2. Types of Business Entities in Philippines
• A business entity is a group of people organized for some profitable or
charitable purpose. Business entities include organizations such as
corporations, partnerships, charities, trusts, and other forms of organization.
Business entities, just like individual persons, are subject to taxation and must
file a tax return.
3. Types of Business Entities in Philippines
Sole Proprietorship
Partnership
Corporation
Stock Corporation
Non-Stock Corporation
Franchising
Cooperative
4. • Sole Proprietorship is a business structure owned by an individual who has
full control/authority of its business and owns all the assets, personally owes
answers to all liabilities or suffers all losses but enjoys all the profits to the
exclusion of others. A sole proprietorship must apply for a business name
and be registered with the Department of Trade and Industry (DTI) -
National Capital Region (NCR). In the provinces, application may be filed
with the DTI regional/provincial offices.
Sole Proprietorship
5. • Under the Civil Code of the Philippines, a partnership is treated as juridical
person, having a separate legal personality from that of its members.
Partnerships may either be general partnerships, where the partners have
unlimited liability for the debts and obligation of the partnership, or limited
partnerships, where one or more general partners have unlimited liability and
the limited partners have liability only up to the amount of their capital
contributions. It consists of two or more partners. A partnership with more
than Peso 3,000 capital must register with the Securities and Exchange
Commission (SEC).
Partnership
6. • Corporation is composed of juridical persons established under the Corporation
Code and regulated by the SEC with a personality separate and distinct from that of
its stockholders. The liability of the shareholders of a corporation is limited to the
amount of their share capital. It consists of at least five to 15 incorporators, each of
whom must hold at least one share and must be registered with the SEC. Minimum
paid up capital is Peso 5,000. A corporation can either be stock or non-stock
company regardless of nationality. Such company, if 60% Filipino - 40% foreign-
owned is considered a Filipino corporation; if more than 40% foreign-owned, it is
considered a domestic foreign-owned corporation.
Corporation
7. Stock Corporation
• Stock Corporation is a corporation with capital stock divided into shares and
authorized to distribute to the holders of such shares dividends or allotments
of the surplus profits on the basis of the shares held.
8. Non-Stock Corporation
• Non Stock Corporation is a corporation organized principally for public
purposes such as charitable, educational, cultural, or similar purposes and
does not issue shares of stock to its members.
9. Franchising
• Franchising is really the 'hiring out' or licensing of the use of 'good ideas' to
other companies. A franchise grants permission to sell a product and trade under
a certain name in a particular area. If I have a good idea, I can sell you a license to
trade and carry out a business using my idea in your area. The person taking out
the franchise puts down a sum of money as capital and is issued with equipment
by the franchising company. The firm selling the franchise is called the franchisor
and a person paying for the franchise is called the franchisee.
10. Cooperative
• It is an organization composed primarily of small producers and consumers
who voluntarily join together to form business enterprises which they
themselves own, control and patronize.
• A cooperative is also defined as a duly registered association of persons, with
a common bond of interest and have voluntarily joined together to achieve a
lawful common social or economic end, and making
equitable contributions to the capital required and accepting a fair share of
the risks and benefits of the undertaking in accordance with universally
accepted cooperative principles.
11. LEGAL ISSUES RELATED TO
ENTREPRENEURIALSHIP
• PATENT
• TRADEMARK, SERVICEMARKS & TRADE NAME
• COPYRIGHT
12. PATENT
• A patent is a set of exclusive rights granted by a sovereign state to an
inventor or their assignee for a limited period of time, in exchange for the
public disclosure of the invention. An invention is a solution to a specific
technological problem, and may be a product or a process.[1]:17 Patents are a
form of intellectual property.
13. 1. PATENTABLE MATTERS
• Patentable Inventions. — Any technical solution of a problem in any field
of human activity which is new, involves an inventive step and is industrially
applicable shall be Patentable. It may be, or may relate to, a product, or
process, or an improvement of any of the foregoing. (Section 21)
14. • Non-Patentable Inventions. — The following shall be excluded from patent
protection:
• 22.1. Discoveries, scientific theories and mathematical methods;
22.2. Schemes, rules and methods of performing mental acts, playing games or doing
business, and programs for computers;
22.3. Methods for treatment of the human or animal body by surgery or therapy and
diagnostic methods practiced on the human or animal body. This provision shall not
apply to products and composition for use in any of these methods;
22.4. Plant varieties or animal breeds or essentially biological process for the production
of plants or animals. This provision shall not apply to micro-organisms and non-
biological and microbiological processes.
