How To Form One Person Corporation In Philippines

If you’re a business owner in the Philippines, you may wonder if it’s worth forming a one person corporation. This article will outline the process for doing so and the benefits and drawbacks of this type of structure. By understanding what’s involved in forming a one person corporation Philippines, you can make an informed decision about whether or not it’s right for your business. Let’s discuss what is a one person corporation.

What Is A One Person Corporation (OPC)?

A one person corporation is a business entity designed for sole proprietors. It offers the same legal protections as a regular corporation but with fewer compliance requirements. This makes it an attractive option for small businesses and startups.

What is OPC Meaning In Business?

OPC meaning in business, refers to One Person Corporation. It is a business entity that is designed for sole proprietors. This company offers the same legal protections as a regular corporation but with fewer compliance requirements.

This corporation is similar to other terms like sole corporation Philippines, single person corporation Philippines and individual corporation Philippines.

Difference Between Single Proprietorship and One Person Corporation (OPC)

There are several key differences between a single proprietorship and an OPC:

Liability

An OPC is a separate legal entity from its owner. The assets of the entrepreneur and the business are treated separately. This means the entrepreneur is not responsible for any losses their business may suffer. However, the assets of the entrepreneur and the company are considered the same, which means that the entrepreneur is personally liable for any risks the business takes.

Processing Cost

The cost of forming and maintaining an OPC is higher than that of a single proprietorship. This is because there are more compliance requirements, such as filing annual reports and holding board meetings.

Legal Recognition

An OPC has greater legal recognition than a single proprietorship. This means it can enter into contracts and own property in its name. It also has the right to sue and be sued in court.

Compliance Requirements

As an OPC is a separate legal entity, it must comply with all the relevant laws and regulations. This includes filing annual reports, holding board meetings, and paying taxes. Therefore, one person corporation definition refers to a business entity with certain privileges but also more responsibilities.

Succession

If the owner of perpetuity dies, their nominee will take over the business for a brief time. However, if the owner of a sole proprietorship dies, their heirs will inherit the company and its assets and liabilities. They will need to apply for new licenses once they expire.

Filing

OPCs must file their incorporation articles with the Securities and Exchange Commission (SEC). They must also submit their bylaws, financial statements, and other relevant documents. Single proprietorships are not required to do this.

What Are The Benefits Of Having An One Person Corporation In The Philippines?

There are several benefits of having an One Person Corporation in the Philippines. These include:

Limited Liability

One of the key benefits of forming a corporation is that it offers limited liability protection to its shareholders. If the company is sued, the shareholders will not be held liable for any debts or damages.

Flexibility

Another benefit of an OPC is that it’s relatively flexible. For example, there are no minimum capital requirements and no need to have a board of directors.

Enhanced Credibility

One of the most important benefits of an OPC is that it can help to enhance the credibility of your business. This is because potential customers and partners will see your company as more professional and established.

What Are The Drawbacks Of One Person Corporation In The Philippines?

There are a few potential drawbacks of One Person Corporation in the Philippines. These include:

Compliance Requirements

One of the critical drawbacks of an OPC is that it’s subject to compliance requirements. This includes filing annual reports and holding shareholder meetings.

Higher Taxes

Another potential drawback of an OPC is that it may be subject to higher taxes of corporation income tax rates. This is because the government views corporations as being more profitable than sole proprietorships.

Processing Cost

The [rocessing cost of an OPC can be relatively high. This is because you’ll need to engage the services of a lawyer and accountant to help with the incorporation process.

How To Form One Person Corporation In the Philippines?

Now that we’ve discussed some of the key benefits and drawbacks of One Person Corporation, let’s look at how to form an OPC in the Philippines.

Step 1: Name of Company

The first step is to come up with a name for your company. This should be unique and memorable.

Step 2: Choose A Registered Agent

The next step is to choose a registered agent. This is someone responsible for receiving legal documents on behalf of the company.

Step 3: Prepare The Articles Of Incorporation

Once you have a registered agent, you’ll need to prepare the articles of incorporation. This document outlines the basic information about your company, such as its name, address, and contact details.

Step 4: File The Articles Of Incorporation

After you’ve prepared the articles of incorporation, you’ll need to file them with the Securities and Exchange Commission. Fill up the application form here. Fill out the form completely and accurately. You will receive an email after submitting your application.

Step 5: Pay The Fees

The final step is to pay the required fees. These vary depending on the type of company you’re incorporating. These fees include name reservation, articles of incorporation, legal fees, FIA Application fee, and documentary stamps. The total costs to be paid are more or less thirty thousand pesos (30,000).

How Much Does It Cost To Set Up An Opc In The Philippines?

The total cost of setting up a One Person Corporation in the Philippines can vary depending on many factors, such as the type of company you’re incorporating and the services you use. However, the average cost is around thirty thousand pesos (30,000). This includes the filing fees, legal fees, and other associated costs.

Reserving a company name is 100 pesos.
Incorporating a company is 1/5 of 1% of the authorized capital stock, but it must be at least 2000 pesos.
The legal research fee is 1% of the registration fee, but it must be at least 20 pesos.
FIA application fee if the single stockholder is a foreigner is 3000 pesos, and if the single stockholder is Filipino, it’s 30 pesos.
Documentary stamp tax is 30 pesos.

What Are The Documents Required To Set Up An Opc In The Philippines?

There are a few key documents that you’ll need to set up One Person Corporation in the Philippines. These include:

Articles of Incorporation

The first document you’ll need is the Articles of Incorporation. This outlines the basic information about your company, such as its name, address, and contact details.

Memorandum of Association

The following document you’ll need is the Memorandum of Association. This outlines the rights and duties of the company’s shareholders, directors, and officers.

By-Laws

These are the rules that the company has for itself. They include how shareholders’ meetings work, who can be a director and things like that. This rule is different from other companies that have to have it.

Resolution of the Board of Directors

This is a resolution passed by the Board of Directors authorizing the company’s incorporation.

Capital Stock

The final document you’ll need is the Capital Stock. This outlines the amount of money invested in the company by its shareholders.

Tax Identification Number

You’ll also need to apply for a Tax Identification Number (TIN) from the Bureau of Internal Revenue.

FAQs About One Person Corporation Philippines

Do I Need A Lawyer To Set Up An Opc In The Philippines?

You’re not required to hire a lawyer to set up One Person Corporation in the Philippines. However, it’s generally advisable to do so. This is because lawyers can help with the incorporation process and ensure all the necessary documents are in order. They can also guide what type of structure is best for your business.

How long does it take to set up an OPC in the Philippines?

The time it takes to set up One Person Corporation in the Philippines can vary depending on many factors, such as the type of company you’re incorporating and the services you use. However, the average time it takes to set up an OPC is around three to four weeks.

How many shareholders can an OPC have?

An One Person Corporation can only have one shareholder.

Can a foreigner own an One Person Corporation in the Philippines?

Yes, a foreigner can own an One Person Corporation in the Philippines.

Conclusion

One Person Corporation in the Philippines can be a great way to structure your business. However, it’s essential to understand the process and costs involved before deciding. This article has outlined the critical information you need to know about One Person Corporation in the Philippines.