SECTION I

BUSINESS DESCRIPTION
The Musical Hat Company is a legal firm intended to produce environment-friendly crochet products. Section II explains the business proposals: The product design, product features, research and development, companys current or proposed legal form, and objectives for future growth of the firm. It is a manufacturing company that also offers wholesale and retail. The firm has a subcontractor for crochets located at Upper Cogon, Carcar City, Cebu. The firm and subcontractor agreed that all materials and labor except for the headset will be covered by the subcontractor.

Vision Statement The Musical Hat Company envisions to be a leading company producing creative and innovative music on hat crochets that promotes the merging of fashion and entertainment for local and international market.

Mission Statement To produce durable, fashionable, and entertaining products that blend fashion and music while meeting the convenience of trendy styles.

PROPOSED ENTRY STRATEGY

The Musical Hat Company launches a unique and trendy hat with built-in speakers that would attract and influence the possible consumers to support the product. The management will be willing to issue leaflets, promotional material, and brochures through seminars, exhibits and trade fairs that will be participated by different groups and individuals to notify them about the product, its features and highlights and its utilization and improvisation during exhibits in schools and malls.

DESCRIPTION OF THE INITIAL PRODUCT

Hat Music is a unique crochet hat with speaker. Unlike the ordinary hats and speakers, it is distinctively unique for it is created in a two-in-one style that would fit todays fashion. Hat Music is an inspired stylish combination of chic and musical materials designed for people who love listening to music while wearing trendy hats. A pocket is added in the inside portion of the hat where the wireless headset and micro chip are attached. Consumers would also get the chance to have their hats customized. The product would be very handy for buyers. Aside from the feature mentioned, the product could also protect the user from having their gadgets snatched by telling everyone that he is using a widget while walking on a street or riding a jeepney. The product is designed for all types of customers. Crochet is perfect for the Philippine climate for it is not tightly packed. It gives the owner the privilege of singing with his/her hat and be going trendy.

PRODUCT RESEARCH AND DEVELOPMENT

The company decided to make Hat Music for consumers who love blending music and fashion. This product goes in different colors, designs, and gives enjoyment which makes it unique.

To upgrade the product, last June 28, 2013, Ms. Hergini Handayan and Ms. Flora Mae Saac, a representative of the company, consulted Mr. Jessie Susada, an ITSO (Innovation and Technology Support Office) consultant, about the proposed Hat Music.

These are the indications of Mr. Jessie Susada: Check www.ipophil.gov.ph for patent purposes; Browse the web if the product is already available in the Philippines; and Look for more designs.

COMPANYS PROPOSED LEGAL FORM

Musical Hat Company is into sole proprietorship. It is the simplest form of business that is owned and operated by an individual. This business entity is easy to start and less hassle. The owner receives all the profits from the business and also responsible for all debts and liabilities incurred.

The following are the advantages of sole proprietorship: Complete control and decision-making power over the business.

No attorney is required for set-up; and Easy dissolution.

The following are the disadvantages of sole proprietorship: Short span of business; Unlimited liability; and Less management skills.

STEPS IN ACQUIRING BUSINESS PERMIT 1. BARANGAY CLEARANCE Address : Pahina Central, Cebu City

Function/Purpose : For the registration of the business where it is located.

Steps: 1. Go to the barangay office and present a residence certificate; 2. Wait for the process of the document that you have applied for; 3. Pay the clearance fee; and 4. Claim the barangay clearance with a receipt. 2. MAYORS PERMIT

Government Office : Office of the Mayor Address :Magallanes Street, Cebu City

Function/Purposes :For the Registration of the Business that ensures a business to comply with necessary requirements.

LIST OF STEPS/REQUIREMENTS FOR NEW MAYORS BUSINESS PERMIT:

I. For issuance of Assessment for payment 1. Duly filled-out and notarized application form (must be signed by the owner if Single Proprietor and by the representative if Corporation/Partnership/Cooperative); 2. Photocopy of one valid ID of the signatory; 3. Personal proof of billing of owner (if single proprietor); 4. Picture of the business location that includes the nearby establishments ; 5. Tax Declaration of Land and Building if Real Estate Lessors/Boarding Houses/Dormitories/Pension Houses and the like; 6. For single proprietorship - Department of Trade and Industry Registration Certificate; 7. For partnership or corporation - Certificate of Registration from the Securities and Exchange Commission, and Articles of Incorporation and By laws Board Resolution of Authorized Representative; and 8. For Cooperative - Certificate from the Cooperative Development Authority, Articles of Cooperative and By-laws Board Resolution of Authorized Representative.

II.

