Submitted by:

Jun Bill M. Cercado

(JD-3B)
1. JP shall build a partnership form of business organization rather than a
sole proprietorship or a corporation. Considering his profession as a civil
engineer, the amount of his investment and other circumstances, the following
factors shall be taken into consideration why it is wise for him to choose the
partnership form of business entity:

a) Two heads are better than one

Due to two or more partners, there is a possibility of high capital

contribution. Applying it to the case of JP, he wants to form a construction
company. In order to make his plan a reality, great amount of capital is
required to form a construction company. The Php 1,000,000.00 investment of
JP is not sufficient to form his desired business. The cost of the equipment that
will be used in the business alone requires more pooling of capital. The cost of
the personnel would also require more capital. Any other start-up costs in
establishing a construction company must also be considered. Hence,
combined financial resources are essential to a business. This is why
partnership shall be form rather than sole proprietorship which limits its
capitalization.

However, since the construction company sought to develop will just

start its operations, corporate form of business is not applicable. The partners
may decide to form a corporation if the business bloomed or created
tremendous profit and an established reputation in the construction industry.
Hence, for a starting business, partnership is just a wise choice of JP to form
rather than corporation.

b) Draw on skills and abilities of each partner.

This advantage does not only pertain to capital contribution but also to the
ideas such as marketing and the management aspect of the partnership. JP is
an engineer and cannot handle the business alone. He needs industrial
partners who will manage the business. The expertise and the creativity of the
other partners are essential to make the business feasible and successful. In
sole proprietorship, the management is only limited to a sole proprietorand
consequently leads to lesser chances for innovation and business
improvements. Hence, JP should form a partnership rather than sole
proprietorship.

c) Sharing of Losses

In partnership form of business structure, partners shares for partnership

losses. Hence, there is a reduction of individual losses if more partners carry
such losses of the company.
In a sole proprietorship, the burden of losses of the business pertains to the
sole proprietor alone. Consequently, it means that the sole proprietor has more
chances to suffer losses and bankruptcy as compared to partnership. Hence,
JP should form a partnership rather than sole proprietorship.

d) It is easy to get started

If JP opted to form a partnership, it is just subject to a lesser regulations as

compared to a corporation. Fewer requirements are required by the law to
comply with for partnership registration as compared to a corporation. In other
words, they are less strictly regulated in terms of laws governing the formation.
Furthermore, the start-up costs are low as compared to corporation. Hence, it
is easy to create.

e) Flexibility of management

As long as the partners agree, partnership is far more flexible in terms of

management as compared to corporation and sole proprietorship. Since it is
flexible to manage, the partners may likewise share the responsibility of
running the business.

Since JP is an engineer by profession, he may also opt to manage the business.

He may likewise delegate to another partner the management of the affairs of
the construction company if JP cannot offer his time to manage it by the
nature of his profession.

f) Joint decision-making processes

Partners share the decision making and can help each other out when they
need to. It means that the partners exercise joint responsibility and meet
frequently. This enables them to take decisions promptly, which is conducive to
taking advantage of sudden opportunities.

Hence JP must opt to form a partnership because more partner means more
brains that can be picked for business ideas and for solving of problems that
their construction business might encounter in the future.

g) Easy dissolution

As compared to a corporation, dissolution of partnership concern is very easy.

The partnership may be dissolved by death, incapacity or insolvency of partner.
There are no legal formalities required in dissolution of partnership. In fact, if
the partnership is “at will” then any partner can get the partnership firm
dissolved by giving notice to the partners.
How to Register a Partnership Company in the Philippines?
Business registration is a crucial step while setting up a business. Depending on the
size of your company, the whole registration process can either be short and simple or
long and tedious. Company registration in the Philippines is not a tedious process if the
investor is aware of the various regulations related to the same. To register your
partnership firm in the Philippines, here’s a guide that will help you understand the
process clearly.
1. Register Your Business Name at the Securities and Exchange Commission
(SEC)

