Domestic Corporation
Domestic Corporation
It is a form of business entity created in accordance with laws of the Philippines. It is considered as a separate and distinct legal entity from its owners (shareholders), as such it has its own juridical personality.A corporation may enter into contracts and has the capacity to sue and be sued. The liability of the corporation is limited to the assets of the corporation. As such, shareholders are not personally liable for liabilities incurred by the corporation, except in cases of fraud. A corporation is considered as a Filipino domestic corporation if at least sixty (60%) percent of its capital is owned by Filipinos.
Pros:
- Owners are separate from legal liability so they’re not entirely responsible when faced with legal issues or debt.
- Ability to sell the stock, which raises the likelihood of acquiring financial capital.
- Well-established structure with clearly defined roles, accountabilities, and agendas.
Cons:
- The process is time-consuming and expensive, with lots of paperwork.
- Tons of regulations, which make for very little flexibility.
- Possibility of double taxation (where both the corporation’s profits and stockholder’s paid dividends are taxed).