For issuance of Business Tax Payment Certificate and Retrieval for Inspection 1. All of the documents enumerated under I;

2. Assessment Sheet; 3. Original Copy of Official Receipts of payment for business taxes, fees and charges; and 4. Original Copy of Community Tax Certificate of the current year. III. For verification of requirements (must be complied within 60 days from the issuance of Business Tax Payment Certificate)-Submit original and photocopy of the following documents: 1. All of the documents enumerated under I and II above; 2. Barangay Clearance with the official receipt of payment; 3. SSS, PHILHEALTH, and PAG-IBIG Clearance; 4. Sanitary Permit indicating the number of Employees; 5. Fire Safety Inspection Certificate; 6. Real Property Tax Clearance or Certificate of NO DELINQUENCY of the immediately preceding year, if the property is owned by the applicant OR Contract of Lease if renting the building and/or land (submit 2 photocopies); 7. BIR Issued Certificate of Registration (COR), BIR Form 0605 (Proof of payment of BIR Annual Registration Fee of Php500.00 per establishment ); 8. Community Tax Certificate of Employees; 9. Occupational Tax and Professional Tax of Employees; 10. Official Receipt of the Registration of Weights and Measures if engaging with Weights and Measures; 11. List of Tax Declaration Numbers of Real Estate Properties subject for rent for Real Estate Lessors;

12. Other Requirements from National and/or Local Government Agencies as the case maybe (Additional Requirements based from the Joint Inspection Team Remarks); and 13. Approved Joint Inspection Team Inspection Report. 3. SANITARY PERMIT

Government Office : City Health Department Address : Carreta, Cebu City

Functions/Purposes : This Permit will ensure that the business has complied the proper sanitation. Steps: 1. Secure an application form for business establishment; 2. Filled out everything that are needed; 3. Pay fees for sanitary permit and sanitary health certificate; and 4. Claim the sanitary permit.

4. BUSINESS PERMIT Government Office : Department of Trade and Industry Address :3rd floor WDC Building, Osmea Boulevard, Cebu City

Function/Purpose :This permit is responsible for the registration of the business and to develop the expansion of Philippine Trade Industry. . For sole proprietors, walk-in application through DTI teller must follow the following steps: 1. Applicant fills out the PBR application form and submits to DTI teller for processing.

2. DTI Teller secures applicants TIN. (If there is an existing TIN, PBR will validate against records). 3. Business Name (BN) Certificate and Employers Registration Numbers (ERNs) are processed. A Transaction Reference Number (TRN) is presented to Cashier for payment of BN fee. Official Receipt of Payment is presented to the DTI Releasing Officer for the BN Certificate. Applicant gets SSS, Phil Health, and PagIBIG ERNs from DTI teller. 4. Certificate of Registration or employer ID can be secured from agencies upon presentation of PBR-generated ERNs.

For SEC-registered companies, walk-in application through teller at DTI Office or SEC must follow the following steps, but note that only partnerships or corporations already registered with the SEC can apply. 1.) Applicant fills out the PBR application form and submits to the teller for encoding and processing. 2.) Applicant also submits photocopies of complete SEC registration documents (i.e., SEC registration certificate, articles of partnership/incorporation). Original copies are required for verification. 3.) Teller transmits application for employer registration numbers (ERNs) to SSS, Phil Health, and Pag-IBIG and applicant gets PBR-generated ERNs. 4.) Certificate of Registration or Employer ID can be secured from agencies upon presentation of PBR-generated ERNs.

5. EMPLOYEE BENEFITS

Government Office : Social Security System (SSS)

Address

: Osmea Boulevard, Cebu City

Functions/ Purpose : To promote social justice and quality of life of every member in the society.

Steps: 1. Fill out this form in two (2) copies and appropriate parts as follows: For Employer Main Office Parts I and III For Employer Branch Office Parts II and III 2. Submit this form to the nearest SSS office with accomplished Employment Report (SS Form R-1A), Specimen Signature Card (SS Form L-501), and a sketch of your business address. 3. The form shall be supported by applicable required documents and signed by authorized signatories:

3.1 If Main Branch

Legal Personality Single Proprietorship

Authorized Signatory Owner or, in his absence, the legal spouse or, in their absence, any representative with Special Power of Attorney(SPA)

Partnership Corporation

Managing Partner President, Secretary Chairman or Corporate

Cooperative Non-stock/Non-profit corporation

Chairman or Corporate Secretary President, Secretary Chairman or Corporate

Manning Principal

Agency

with

Foreign President, Secretary

Chairman

or

Corporate

3.2 If Branch Office

Required Document

Authorized Signatory

Certificate of Operation from the main Highest ranked official of the branch office signed by the President,

Chairman or Corporate Secretary

4. Pay the fee of P165.00 for Employer Registration Plate at the SSS or at any SSS-accredited bank and submit validated Miscellaneous Payment Return (SS form R-6) or SS Form R-6 and Special Bank Receipt with this form. 5. Notify SSS of any changes in data and the status of the employers business operations to avoid being billed for period/s when no contributions are due. Fill up and submit Employer Data Change Request (SS Form R-8) supported by the required documents/s, in any of the following cases: - Temporary suspension, permanent cessation or merger/consolidation of business operations; and - Changes in the employers data such as business name, address, ownership, legal personality, and other relevant information

6. Request for replacement of the Employer Registration Plate, in case of loss or change of business name and/or address that will result to change of SSS branch ownership, using the Application for Employer Registration Plate. 7. Always use your 13-digit Employer Number in all transactions with the SSS.

