Sole proprietorship


  • Entire profit goes to the sole proprietor
  • Sole proprietor alone bears any loss
• Sole proprietorship

  • Capital is arranged by the sole proprietor
  • Owner provides it either from their resources or by borrowing
• Sole proprietorship

  • Controlling power remains with the owner
  • Owner takes all decisions
• Sole proprietorship


  • Liability of the sole proprietor is unlimited
  • Business assets and personal properties can be used to pay business liabilities
• Sole proprietorship


  • Formation and operation require almost no legal formalities
  • No need to be registered
  • May require a license from local administration or health department
• Sole proprietorship


  • Very easy to form and wind up
  • Small amount of capital to start
  • No need to comply with legal formalities except for licenses
• Sole proprietorship


  • Profits belong to the sole proprietor alone
  • Direct link between effort and reward
  • Strong motivation to work hard
• Sole proprietorship


  • Quick decision making and prompt action
  • Better control over the business
  • Ability to maintain business secrets
  • Close personal relations with customers and employees
  • Flexibility in operations
• Sole proprietorship


  • Encourages self-employment and creates job opportunities
• Where to register a sole proprietor business

  1. Department of Trade and Industry

  2. Bureau of Internal Revenue

  3. Local Government Units (Barangay, Mayor's Office)

  4. Social Security System

  5. Philippine Health Insurance Corporation

  6. Home Development Mutual Fund
• Basic requirements and procedure in registering a sole proprietor business

  1. Register business name at Department of Trade and Industry (DTI)

  2. Register with Bureau of Internal Revenue (BIR)

  3. Register with Barangay

  4. Register with Mayor's Office

  5. Process other permits (Fire, Sanitary, Locational Clearance)
• Partnership


  A contract whereby two or more persons bind themselves to contribute money, property and industry to a common fund, with the intention of diving profits from among themselves
• Partnership


  • Must be put up by persons having legal capacity to contract
  • Contributions must be in the form of money, property, or service
• Registered


  Register your book of accounts and receipts/invoices
• Claim


  Claim your BIR Form 2303 – Certificate of Registration (COR)
• Before you can legally operate your business

  1. Secure business clearance/permit from the Local Government Unit (LGU) starting with the Barangay

  2. While processing your registration in BIR, you may also start processing in the Barangay

  3. Register your business in the Mayor's Office

  4. Process other permits, if needed, such as: Fire Permit, Sanitary Permit, Locational Clearance, etc.
• Elements of Partnership


  • Valid contract, whether oral or written
  • Persons having legal capacity to contract
  • Contributions in the form of money, property, or service
  • Purpose of the business is to divide the profits among themselves
• Characteristics of Partnership


  • Mutual contributions
  • Division of profits or loss
  • Co-ownership of contributed assets
  • Mutual agency
  • Limited life
  • Unlimited liability
  • Income taxes
  • Partner's equity accounts
• Mutual Contribution


  There cannot be a partnership without the contribution of money, property or industry (i.e. work or services which may either be personal manual efforts or intellectual) to a common fund
• Division of Profits or Losses


  The essence of a partnership is that each partner must share in the profits or losses of the venture
• Mutual Agency


  Any partner can bind the other partners to a contract if he is acting within his express or implied authority
• Limited Life


  A partnership has a limited life. It may be dissolved by the admission, death, insolvency, incapacity, withdrawal of a partner or expiration of the term specified in the partnership agreement
• Unlimited Liability


  All partners (except limited partners), including industrial partners, are personally liable for all debts incurred by the partnership. If the partnership can not settle its obligations, creditors' claims will be satisfied from the personal assets of the partners without prejudice to the rights of the separate creditors of the partners
• Partners' Equity Accounts


  Accounting for partnerships is much like accounting for sole proprietorships. The difference lies in the number of the partners' equity accounts. Each partner has a capital account and a withdrawal account that serves similar functions as the related accounts for sole proprietorships
• Types of Partnership (According to Object)

  • Universal partnership of all present property
  • Universal partnership of profits
  • Particular partnership
• Types of Partnership (According to Liability)

  • General
  • Limited
• Types of Partnership (According to Duration)

  • Partnership with a fixed term or for a particular undertaking
  • Partnership at will
• Types of Partnership (According to Purpose)

  • Commercial or trading partnership
  • Professional or non-trading partnership
• Types of Partnership (According to Legality of Existence)

  • De jure partnership
  • De facto partnership
• Kinds of Partners


  • General partner
  • Limited partner
  • Capitalist partner
  • Industrial partner
  • Managing partner
  • Liquidating partner
  • Dormant partner
  • Silent partner
  • Secret partner
  • Nominal partner or partner by estoppel
• Corporation


  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
• Characteristics of A Corporation

  • Separate legal entity
  • Created by operation of law
  • Right of succession
  • Powers, attributes, properties authorized by law
  • Ownership divided into shares
• Separate legal entity


  A corporation is an artificial being with a personality that is separate from that of its individual owners