One of the most important decisions you'll make when starting a business is choosing the right structure. Each type has different legal, tax, and operational implications.
Sole Proprietorship
A sole proprietorship is the simplest business structure. It's owned by one person and registered with the Department of Trade and Industry (DTI).
Pros:
- Easy and inexpensive to set up
- Full control over business decisions
- Simple tax filing
Cons:
- Unlimited personal liability
- Limited access to funding
- Business ends when owner dies or becomes incapacitated
Partnership
A partnership is formed by two or more persons who agree to contribute money, property, or industry to a common fund. Registered with the SEC.
Pros:
- Shared resources and expertise
- Relatively easy to set up
- Tax benefits for general partnerships
Cons:
- Unlimited liability for general partners
- Potential for disagreements
- Each partner is liable for the actions of other partners
Corporation
A corporation is a separate legal entity from its owners (stockholders). Registered with the SEC under the Revised Corporation Code.
Pros:
- Limited liability protection
- Easier access to capital
- Perpetual existence
Cons:
- More complex and expensive to set up
- More regulatory requirements
- Double taxation (corporate tax + dividend tax)
One Person Corporation (OPC)
Under the Revised Corporation Code, a single stockholder can now form a One Person Corporation, combining the benefits of a corporation with the simplicity of a sole proprietorship.
Choosing the right structure depends on your business goals, risk tolerance, and growth plans. Consult with our team at Wania and Partners to determine the best option for your situation.