Many Filipinos are entering the eCommerce market and launching businesses, thanks to the ease of setting up one and ever-growing market demand. Of course, you can explore entrepreneurship too, but you must abide by the law by properly registering your businesses.
In particular, Republic Act No. 11232, also known as the Revised Corporation Code (RCC), allows the creation of the One Person Corporation (OPC) in the Philippines, which can help open up opportunities for micro, small and medium enterprises.
How will this new business type fare in the market? This guide will tell you everything you need to know about OPCs and help you determine if you should register under the same category.
What is a One Person Corporation?
As the name implies, a One Person Corporation (OPC) has a single stockholder who can either be a natural person, estate or the subject of a trust entity. Unlike regular corporations, OPCs do not need multiple incorporators or a board of directors to register their business.
OPCs can exist perpetually. That means a particular corporation does not have an expiration period even if the stockholder or incorporator dies or becomes incapacitated. In such a case, a nominee or alternate nominee shall assume the position. On the other hand, estates or trusts incorporated as OPCs cannot exist after their respective entities close.
Meanwhile, some entities cannot form an OPC unless provided by special laws:
- Licensed professionals
- Banks, non-bank financial institutions, quasi-banks
- Pre-need, trust, insurance companies
- Public and publicly listed companies
- Non-chartered government-owned and government-controlled corporations
Primary Considerations for SEC OPC Registration
Forming an OPC entails filing a business registration with the Securities and Exchange Commission (SEC). Here are the essential components when registering as an OPC.
An incorporator is a natural person of legal age acting simultaneously as the corporation’s single stockholder, director and president. Again, a trust or estate can also serve as the OPC’s incorporator.
An OPC allows complete control of a sole proprietorship and the limited liability of a corporation. As such, you can run a company even if you’re the only one doing so with limited shares. Plus, if the business goes into debt or goes bankrupt, creditors can only go after the company’s assets, not the owner’s personal properties.
Here are some examples of businesses that can register as OPCs in the Philippines:
- Sari-sari stores
- Vape shops
- Small RTW clothing stores
Your OPC does not need to comply with any minimum capital stock requirements unless specified by a special law. You also don’t need to pay a portion of your OPC’s capital stock at the time of incorporation. However, you must pay a fixed 30% corporate income tax for your OPC.
You must affix an “OPC” suffix at the end of your OPC’s company name to indicate the separation of entities.
Corporate Officer Appointment
Within 15 days of its certificate of incorporation issuance, the OPC must appoint a treasurer, a corporate secretary, and other officers necessary to carry out operations. As the incorporator, you can also appoint yourself as treasurer but not the corporate secretary.
Requirements for One Person Corporation in the Philippines
SEC guidelines state that you must file all applications and transactions manually or online with the SEC’s Company Registration and Monitoring Department or on its affiliated website. In May 2019, the agency approved the registration of the first OPC under the RCC.
Refer to this list of requirements if you’re ready to register and incorporate your OPC.
Prepare at least three proposed names for your OPC and essential details, including the address, officers’ data, capitalization details and year end accounting date. You must also indicate the purpose or nature of your OPC’s engagement.
You will need to prepare your Articles of Incorporation, Acceptance Letter of Nominees and Notice to Change Name documents, then fill out the form for OPC via the SEC Electronic Simplified Processing of Application for Registration of Company.
If you’re the appointed treasurer, you must open an account—Treasurer-in-Trust for OPC (TITF)—with your preferred bank for the paid-up capitalization. Then, once the SEC approves the OPC registration, you may convert the TITF account into a regular checking or savings account.
Similar to operating other businesses, an OPC can bring financial risks. As such, it’s in your best interest to consult a knowledgeable accounting firm to help you get started on business accounting for your OPC.
The SEC shall evaluate your online OPC registration. Afterward, it will instruct you to upload documentary requirements and issue a Payment Assessment Form that you must pay in SEC-allowed platforms.
Approval of OPC Registration
An approved OPC registration makes your OPC a legal entity. You can now start hiring employees, entering lease contracts and performing relevant transactions for your corporation.
Business Permit of OPC Philippines
With the SEC-approved Certification of Incorporation, you can apply for a business and occupancy permit in the city or municipality with jurisdiction over your OPC.
Tax Authority and Welfare Registrations
If you already have a business permit, you can proceed to the Bureau of Internal Revenue for the tax identification number, books of accounts and invoicing. Then, fill out the forms required and pay a registration fee and documentary stamp tax for your OPC capitalization and other relevant papers.
At the same time, you must register with the Social Security System, Philippine Health Insurance System and Home Development Mutual Fund for employee welfare benefits.
Other Government Agency Registrations
Depending on the nature of your OPC, you might need to register it with any of these agencies:
- Bureau of Customs
- Food and Drugs Administration
- Bangko Sentral ng Pilipinas
OPC Registration Timeline
The entire process can take more than a month, so it helps to familiarize yourself with the necessary steps and requirements to avoid further delays in registering your OPC in the Philippines.
Other Costs of Registering as an OPC
Basic registration costs, government fees, taxes and related expenses range from approximately ₱27,000 to ₱55,300 ($500 to $1,000) for OPCs with a capitalization of less than ₱1 million ($20,000).
A Better and Brighter Business
Aspiring entrepreneurs like yourself can now easily register a business in the Philippines, thanks to the more straightforward online process of SEC OPC registration.
Registering as a One Person Corporation in the Philippines enables you to run a corporation without the associated risks brought by multiple business partners. And with the right business accounting services from CloudCfo, you can have more financial control over your business.