Sole proprietorship vs Domestic corporation

Hi all,

I have decided to gather some advice here on how i should incorporate my business.

A little about me and the business
I'm a Singaporean who's looking to bring my friend's business into Philippines. It is a events based business that is not very capital intensive. Investment wise, i will be using approximately 7.5k USD for incorporation and acquisition of equipments which will be my main assets. My business does not need permanent employees so i will be hiring part timers.

I also have a filipino gf whom i've dated for 5 months. She's a smart woman whose working in a local bank. I also have a group of filipino friends whom i've met during my travel and can potentially help me to incorporate.

Sole proprietorship vs Domestic Corp
Hence, i will need to consider which type of structure to incorporate my business. Through my research, the following is what I understand of the different advantages(do correct/add on if i'm wrong):

Sole Proprietorship
1. Easy to start in terms of paperwork (less formalities)
2. Less regulatory requirements
3. I can potentially have full control over my earnings as i can decide my own remuneration (very important)
4. I will only be liable for personal tax (no corporation taxes)

Domestic corporation
1. More structured in terms of decision making
2. Limited liabilities
3. entities last forever

Currently, I am more geared towards sole proprietorship solely due to the reason I can have control over my own earnings(for corporations, as a director, i can only pay myself 10% of entity's income; a dividend payout will also benefit all the other shareholders who doesnt invest any money). I will register the company under my girlfriend but hold the bank account as well as have an agreeement with her to state that i'm loaning those equipments which i want to buy to her for the business. So in case if anything happens, I will get back both my money and equipments. \

Ultimately, I want to protect my interest as much as possible while maximising my returns from this business.

I will appreciate any advice you can provide on this. Thanks!

Any advice?

Patience is a virtue. Remember it is a weekend so people have other priorities.

Hi CherHow, welcome to the forum, while I am no expert I am aware of the following, you can google and learn more, this is basic but gives a heads up on things to watch out for.

http://news.abs-cbn.com/nation/07/09/09 … -dummy-law

Good luck with your venture.

Cheers, Steve.

If you set up a SP with your gf as the owner, then all the profit will go to her.  Don't know the regs concerning the assets, but if you are lending money or renting equipment to the SP then you have your own businesses doing transactions with your gf SP.  If you have a corporation, then won't you be the only shareholder, or will that be your gf?  Declaring dividends to the only stockholder may save you money, such as employment taxes and insurance.  Does the Philippines  have any structures such as the S corporation in the USA?  That may be your best choice, if available.

This should give you a starting point

http://smallbusiness.chron.com/can-sole … 19206.html

Since the OP asked for info a month ago he has added no further info or responded to responses.
I will cite:

"I'm a Singaporean who's looking to bring my friend's business into Philippines. It is a events based business that is not very capital intensive. Investment wise, i will be using approximately 7.5k USD for incorporation and acquisition of equipments which will be my main assets. My business does not need permanent employees so i will be hiring part timers."

My friends business or my business? Furthermore appears to want to incorporate on a fledgling venture with only small change, go the girlfriend route if you trust her,,,,,,, remember it is the Philippines.

Cheers, Steve.

Hey everyone, so this is sort of related.

I am looking to hire a couple employees in the Philippines (2 or 3) for a temp period of 3-4 months.

I spent a month total in Cebu / Lapu Lapu / and Ormoc City a few months ago and am going to be going on a longer trip now.

What I need to do is hire people to work for me wherever I will be staying. I went to the SEC building in Cebu and a sole proprietorship did not seem to be an option.

I was thinking of just starting a simple DBA or LLC here in the states and then have two employees that I hire file as a company with the SEC in the Philippines.
And then I can just pay from my company to their company.

I have read though that I am not allowed to be a "boss" in this sort of setup and I'm not allowed to be around daily and giving directions, which I would like to do.

The business in general is a research based business and the job is pretty simple, essentially the employees main task is to watch certain events and track data during that event. The reason is it not possible in the US is because of wages, but with wages being so low in the Philippines I am perfectly ok giving this is a go and paying the employees 500 pesos per pay for 5 hours of work.


From my previous stay there it seems like I could do this under the table pretty easily and have the employees working out of an internet cafe, but I would like to be a lawful person and not end up in a jail in the Philippines, which is why I would like to go the legal route.

A couple obvious points. '

You need a work permit to do any gainful employment here. This is as I understand somewhat difficult to get in some circumstances. Consult a good immigration attorney.

Philippine corporations need to be at least 60% Philippine owned. That means you need trusted locals to become owners of the majority of the company. You need people you completely trust for this. There are a lot of schemes around on how to subvert the local ownership and control laws. i.e. own 40% of the shares but the class that is voting. Let the locals own the remaining 60% of the shares in a non voting class.

However there are "anti-dummy" laws designed to prevent most if these schemes. If caught then you can lose everything as well as being deported/fined/jailed.

Turning in foreigners who are working illegally or otherwise circumventing local laws is a national pastime here.

The business laws and permits required to operate here are complex and mostly enforced in a manner to extract as much money from the rich foreigners as possible.

Just about every official/court dispute here is resolved in favour of the local and at the expense of the foreigner. The guiding principle appears to be deep pockets pays and every foreigner has much deeper pockets than any Philippine so save on lawyers fees and just pay up right away.

Be very careful what you do. Get good legal advice, not from random strangers on  line but from professionals i.e. people with actual credentials, experience and knowledge about what they are talking about.

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