The 3 Most Popular Types of Business in the Philippines

Are you confused what types of business you need to use for your business? Don’t worry. In this article, we will discuss the business types and things you need to consider before choosing the right business types. Check this out!

What Are Types of Business? What Are the Differences?

What are types of business? Before we discuss more about types of business, you need to understand what business is. So, business is an entity that provides goods or services for their customers in exchange for payment.  There are 3 major types of business in entrepreneurship based on the product offered, such as:

Service Business

The first  types of business organisation is service business. Service business provides no physical form product. It just offers services like skills, expertise, labor and many more. If you are looking for types of business in accounting, the answer is service business because accounting only gives a service in exchange for payment.

Here are several service businesses example you need to know, such as:

• Business services including accounting, taxation, legal, advertising, computer programming, and more.
• Personal services including laundry, salin, car rental, photography, hospitals, schools, and more.

Merchandising Business

One of the business ideas Philippines that you can try is merchandising business. This merchandise business sells products at retail price but buys the product at a wholesale price. These business types make a profit by selling their products at a higher price than the purchase cost.

This type of business is also known as a reseller business. This business also buys and sells the product with no form changing. The example of merchandising business are grocery, electronics, drug store, departement store, home furniture, and more.

Read also: 8 Reseller for Online Business Beneficial Tips for Beginners

Manufacturing Business

Another types of business ideas is manufacturing business. Different from the merchandising business, manufacturing businesses make the product they sell on their own by using a raw material and change it to products. Here are examples of manufacturing businesses.

• Food processing like producing frozen goods, canned meat, bottled drinks, oils mills, bakeries and many more.
• Fabric mills, clothing factories and textile production.
• Woods and metal works like table, chairs, cabinets, building and others.

After you know there are 3 types of business based on the products offered. You also need to know the types of business forms. Here are the business form types for you, such as:

• Sole Proprietorship: The simplest type of business which is owned and operated by a person and the business is easy to set up. It is also known as a small business type.
• Partnership: A business that is owned by more than 1 person who shares responsibilities and profits.
• Limited Partnership: A business partnership usually has business operators and investors on it.
• Corporation: A type of complex and fully-independent business with shareholders or legal entity.
• Limited Liability Company (LLC): A combination of a partnership and a corporation which is one of the most popular business types for newbies.
• Nonprofit Organization: This business uses its profits for charitable purposes.
• Cooperative (Co-op): A business owned and operated for the members benefit.

Read also: 3 Business Plan Examples With Benefits Of Writing It

How to Choose the Right Business Types for You

Choosing the right business types is important because it impacts your business success too. Here are several factors that you need to consider before starting business in Philippines.

Flexibility

The first thing you need to consider is the business ownership flexibility. You need to point and identify who will get the maximum flexibility in the business you made. Besides that, you also need to make your business goals, concerns, list out your business needs as well as the financial issues. Business goals are really important for your business success.

Liability

There is a liability in every business. That’s why you need to examine and list each potential liability of your business organization and consider whether you can take all the risk personally or not. If you can’t handle the risk personally, it is better to avoid the sole proprietorship business form.

Complexity

Another thing you need to consider is the complexity. You need to measure the level of complexity you can take. If you don’t like complicated things, you can choose sole proprietorship. Setting up the sole proprietorship business is easy and simple. You will be the only owner and the only one who will run the business.

Taxes

Don’t forget to consider the taxes because there are taxes that you need to pay when setting up a business. You can consider the taxes matter and find out the way to minimize the taxation.

Control

You need to consider and determine how much control you want to have over the business. If you want to have full control of your business, you can choose LLC or sole proprietorship.

Capital Investment

Another important factor you need to consider is capital investment. If you are looking for outside funding for the business you set up, you can choose a corporation. Corporation is the best choice for you who are seeking funding from bank accounts or other partners.

3 Most Popular Types of Business in Philippines

Are you curious about the types of business to start in the Philippines? Here are the most popular types of business in the Philippines you need to know.

Sole Proprietorship

The first business organization form you can choose is sole proprietorship. This form owned a business in a single person and there are no business partners needed. Sole Proprietorship is the easiest business type to set up and the owner will be the one that handles and is responsible for the business unlimitedly.

Partnership

Different from the sole proprietorship, partnership business can be composed by two or more business partners. Partnership businesses also have unlimited liability unless the owners set up limited-partnership (LP) businesses.

Corporation

Corporation is a business organization that is owned by several people, shareholders or legal entities. Owners will not need to take out their personal assets if there are any corporation debts because corporation is a limited partnership.

Conclusion

Business is an entity that provides goods or services for their customers in exchange for payment. Before you choose the suitable business type, you need to consider things like flexibility, liability, complexity, taxes, control and capital investment.

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