Business Entities in the Philippines

Business Entities in the Philippines

The Philippines is a country which has emerged from being an average to becoming one of the most preferred locations in the world to invest in. According to the Statistics of recent years, the Philippines is ranked 113th for being one among the 190 business-friendly economies on a global level.

Before anyone starts a business in any part of the world, it is essential to know about the business environment and mindset on a local level, business culture, legal factors and all other requirements that are necessary during the setting up a company. According to Statistics, the GDP of the Philippines is expected to rise by 6.8% in the year 2022. Now, doing business in the Philippines could be quite challenging because it's business environment differs from other locations. However, with enough knowledge and expertise in the field, one might get the idea of business entities in the Philippines.

Before you initiate the company setup process in the Philippines, you need to know is the types of business entities for the smooth operation. There are a few types of business entities in the Philippines are mentioned below.

Sole Proprietorship

In the Philippines, the most basic and commonly found form of business is a sole proprietorship. It is widely chosen because it has a limited number of procedures for the registration. A sole proprietorship in the Philippines is one of the business structures entities, and it is owned by an individual who is also the investor solely responsible for the entire organization that he or she runs.

  • For proprietorships in the Philippines, the laws, formation process, rules and regulations, company policies and legal entities are not as same as they are for partnership and corporation. So it is comparatively easy, and the registration can be done within a matter of days depending on the city.
  • If you are a sole proprietor and with a proprietorship business, you will be considered as a single taxpayer and are responsible for the total amount of tax the organisation has to pay. So in the Philippines, a sole proprietor shares a single TIN (Taxpayer Identification Number).
  • A sole proprietor has to register his/her trade name of the business under the Department of Trade and Industry.

If you are a beginner in the business field with many limitations and looking for more experience in less time, you can consider the sole proprietorship as the best option.


The partnership in the Philippines is one of the business entities. As the name states, the ownership of an organization is divided into two or more number of alliances. However, the Philippines considered partnership as a juridical person; that means a foreigner who is a resident of the country legally, but not a natural. Here the liability equally is shared by the invested owners of the running business by their capital amount. While in this kind of partnership, the Unlimited Liability is shared and is called a General Partnership.

  • In the limited type of partnership debts, unlimited liability and company obligations are shared by some of the partners, not all. Here no single owner can have full control over the autonomy of the business in the organization.
  • Since the responsibilities are divided, it is easy to attract and gain several investors who would agree to invest in a group of partnerships because there is full access to the company’s corporate assets for a purposeful utilization.


If you are willing to be an investor in the Philippines, you can be a part of a corporation. It is another type of business entity which requires you to have a minimum number of shareholders representing an entire organization. Here the shareholders of a company work towards a single goal of advancing the corporation towards bringing the positive outcome. To form a corporation In the Philippines, minimum numbers of 5 shareholders are required, and the profit is divided by every individual’s shareholding percentage. Thus, it turns out to be less risky.

Branch Office

The branch office is a type of business entity in the Philippines which is slightly different from others. If you are a foreigner looking to invest in the country, this could be an option you can consider. A branch office is an extension of a foreign company which is set up in the Philippines. There are a different set of rules, regulations and other legal factors a branch office has to follow in the Philippines. It has to get the business license from the SEC, and the local resident of the Philippines will be in charge of the company. The idea of incorporating a branch office in the Philippines with the help of a local resident investor, there are chances of achieving your goals in comparatively less time.

Representative Office

This is one of the business entities in the Philippines you need to know about, especially if you are a foreign investor. A representative office can be set as the branch of a foreign company for the smooth running of business and administration of the company. The setup is thought from a convenience point of view for the promotional activities of the parent company. The representative office can be set up for its parent company without having to be involved in the business activities which lead to income. You can set up a representative office in the Philippines with the sole purpose of promoting the parent company or to gain insights about the target market and audience to achieve positive results.

Benefits of Starting a Business in the Philippines

  • The Philippines is the 34th largest economy in the world. It has been maintaining the consistency of being one of the 125 business friendly locations on a global level.
  • The infrastructure of the Philippines is set in a way that by the year 2022 it is expected to become an upper-middle range income country.
  • The business culture in the Philippines is very flexible and is always open to foreign investors and the expansion of its economy on a global level.
  • The labour cost is surprisingly affordable in all the business fields, and the quality is well maintained in all the terms as well.
  • With the rich Human Resource and new Employment Opportunities in the Philippines, there will be a decline of 5.5% in unemployment by 2022.

The Philippines is emerging as one of the ideal locations for investment and business purpose. However, the beginning of a company or business can be quite hard work and challenging. There are many decisions to be made, factors to be considered. We at Business Setup Worldwide offer our assistance to the business owners and relieve them from these things. Our business experts are well-versed with the subject and can accompany you in the necessary process. If you want to take a step forward, do contact us.-we’d be glad to assist.