If you are registering a corporation or a partnership firm, then you have to register your
company name at the SEC. It is the government agency responsible for the securities
law and regulating the securities industry in the Philippines. After registering, you must
secure a Certificate of Registration from the SEC in order to have the license to operate
a business.
2. Obtain a Barangay Clearance

In the Philippines, all the businesses must obtain a Barangay Clearance from any local
Barangay office where the business is located. A clearance will assure that your
business is a community friendly establishment and conforms to the standards of the
Barangay.
3. Register with the Social Security System (SSS)

Companies who hire employees must register their business and employees with the
SSS. Registering your employee with the SSS ensures that, as an employer, you are
lawfully remitting your employer’s contribution to the agency for the benefits of your
employees. Not registering your employees with the SSS is regarded as violating the
Social Security Law.
4. Obtain Permit from the Mayor’s Office

After securing Certificate of Registration, Certificate of Barangay Clearance and

registration with the SSS, the next step is to register and obtain a permit from the local
Municipality closer to your office. The permit affirms that your business is compliant with
the municipality or city’s ordinances and standards such as sanitary, fire and safety and
other clearances.
5. Register Your Business with the Bureau of Internal Revenue (BIR)

A Certificate of Mayor’s Permit must be submitted prior to the issuance of the BIR
Certificate of Registration. Registering with the BIR will give you an authorization to print
official receipts, register books of accounts and obtain a separate Tax Identification
Number (for partnerships and corporations). BIR registration fee is 500 pesos annually.
Documents Required to Set Up a Partnership in the Philippines
1. Basic Requirements

 Name Verification Slip

 Articles of Partnership (AP)
 Joint Affidavit of two partners to change partnership name (not required if already stated
in AP)
 Registration of data-sheet
 Certificate of Bank Deposit
 Name of the partnership
 Principal office address
 The contact number of the partner
 Name, citizenship, address, birthday and Taxpayer Identification Number (TIN) of the
partners
 Capital contribution of the partners
 Purpose of the partnership

2. Additional requirements

 Endorsement/clearance from other government agencies, if applicable

 For partnership with a foreign national as a partner (FIA Form - 105)

Note: For a limited partnership, the word “Limited” or “Ltd” should form part of the
partnership name.
It can be a cumbrous task to gather all the documents and complete the process on
your own, especially when you are not completely aware of the whole process. In such
case, you can always take a help from a consultant who is updated about all the
regulations of that particular country. Business Setup Worldwide is one such platform
who can help you with business registration in the Philippines. We have a specialized
team of professionals having extensive knowledge of all company formation rules and
regulations in the Philippines and can help you with partnership registration in the
Philippines with ease in less time. Contact us for more information – we’d be happy to
assist.

Getting your business officially registered is one of the most important things that must
be accomplished for any starting company. Apparently, it can get really tiring and
confusing, especially for those who are not familiar with the requirements and
processes here in the country.

For business registrations, it’s always best to have legal assistance from an
experienced lawyer to save you time and effort. Nevertheless, if you are planning to do
it on your own, here are the steps on how to register a partnership business in the
Philippines:

Prepare the required

documents for SEC
Registration
The first thing you are required to accomplish is the registration of your business with
the Securities and Exchange Commission or SEC. A partnership (or a corporation) is
obliged to secure a certificate of registration with the SEC to own a license to operate
their business. The basic documentary requirements that need to be prepared are:

 Name Verification Slip (which can be obtained from the SEC’s website if you prefer to

have it before going to an SEC office)

 Articles of Partnership or AP

 A Joint Affidavit of partners to change their partnership name if it has not been stated

in the AP

There are, however, additional requirements depending on the nature of your business.
These requisites may include:

 Endorsement or Clearance from other government agencies. You may check out

this link to know if it’s applicable for your business.

