Types of Business Entities in the Philippines
Philippine founders generally choose among a sole proprietorship, partnership, One Person Corporation, ordinary stock corporation or nonstock corporation. The right choice depends on liability, number and citizenship of owners, control, continuity, capital, fundraising and regulation.
Decision summary
| Structure | Separate juridical personality | Typical fit | Main caution |
|---|---|---|---|
| Sole proprietorship | No | One owner and simple control | Owner and business are not legally separated for liability |
| Partnership | Yes | Two or more contributors | Partner authority and liability require careful agreement |
| One Person Corporation | Yes | One stockholder seeking corporate separation | Nominee, alternate nominee and record duties apply |
| Stock corporation | Yes | Multiple owners, investment and transferable shares | Board, shareholder and recurring SEC compliance |
| Nonstock corporation | Yes | Nonprofit or membership purpose | Income cannot be distributed as dividends |
Controlling authority
The Revised Corporation Code, Republic Act No. 11232, governs corporations, including One Person Corporations. Partnership rules are primarily in the Civil Code. Sole proprietorship registration is handled through the DTI, but the owner remains the person operating the business.
Facts that change the answer
- Number and citizenship of owners
- Exact revenue-producing activity
- Foreign-equity restrictions and capitalization
- Need to admit investors or transfer ownership
- Exposure to debts, regulated activity and contractual risk
- Succession and continuity requirements
Documents and approvals
A corporation normally requires Articles of Incorporation, bylaws when applicable, treasurer information, registered-office details and initial governance records. An OPC uses a single-stockholder structure and names a nominee and alternate nominee. Partnerships require a partnership agreement and SEC registration when applicable.
Procedure
- Describe the activity and ownership precisely.
- Screen foreign ownership and licensing.
- Compare liability, control, funding and continuity.
- Choose the structure and prepare governing documents.
- Register with the responsible agency.
- Complete BIR, LGU and sector-specific registrations.
- Open statutory books and a compliance calendar.
Sources and review
- Republic Act No. 11232
- Securities and Exchange Commission
- SEC Electronic Simplified Processing of Application for Registration of Company
Verified 22 September 2026. Portal instructions, forms and fees should be rechecked immediately before filing.