• Provisions under this subsection shall not preclude Congress to consider the enactment
of a law providing sui generis protection of plant varieties and animal breeds and a
system of community intellectual rights protection:
• 22.5. Aesthetic creations; and
22.6. Anything which is contrary to public order or morality. (Section 22)
15. THE LAW ON TRADEMARKS
IP CODE - Republic Act No 8293
• 1. TRADEMARK, SERVICEMARKS & TRADE NAME
• LEGAL DEFINITION OF TRADEMARK: (SECTION 121.1)
• "Mark" means any visible sign capable of distinguishing the goods (trademark) or services (service mark) of
an enterprise and shall include a stamped or marked container of goods.
• LEGAL DEFINITION OF TRADE NAME: (SEcTION 121.3)
• "Trade name" means the name or designation identifying or distinguishing an enterprise.
• 2. TRADEMARK RIGHTS THROUGH REGISTRATION & USE
• The rights in a mark shall be acquired through registration made validly in accordance with the provisions of
this law. (SECTION 122)
• The applicant or the registrant shall file a declaration of actual use of the mark with evidence to that effect,
as prescribed by the Regulations within three (3) years from the filing date of the application. Otherwise, the
application shall be refused or the mark shall be removed from the Register by the Director. (Section 124.2)
16. THE LAW ON COPYRIGHT
IP CODE - Republic Act No 8293
• 1. PROTECTED WORKS
• COPYRIGHT PROTECTED WORKS. Literary and artistic works are original intellectual creations in the
literary and artistic domain. It shall include in particular the following (SECTION 172.1):
• Books, pamphlets, articles and other writings;
• Periodicals and newspapers;
• Lectures, sermons, addresses, dissertations prepared for oral delivery, whether or not reduced in writing or
other material form;
• Letters;
• Dramatic or dramatico-musical compositions; choreographic works or entertainment in dumb shows;
• Musical compositions, with or without words;
17. Works of drawing, painting, architecture, sculpture, engraving, lithography or other works of art; models or
designs for works of art;
Original ornamental designs or models for articles of manufacture, whether or not registrable as an industrial
design and other works of applied art;
Illustrations, maps, plans, sketches, charts and three-dimensional works relative to geography, topography,
architecture or science;
Drawings or plastic works of a scientific or technical character;
Photographic works including works produced by a process analogous to photography; lantern slides;v
Audiovisual works and cinematographic works and works produced by a process analogous to cinematography or
any process for making audio-visual recordings;
Pictorial illustrations and advertisements;
Computer programs; and
Other literary, scholarly, scientific and artistic works.
18. 2. EXCLUDED WORKS
UNPROTECTED WORKS. Notwithstanding the provisions of
Sections 172 and 173, no protection shall extend, under this law, to
• any idea,
• procedure, system, method or operation,
• concept,
• principle,
• discovery or
• mere data as such, even if they are expressed, explained, illustrated or embodied in a work; (SEE
COMPILATION RIGHTS above)
• news of the day and other miscellaneous facts having the character of mere items of press
information; or
• any official text of a legislative, administrative or legal nature, as well as any official translation
thereof (n) SECTION 175
19. Internal and external sources of funds
for your business
• At whatever stage of growth you are in as an entrepreneur, it is
very important to explore all possible sources of capital.
• When borrowing money or raising funds from investors, you need
to consider the three important factors that could affect the viability
of the financing package, namely time duration, interest rate, and the
management participation of the funds provider.
20. BANK LOANS
• Say that you are considering whether or not to accept a short-term loan being
offered by your bank. If you plan to increase your working capital
requirements for your inventory, accounts receivables, or operating expense
budget, this short-term loan might be appropriate. This is because this type of
financing typically requires repayment of the loan within the next 12 months, so you
can pay it back using profits derived from the business during the year.
•
• But if you are looking at financing capital expenditures, such as buying new
machinery or opening new stores, you would need a loan that can be repaid over
a longer period of time. This is because to pay back the loan, your business would
need to accumulate enough profits for a number of years, which would normally be
during the economic life of the assets you have purchased with the loan proceeds.
21. EQUITY FINANCING
• Another form of external financing is raising funds from investors by issuing
equity ownership in form of common shares in your company. The advantage
of equity financing over debt is that the capital provided is interest-free and
there's no requirement for you to pay back.
• Since your investors also become part-owners of your business, however,
they can influence how you manage the business and have some control over it.
For every major business decision that you make, you may need approval from
your investors, who may not be as knowledgeable as you are about your industry.
