One of the notable advancements introduced by the Revised Corporation Code of 2019 is the One-Person Corporation (OPC), a corporate structure specifically designed to meet the needs of solo entrepreneurs and small business owners.

The OPC combines the straightforwardness of a sole proprietorship with the protective features of a corporation, allowing individuals to enjoy limited liability, which is not a benefit available to sole proprietors. This is particularly advantageous, as it separates personal assets from business liabilities, safeguarding personal wealth from business risks.

The flexibility provided by the OPC is further enhanced by its streamlined registration process and the capability for remote setup, making it an ideal choice for those wishing to start a business in the Philippines with minimal administrative burdens.

The advent of the OPC is especially significant for foreign investors and consultants who often face regulatory challenges when entering new markets. By utilizing this corporate structure, they can operate their businesses more effectively while remaining compliant with local laws.

Moreover, the potential for financial benefits has been magnified through recent legislative developments, such as the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act.

This act reduced Regular Corporate Income Tax (RCIT) rates from 30% to 20% for domestic corporations with net taxable income not exceeding PhP 5 million and total assets not exceeding PhP 100 million.

For other domestic corporations and resident foreign corporations, the RCIT is reduced to 25%. This change, effective July 1, 2020, presents an opportunity for OPCs to benefit from a more favorable tax environment.

Additionally, the CREATE Act lowered the Minimum Corporate Income Tax (MCIT) rate from 2% to 1% of gross income from July 1, 2020, to June 30, 2023.

This is particularly advantageous for corporations that may report negative taxable income, as the MCIT ensures a lower tax burden compared to the standard RCIT.

As a result, small and medium enterprises, particularly those previously managed as sole proprietorships, may find it fiscally advantageous to transition to an OPC or standard corporation structure.

As tax implications can vary significantly based on a business’s income and expenses, consulting with a tax attorney or financial consultant is advisable to ensure optimal business structuring and compliance. This shift not only promotes business growth but also encourages a more robust entrepreneurial ecosystem in the country.

What Is an OPC?

An OPC is a corporation with only one stockholder, who can be a natural person (Filipino or foreigner) or a juridical entity. It offers:

• Limited liability protection — owner’s personal assets protected up to invested capital.
• Simplified governance — no board of directors, no need for annual meetings.
• Corporate personality — your business operates as a separate legal entity.

It’s ideal for professionals, consultants, digital service providers, BPOs, and entrepreneurs running lean operations with one shareholder.

Benefits of an OPC

1. Full Ownership & Decision-Making Power
2. As the sole shareholder, you retain 100% control—no need to consult partners or raise capital approval.
3. Limited Liability
4. Risk is contained—your personal assets are separate from corporate liabilities.
5. Easier Governance
6. No need to hold regular board meetings or prepare minutes. Only a Corporate Secretary is required (who can also be you).
7. Credibility with Clients & Financial Institutions
8. As a corporate entity, you’re recognized by banks, clients, and partners more readily than a sole proprietorship.
9. Simplified Conversion
10. You can convert to a regular domestic corporation if you decide to scale, add shareholders, or seek investors.

Limitations & Considerations

• Mandatory Annual Compliance
• Annual submission of the General Information Sheet (GIS) and Audited Financial Statements (AFS) is required, even with one owner.
• Corporate Formalities
• You need a Corporate Secretary and a Corporate Treasurer—these roles cannot be combined in the same person (unless you appoint a representative).
• Corporate Taxation
• OPCs are taxed like any other domestic corporation (20–25% CIT under the CREATE Act) and can’t enjoy individual income tax brackets.
• Conversion Costs
• Transitioning to a stock corporation involves SEC filing and potential notarial expenses.

Incorporation Process

Here’s a step-by-step summary to set up your OPC:

1. Name reservation via the SEC online portal.
2. Submission of Articles of Incorporation (AOI) and By‑Laws (if desired).
3. Appointment of a Corporate Secretary (different from the single shareholder) and payment of the subscriber’s fee.
4. Filing requirements:
   • Proof of capitalization (no minimum, but recommended PHP 5,000).
   • Management, capital, and office address (can include a virtual office).
5. Issuance of Certificate of Incorporation by the SEC.
6. Eventual BIR registration for TIN, Authority to Print Receipts, and Books of Accounts.
7. Registration with local agencies (Mayor’s permit, barangay permit), followed by remittances with SSS, PhilHealth, and Pag-IBIG.

Timeline: 10–20 business days (can be done entirely remotely with professional assistance).

Ongoing Compliance

• Annual SEC filings: GIS & AFS within 30 days after the anniversary.
• BIR compliance: Quarterly income returns, percentage taxes, or VAT filings.
• Monthly/quarterly remittances: For employee contributions and withholding taxes.
• Local licenses/permits: Renew annually (Mayor’s permit, TIN, zoning, barangay).
• Accountability: Company books and annual audits must be kept current.

OPC Conversion Options

If you want to grow and expand your shareholding structure later, you can convert:

• OPC → Stock Corporation: Additional shareholders admitted, revised Articles filed with the SEC.
• OPC → Branch Office or Subsidiary: For foreign expansion, including PEZA/BOI registration—requires new formation and capitalization.

FAQ: Common Questions

Can a foreigner be the sole owner of an OPC?

Yes—100% foreign-owned OPCs are allowed except in industries restricted by the Foreign Investment Negative List (e.g., mass media, public utilities).

Do I need a business permit if I only operate remotely?

Yes—Mayor’s Permit and barangay registration are still required, unless you qualify for home-office exemptions.

How much capital is required?

No minimum per law, but PHP 5,000–50,000 is recommended for a realistic corporate profile with banks and investors.

Does OPC have to hold meetings?

No board meetings needed. As a shareholder, you can sign resolutions and appoint officers unilaterally, subject to SEC guidelines.

What if I want someone to manage the company?

You may appoint a manager or representative (POA can be executed) for operations; a Corporate Secretary needs to fulfill statutory duties.

Why Engage DavaoAccountants

At DavaoAccountants, we specialize in supporting OPC clients—whether you’re local or overseas. We offer:

• Full-service incorporation: Name reservation, SEC filing, and virtual address setup.
• Compliance management: BIR registration, permits, bookkeeping, remittances, and filings.
• Strategic planning: Capital optimization, conversion to PEZA/BOI, and corporate governance.
• Conversion services later on if you decide to scale or change structure.

Ready to Launch Your OPC?

The One‑Person Corporation is the ideal structure if you want the simplicity of sole proprietorship but the credibility, liability protection, and long-term potential of a corporation, with just one owner.

Let’s talk about your business objectives, and design an OPC package tailored for you—with virtual incorporation options, straightforward compliance, and scalability.

Contact DavaoAccountants today for your free initial consultation and make your move toward corporate success in Mindanao and beyond.

This article is intended for general informational purposes and does not constitute legal, tax, or financial advice. Consult a licensed professional to assess your specific situation.