How to Register a One Person Corporation

October 31, 2024

Registering a business in the Philippines has been simplified by introducing the One Person Corporation (OPC). This corporate structure enables a single individual to incorporate a limited liability company, streamlining the corporate registration process and offering specific advantages. For many entrepreneurs, particularly those seeking complete enterprise control, the OPC provides a unique opportunity to operate under a corporate structure without requiring multiple shareholders. Below, we’ll examine an OPC, the eligibility and requirements to set one up, the liabilities and benefits involved, tax considerations, and the registration process.

What is a One Person Corporation (OPC)?

A One Person Corporation is a type of corporation wholly owned by a single individual in the Philippines, providing the owner with limited liability protection. Unlike traditional corporations, an OPC does not require multiple shareholders, which allows the individual to retain complete control over business decisions and operations. This structure is ideal for entrepreneurs who wish to maintain sole ownership and authority within their company while still benefiting from the liability protections and credibility associated with corporate entities.

Eligibility to Incorporate a One Person Corporation

The OPC is available to individuals, provided they are either:

A natural person (individual), or
A trust or an estate.

While most individuals can incorporate an OPC, certain professions and business activities are restricted. Notably, those who require a “partnership” by law, such as practicing licensed professionals (e.g., lawyers, doctors), may not register as an OPC. Foreign nationals can also set up an OPC in specific industries, subject to foreign ownership limitations – the Foreign Investment Negative List (FINL) – applicable in the Philippines.

Liabilities and Benefits of Registering a One Person Corporation

Liabilities: One of the primary benefits of an OPC is limited liability, meaning the corporation is a separate legal entity from its owner. This distinction protects the owner’s personal assets in case of business debt or liabilities. However, the owner may still be held liable if they fail to adhere to corporate governance requirements, such as separating personal and business finances, or if fraudulent activities are involved.

Benefits:

Total Control: The owner enjoys complete control over the business, free from the need to consult shareholders.
Corporate Credibility: Operating as a corporation may increase client, customer, and supplier credibility.
Tax Deductions: OPCs can avail of corporate tax deductions, which can benefit business savings and growth.
Ease of Succession: With proper documentation, an OPC allows for a smoother transfer of ownership and assets in the event of the owner’s passing.

Tax Implications for a One Person Corporation

The tax implications for an OPC in the Philippines are similar to those of other corporations. Key tax considerations include:

Corporate Income Tax: OPCs are subject to a 25% regular corporate income tax (RCIT) on taxable income, but for businesses earning net taxable income below PHP 5 million and with total assets below PHP 100 million, a reduced rate of 20% is available.
Minimum Corporate Income Tax (MCIT): The MCIT rate is 1% of gross income, imposed when the RCIT is lower than the MCIT for at least two consecutive years.
Value-Added Tax (VAT): OPCs with annual gross sales or receipts exceeding PHP 3 million must register as VAT taxpayers, and the standard VAT rate on goods and services is 12%.

Director and Paid-Up Capital Requirements

Director Requirements: An OPC can have a single director, typically the owner, who serves as the president and treasurer. However, the owner may need to appoint a corporate secretary and a compliance officer to oversee the corporation’s governance requirements.

Paid-Up Capital Requirements: The minimum paid-up capital for an OPC depends on the nature of the business and whether foreign equity is involved. While there’s generally no minimum capital required for local entities, foreign-owned OPCs may need to comply with industry-specific capitalization requirements.

Process to Register a One Person Corporation in the Philippines

Reserve and Register the Company Name: To ensure your chosen company name is unique and available, submit a name reservation through the Securities and Exchange Commission (SEC) online portal.
Prepare Required Documents: Essential documents for OPC registration include:
- Articles of Incorporation specify the single shareholder and indicate a nominee who will take over in case of death or incapacity.
- A signed affidavit of the nominee.
- SEC Form No. 1 (Application for Registration).
File for Registration with SEC: Submit the prepared documents to the SEC and pay the corresponding registration fees. The SEC will then review and approve the application.
Obtain the Certificate of Incorporation: Upon approval, the SEC will issue a Certificate of Incorporation, officially recognizing the OPC as a legal corporate entity.
Register with Other Relevant Government Agencies:
- Bureau of Internal Revenue (BIR) for tax registration and issuance of a Tax Identification Number (TIN).
- Local Government Units (LGU) to secure necessary permits and licenses, including the Mayor’s Permit.
- Social Security System (SSS), PhilHealth, and Pag-IBIG for employee-related contributions if you plan to hire staff.

Completing these steps will establish your OPC as a fully compliant business entity in the Philippines, allowing you to operate legally and benefit from corporate protections and tax advantages.

Is Assistance Available?

Yes, assistance is available! Registering a One Person Corporation involves various legal and regulatory steps that require attention to detail and compliance with Philippine laws. At Triple i Consulting, we specialize in assisting clients through each phase of the registration process, ensuring a smooth, efficient experience. Our team of experts is well-versed in the latest regulatory requirements and can provide you with the guidance necessary to complete your OPC registration correctly and hassle-free. To learn more about how we can help, contact Triple i Consulting and schedule an initial consultation with one of our experts today through any of the channels below: