In the Philippines, business establishment is permitted for both domestic and foreign entrepreneurs. In the Philippines, there are basically three types of business vehicles. These include companies, partnerships, and single proprietorships (both domestic and foreign).

• Sole Proprietorship- A sole proprietorship is a business run by a single natural person, and the owner has unlimited responsibility. The business is also independent of its owner and does not exist as a separate legal entity.
• Partnership- By signing a contract, two or more people can form a business partnership. Here, two or more partners agree to contribute funds, assets, and labour to the partnership structure with the goal of engaging in business endeavors to make profits that will be divided amongst themselves. A partnership is regarded as having its own distinct legal personality in the Philippines. The debts and obligations of the partnership are wholly borne by the partners.
• Corporations- In the Philippines, a corporation is comparable to an LLC or a limited liability company in other countries. Under the current regulations governing the incorporation of corporations by foreigners, a foreigner may register a corporation. The six categories of businesses that a foreign entity may set up in the Philippines are listed below. These consist of:

  1. Regional Operating Headquarters (ROHQ)

  2. Domestic Corporation

  3. One Person Corporation

  4. Branch Office

  5. Representative Office

  6. Regional Headquarters (RHQ)

• Local company or subsidiary- A foreign business may establish an entity in the Philippines via the following forms: Subsidiary or a domestic corporation. It has a distinct legal personality from its stockholders as a corporate concern. A Limited Liability Company or a Private Limited Company with comparable structure can be found in various nations.

The minimum number of incorporators needed to form a domestic corporation has been reduced from 5 to 2, but the maximum number of incorporators has only been set at 15, in accordance with the most recent revisions to the Revised Corporation Code and the most recent rules introduced in the SEC Memorandum Circular No. 16 of the 2019 series. This makes it possible to form corporations with two, three, and four members.

These incorporators, who must sign the articles of incorporation, were first stockholders. Each incorporator shall continue to hold at least one share when the company was incorporated. The most recent changes allow any combination of partnerships, associations, corporations, and natural persons to register a domestic corporation, when before this was only possible for natural persons.

The new Commercial Code does not require a minimum capital stock for stock corporations unless a different law specifically mandates it.

• One-person business (OPC)- The Revised Commercial Code and SEC regulations have also made it possible to register a one-person corporation (OPC), in which a single natural person can establish the company and serve as its sole stockholder. The corporation's sole incorporator, director, and president is this individual. The OPC's obligation is constrained by the corporate assets' scope and does not extend to the corporation's individual assets.

The establishment of an OPC by a foreigner is permitted, but they must once more adhere to the Foreign Investment Negative List. A nominated stockholder and an alternate nominee stockholder must also be named in the articles of incorporation by the OPC. If the primary person dies, these people will take over the OPC's duties. Once more, the OPC has 15 days to nominate a corporate secretary or treasurer. When providing a surety bond, the sole shareholder might serve as the treasurer.

• Branch Office- Foreign businesses looking to establish a presence in the Philippines may use the branch office structure. This branch office is an outgrowth of its foreign parent company in Philippines and not a separate legal entity. Therefore, the foreign business is in charge of the company's entire debt load. It has been incorporated in accordance with the laws of the foreign country in which it has done so.

Foreign firms must also select a resident agent to receive letters from government agencies on behalf of the branch office. A domestic corporation or an individual may serve as this resident agent.

The same as for a domestic corporation, there are setup charges. It can register with 5,000 if it exports more than 60% of its total sales. Additionally, the overseas parent firm is obliged to provide an annual deposit of 5,00,000. Additionally, if the branch office's annual revenue exceeds $10 million, then the There will be a 2% annual increment on the first $5,000.

• Representative Office- A foreign business may start by setting up a branch office in the Philippines prior to making sizable investments there. It does not have permission to produce income both inside and outside of the Philippines, despite the fact that it is an extension of its international parent business and that its parent company alone is responsible for paying its responsibilities.

It is only allowed to serve as a liaison office, supporting its parent business's marketing and sales efforts, performing market research, checking the quality of items related to the foreign company, etc. The required capital is at least $30,000. It hasn't been allowed to make money or provide services to other clients. Additionally, it is not eligible for tax benefits.

• Regional Executive (RHQ)- A Regional Headquarters is an administrative division of a foreign organization that has been granted permission to inspect, monitor, and oversee the operations of the corporation's branches, representative offices, and affiliates globally. It serves as a hub for communication for all of its partners. It is not permitted to make money and does not have a separate legal identity. It can carry out developmental projects in the Philippines, obtain raw resources, perform research and development, and train staff.

An RHQ must choose a resident agent and provide documentation of its registered business address, just like Representative Offices. $50,000 is the required paid-up capital to launch a RHQ. It is prohibited from running the business of its parent company’s affiliations, branches, and affiliates. It is unable to generate any revenue or provide services to outside parties. With the customers of its parent firm in the Philippines, it may pursue any business. Additionally, none of these operations may be carried out by its parent firm through its RHQ.

• Regional Operating Headquarters (ROHQ)- An extension of its overseas parent firm, the Regional Operating Headquarters (ROHQ) is able to make money by providing the authorized services to its head office, subsidiaries, branch offices, and other affiliates all over the world. It is not a distinct legal person.

It is necessary to name a resident agent and provide documentation of a registered business address, just like RHQ. The minimal paid-up capital needed to establish a ROHQ is $200,000. It cannot solicit business from any other firm by providing any qualified services for anybody other than its parent company and its affiliates.