22. INTERNAL FINANCING
• You may want to consider internal financing if external financing is hard to come by, especially during this
time when many banks and investors are struggling with financial insecurity.
• You can increase the internal cash flows generated by your business by increasing your profit, selling assets,
and managing your working capital better. You can increase profits by looking at ways to cut your costs and
improve gross margins.
• You can also get internal financing by converting slow-moving inventory into cash and reducing your
accounts receivable balance.
• Another way to get internal funding is to sell the idle assets of your business. These are your assets that have
already been fully depreciated and are no longer being used in your operations, such as old equipment,
vehicles, or building property.
• You can also raise the cash you need by selling some of your company's assets such as land, or by leasing
them with the option to buy them back in the future.
23. Things to consider when choosing the
right location for your business
• Here are some important issues to consider when choosing a
location for your business, according to the best-selling book
“Start Your Own Business: The Only Start-Up Book You’ll Ever
Need”:
24. Demographics
• You should study both prospective customers and
employees in the area. Observe if the immediate
community can provide your required customer base,
plus the talents you need for your business.
25. Foot traffic
• This issue is very important if you want to go into retail.
You may have to physically count the number of people
passing the area at different times of the day so you may
be able to plan your actual
26. Accessibility
• Is the place accessible to everybody you will be doing
business with – customers, suppliers, and employees? If
you are targeting the high-income group as customers, is
there ample parking space for them?
27. Competition
• Are there any shops or other businesses in the area that
vie for the same market you will target? Will there be
enough demand for products or services that you and
your competitors will offer?
28. Local ordinances
• Are there any rules or city ordinances being enforced in
the area that might affect your business? You also have to
check the area’s zoning policy.
29. Building or mall facilities
• If you are targeting a location in a commercial building or
a mall, make sure the facilities are sufficient for you and
other businesses in the area. As well, double-check your
assigned slot in a mall to find out if foot traffic is heavy.
30. Growth plans
• Will there be space to expand your business when the
time comes? If there is, find out early enough so you can
plan how much you need to set aside to cover the
additional cost.
31. Visibility
• A visible location is one that offers "unobstructed view
from different vantage points." The better your visibility,
the more customers you want to attract.
32. Size of the commercial center
• Is the shopping mall, or any other commercial center
where you're at bigger than the next? Remember that
people will choose the bigger commercial center.
33. Synergy
• Are the businesses nearby that would complement mine?
A healthy lifestyle brand should locate where there are
similar-positioned shops.
34. Conditions at the trade area
• How well maintained is the trade area? Is it prone to
flooding? Can the building withstand earthquakes?
37. Different classifications of business
• Are you planning to enter into business and call yourself a businessman or
entrepreneur? That sounds great! But what do you want to be… a proprietor,
partner or stockholder? Do you want to offer a service or sale tangible
products? Before you proceed, it is wise to consider first the different types
and forms of business, firm or enterprise that you may undertake. You
should carefully assess yourself, including your skills, financial resources and
team, to select the best kind of business to start. To guide you, the following
are the different types of business in the Philippines you may need to
consider.
38. 1. Service business
• – this provides intangible goods or services to customers.
It usually generates profit by charging for labor or other
services rendered to consumers, government or other
companies. Below are examples of service businesses:
39. • Firms which offer professional services, such as accounting, legal, engineering, business
consulting, customer service and architecture
• Transportation companies, such as airlines, shipping, land tours and forwarders
• Entertainment, such as artists and movie houses
• Hotels and restaurants
• Apartments
• Banks, lending companies and other financial institutions
• Telecommunication companies
• Event planners
• Medical and dental services
• Security and janitorial services
• Media, blogging and advertising
• Website developers
• Graphic designers
• Business process outsourcing (BPO) companies and others
40. 2. Merchandising business
• – this purchase products from other businesses or
manufacturers and sell them to customers. Merchandising
companies usually have merchandising inventories in their
current assets account. They usually generate profit by
providing markup price on their goods available for sale.
These businesses include retailers and trading companies
such as the following:
41. • Grocery stores
• Department stores
• Distributors
• Real estate dealers
• Car dealers
42. 3. Manufacturing business
• – this converts raw materials, labors and overhead into
finished products that are available for sale to customers.
Manufacturing firms includes the following companies:
43. • Car manufacturers
• Wine and soft drinks producers
• Electronic parts manufacturers
• Producers of drugs and other medical products
44. 4. Other businesses
• This includes businesses that can’t be classified as service,
merchandising or manufacturers. Examples are
agriculture and mining companies. These companies are
engaged in producing or exploration of raw or natural
materials, such as plants and minerals.
