Sole proprietorship vs OPC vs corporation

The short version

Most sari-sari stores, carinderias, online sellers and small service shops start as sole proprietorships because it is the cheapest and fastest route. An OPC makes sense when you are still the only owner but want the business to be a separate corporation. An ordinary corporation fits when two or more people are investing and want shares.

Sole proprietorship: the DTI route

You register a business name online on BNRS, pay by scope (₱200 barangay to ₱2,000 national) plus ₱30 documentary stamp tax, and renew every five years. DTI is clear that this gives the business a legal identity only; you still need a mayor's permit to operate. The full steps are in DTI business name registration.^[1]

The registration is tied to you as owner. It cannot be transferred to someone else, and DTI cancels the name on the owner's death once a relative reports it. If the business will outlive you or change hands, that is a point in favour of a corporation.^[1]

One Person Corporation: one owner, separate company

Only a natural person, trust or estate may form an OPC. You are the sole director and president, you name a nominee and an alternate to take over if you die or become incapacitated, and you appoint a corporate secretary who is not you. If you act as treasurer, you post a bond renewed every two years.^[4]

Limited liability is not automatic. Under Section 130 the single stockholder has to show the OPC was adequately financed, and can be held personally liable if its property is not kept independent of their own.^[4]

Ordinary corporation: for co-owners

Up to 15 incorporators may organize a stock corporation, with no minimum capital stock unless a special law requires it. Domestic stock corporations file on eSPARC, where OneSEC aims for one-day approval. See SEC registration. If you and your co-owners do not want a corporation, a partnership is the other SEC option.^[4,5]

Questions to ask yourself

There is no single right answer. For tax effects of each choice, see BIR taxpayer classification and talk to a CPA before you file.

• Will anyone else put money in, now or within a year?
• Could a customer, supplier or landlord claim more than you can pay from savings?
• Can you keep business money fully apart from household money?
• Do you need a corporation to deal with a big client or bank?
• Is the lower start-up cost of a sole proprietorship worth more to you right now?

Side by side

Questions people ask

Can I switch from a sole proprietorship to an OPC later?

You register the OPC with the SEC as a new entity. If the old DTI name is no longer used, DTI accepts cancellation when business operations stop before the name expires.

Which is cheapest to register?

A DTI sole proprietorship: ₱230 at barangay scope, including the stamp tax. An OPC or corporation starts at a ₱2,000 SEC filing fee before the legal research fee and name reservation.

Can an OPC become a regular corporation?

Yes. An OPC may convert to an ordinary stock corporation after notice to the SEC within 60 days of the change.

Do all three need a mayor's permit and BIR?

Yes. Registration with DTI or SEC is only the first step; every type still gets a barangay clearance, a mayor's permit and BIR registration before opening.