YOU decided 2024 is the year you'll finally take the leap and start a business. Good for you! We wish you all the very best. While it's probably exciting (and a bit nerve-wracking) to build the website, do marketing campaigns and start selling, we remind you not to forget an important step: registering your business. Why? First, it's a legal requirement. More than that though, it does open various opportunities such as trust between you and your customers, tax benefits, and more! Here in the Philippines, you can register as various entities that offer specific benefits depending on the business. Not sure which entity is right for you? Here is a quick guide:
Freelancer
Freelancers are self-employed individuals who usually get paid per-project or work basis. This self-employed individual usually creates the product, and they don't have plans of hiring individuals. Examples of those who register as freelancers are writers, graphic designers, IT specialists, photographers, and more.
Professional
Like freelancers, professionals are also self-employed individuals. The only difference is that they usually have a license or are registered under the Professional Regulation Commission. Examples include doctors, lawyers, dentists and public accountants.
Sole proprietorship
A sole proprietor is a business owned and operated by a single individual. It's relatively simple to set up, with minimal regulatory requirements while giving the owner full control. However, there is unlimited personal liability and limited capacity to raise capital. Compared to freelancers, sole proprietors can hire employees. Those in similar industries as freelancers can register as sole proprietors. Many marketplace (Lazada and Shopee) vendors are registered as sole proprietors, as well as those still currently employed but would like to try and start a side hustle.
One-person corporation (OPC) and domestic corporation
Corporations are business entities that are separate legal entities. Owners are known as stockholders, and their level of control varies depending on the percentage of stock ownership. As it's a separate legal entity, individuals have limited liability. However, it is more complex to set up with more regulatory requirements. The main difference between an OPC and a domestic corporation is that an OPC only has one stockholder. However, it's possible to switch between these two entities. It's also easier to raise capital and invite investors. Most medium to large companies are corporations.
Still confused? Companies like Permitly.PH help entrepreneurs figure out the right entity before registration as it's quite costly to accidentally register as the wrong entity. They offer free 15-minute consultations and also assist in the process of registering which can be quite overwhelming for many.
To all future entrepreneurs out there, good luck! We are cheering for you this 2024.
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