  FIA Form – 105 (for partnerships with a foreigner as a partner)

Obtain a Certificate of
Registration with the SEC
The initial steps can be done online through their website such as checking your
proposed company name’s availability through https://crs.sec.gov.ph/, once verified that
the name is not yet taken, you can then fill out the application form on the same site.
The rest of the application process is listed on that corresponding page, however, this
can all be accomplished at any SEC office as well if you find it more convenient to just
go there and be personally assisted by an employee.

Get a Barangay Clearance

All businesses are required to have a Barangay Clearance according to our Local
Government Code. This clearance is obtained at the local Barangay Office where your
business is or will be located and the fee in securing one, though varies per location, is
often minimal. A Barangay Clearance serves as an assurance that your business
adheres to the standards of the local Barangay and that your business is a community-
friendly company.

Register your business &

employees with the Social
Security System (SSS)
Registering your business and employees (even if they are temporary or provisional) is
mandated and is considered a violation of the Social Security Law if not performed.
Employers are obliged to submit the SSS coverage of a worker within 30 days of his or
her employment. The SSS website (sss.gov.ph) presents comprehensive information on
the responsibilities and obligations of an SSS employer. The following forms must be
completely filled out and submitted to be a registered SSS employer:

 SS Forms R-1 and R-1A

 Photocopy of SEC Articles of Partnership

 Business location sketch or map

 Validated Miscellaneous Payment Return also known as SS Form R-6 or SS Form R-6

with Special Bank Receipt (proof of payment for the Employer Registration Plate)
Register with other
government-mandated
agencies
Once your business began its operations and you’ve hired a number of employees,
registration with other government-mandated agencies must follow through.

 The new National Health Insurance Act (RA 7875/RA 9241) is requiring all employers in

the Philippines to register their employees with Philippine Health Insurance Corporation

(Philhealth) and to remit their share of contribution to the said agency. Registering your

employees ensure that they are going to be covered by this health insurance which can

help greatly in reducing hospitalization costs and their other health care needs.

 Pag-IBIG FUND. As stated in RA 7742, SSS members who earn at least Php4,000 per

month must be registered with the Home Development Mutual Fund (HDMF) which is the

agency that administers the Pag-IBIG Fund. This agency works towards providing its

members with sufficient housing (loans) through an effective saving scheme.

NOTE: Registration with the Department of Labor and Employment (DOLE) is also a

must for business operations with five or more employees.

Obtain a Mayor’s/Business
Permit
This document can only be acquired after securing a Certificate of Registration from
SEC, Barangay Clearance, and registration with the SSS since these documents would
be required to get a business permit. The fees, requirements, and processes may vary
in different local offices. Fees for new applicants may depend on their starting capital
while charges for renewals depend on the applicant’s prior year gross revenues or
sales. Here are the basic requirements in obtaining a Mayor’s Permit:

 Business Permit Application Form

 Barangay Clearance

 Certificate of SEC Registration

  Public Liability Insurance (for Restaurants, Cinemas, Malls, etc.)

 Authorization Letter of the owner/s with ID

 Contract of a lease (if renting a space) or land title/tax declaration (if you own the place

of business)

 SSS Certification or Clearance

 Community Tax Certificate or CEDULA

Depending on the type of business, other documents may also be required. Business
permits are renewed every year.

Register with the Bureau of

Internal Revenue (BIR)
A Mayor’s Permit must be submitted before processing a Certificate of Registration with
the BIR since Mayor’s permit is actually a requirement to obtain such a certificate.
Registering with the Bureau of Internal Revenue will give you permission to issue official
receipts, register books of accounts, and (for partnerships and corporations) to obtain a
separate Tax Identification Number.

Business registrations take days and great effort and a helping hand shall always be
considered. Yap, Kung, Ching & Associates Law Office provides complete assistance
when it comes to business registrations together with other legal matters. Remember
that starting a business can be a handful and getting a lawyer to help you have this
thing off your load is just one call away.