Should you become an OPC?

3 quick questions. Pick an answer to see why.

1. Sales ₱1.5 million, 20% profit. Who pays less income and percentage tax?

The sole proprietor The OPC They pay the same

The sole proprietor's first ₱250,000 of income is tax-free; a company pays 20% from the first peso. ₱52,500 vs ₱105,000.

2. When can a company's flat 20% beat a sole proprietor's graduated rates?

Always, from the first peso When profits are large and kept in the company Only below ₱3 million in sales

Graduated rates pass 20% on average only at higher profits (about ₱1.95M at a 20% margin), and the saving holds only for profit the company keeps.

3. Carla's OPC pays its profit to her as dividends. What happens?

Nothing more, it's already taxed Another 10% is withheld It's taxed again at 20%

Dividends from a company to an individual carry a 10% final tax, which often wipes out the company's advantage.