Sole Proprietorship
A sole proprietorship is owned by one person in the Philippines. The business and owner have no legal separation. The owner has full control and liability. Sole proprietors own all assets and profits. They also owe all debts. Sole proprietorships are the easiest businesses to form in the Philippines. Over 40% of Philippine firms are sole proprietorships. Foreigners can run sole proprietorships in allowed industries.
Registration and Perception
Sole proprietors should register with the Bureau of Trade Regulation and Consumer Protection. This shows the business is legal and credible. Sole proprietorships can seem small-scale. Corporations seem more legitimate to clients and vendors. Corporations also find it easier to get investors and loans.
Corporation
The main advantage of a corporation is limited liability. The owners and business are legally separate. The owners’ personal assets are protected from business debts. But corporations have more legal formalities like board meetings and elections. Sole proprietors directly receive all profits and have total control.
Business Transformation
Sole proprietorships can transition into corporations as they grow. Consider the advantages of each when starting a business. See which structure you can maximize and work around the disadvantages.