Incorporating a business is a key step for entrepreneurs in the Philippines. It gives you legal recognition and protects your personal assets from business liabilities. Let’s look at what incorporation means, its benefits, and the legal framework involved.

What is Incorporation?

Incorporation is the process of legally forming a corporation under Philippine law. A corporation is a separate legal entity that can enter into contracts, sue or be sued, and own property independently of its owners.

Benefits of Incorporation

• Limited Liability: Shareholders are not personally liable for corporate debts beyond their investment in shares.

• Perpetual Existence: Corporations continue to exist even if ownership changes or shareholders pass away.

• Access to Capital: Incorporated businesses can raise funds more easily by issuing shares or obtaining loans.

Legal Framework for Incorporation

The incorporation process in the Philippines is governed by the Revised Corporation Code (Republic Act No. 11232). This law outlines the requirements for forming a corporation, including:

• Drafting Articles of Incorporation and By-laws

• Securing a Business Name from the Securities and Exchange Commission (SEC)

• Obtaining necessary permits and licenses

Steps to Incorporate a Business

1. Choose a Business Name: Make sure it’s unique and not similar to existing corporations.

2. Draft Articles of Incorporation: This document outlines your corporation's purpose and structure.

3. File with SEC: Submit your Articles of Incorporation along with required documents to the SEC.

4. Obtain Business Permits: After SEC registration, secure local business permits from municipal or city offices.

Incorporation is essential for entrepreneurs in the Philippines looking to establish a formal business entity. Understanding the process helps protect personal assets.

For more detailed guidance on incorporation steps, visit Business Registration and Permits from the Department of Trade and Industry.

References

• Department of Trade and Industry. (n.d.). Business registration and permits. Retrieved January 17, 2025, from https://www.dti.gov.ph

• Philippine Congress. (2019). Revised Corporation Code (Republic Act No. 11232). Retrieved January 17, 2025, from https://www.officialgazette.gov.ph/2019/02/20/republic-act-no-11232/