6. HEALTH BENEFITS

Government Office : Philippine Health Insurance Address : 8th floor, Golden Peak Tower, Gorordo Avenue-Corner Escario Street, Cebu City Steps: 1. Submit the following at any Phil Health Office: Employer Data Record or ER1 Form (in duplicate) Business permit/license to operate and/or any of the following

2. After processing, the employer will be issued the following:

Phil Health Employer Number (PEN) and the Certificate of Registration Phil Health Identification Number (PIN) and Member Data Record (MDR) of registered employees

3. Employers are required to display the Certificate of Registration in conspicuous area of their offices.

7. HOUSING AND LOAN PROGRAMS

Government Office : PAG-IBIG Address : W. T. Tower, Mindanao Avenue-Corner Archbishop Street, Cebu Business Park, Cebu City Purpose : Gives opportunities to every Filipinos to support their financial needs through this program. Steps: 1. Get your checklist of requirements and housing loan forms

Available at the PAG-IBIG offices and on the website www.pagibig.gov.ph .

2. Submit your Housing Loan application to the PAG-IBIG Fund complete requirements. Pay partial processing fee of P 1,000.00(non-refundable) NCR Properties: To be filed at any of the following PAG-IBIG offices: Imus, Kamias, and JELP Business Solution Buildings, Shaw Blvd., Mandaluyong City Provincial Properties: To be filed at the PAG-IBIG office nearest the subject property Processing Period: 15 working days(Inclusive of Credit Investigation and Property Valuation) 3. Receive your Notice of Approval(NOA)/Letter of Guaranty(LOG) & sign your loan document NOA will be released ONLY to the borrower or to the AttorneyIn-Fact for OFW borrowers, provided with SPA 4. Accomplish your NOA requirements for check release You are given 90 calendar days to do the following: For purchase of House and Lot/Purchase of Condominium Unit/Purchase of Lot Give LOG to the seller Proceed to the BIR for payment of Capital Gains Tax and Documentary Stamp Tax. The BIR will issue Certificate Authorizing Registration Proceed to the Local Government Unit (LGU) for payment of Transfer Tax to the PAG-IBIG office to schedule trip to the Registry of Deeds (RD) for transfer of title and annotation of mortgage Proceed to the LGU for Transfer of Tax Declaration.

For construction of House/Home Improvement Proceed to the BIR for payment of Documentary Stamp Tax Proceed to the Registry of Deeds (RD) for annotation of mortgage

For refinancing Proceed to the banks/financing institution to give the Letter of Guaranty (LOG) and Loan and Mortgage Agreement(LMA) Proceed to the Registry of Deeds (RD) for annotation of mortgage

5. Submit to the PAG-IBIG Fund your NOA and complete requirements Your loan will be ready for release within 5 working days

6. Receive loan proceeds at the PAG-IBIG Fund Payee to bring two (2) valid IDs. (Payee is either the borrower, the seller, or a third party to which the loan proceeds is assigned to be released.) Borrower to bring 12 PDCs(if payment is not thru Salary Deduction) Loan proceeds will be released to the person/institution assigned to by the borrower/buyer

7. Start paying your monthly amortization One month from DV/Check Date For house construction/home improvement, one month from DV Check Date of the final loan release

8. TAX REGISTRATION

Government Office : Bureau of Internal Revenue Address : N. Bacalso Avenue Cebu City, Philippines

Function/Purpose : To be responsible for the collection of taxes of the business as well as inspecting taxes. Steps: 1. Go to the Regional District Office (RDO) where your business is located 2. Fill-up the BIR Form 1901 Application for Registration (for Sole Proprietor) 3. Submit completed registration form together with the following:

Certificate of Registration form DTI Barangay Clearance Mayors Business Permit Proof of Address such as Contract of Lease (if rented) or Certificate of Land Title (if owned)

Valid IDs, if applicable.

4. Pay the Registration Form (BIR Form 0605) 5. Register your book of accounts and receipts/invoices. 6. Claim your Certificate of Registration (BIR Form 2303)

9. EMPLOYEE REGISTRATION Government Office : Department of Labor and Employment Address : 2nd floor, GMC Plaza. MJ Cuenco Avenue-Corner Legaspi Street, Cebu City Function/Purpose : Mandated to formulate policies; implement programs and services to protect the rights of every employee.

To pre-register, follow the steps below:

1. Online, visit the Phil-Jobnet website (http//www.phil-job.net). 2. On the DOLE website, click on the 2012 Labor Day and Livelihood Fair Applicant Pre-Registration button, sign-in using a valid e-mail address and password, and tick off the terms of the service box. 3. An account activation message will be sent to the registered e-mail address that will provide an activation link and code. Wait for this message. 4. Upon receipt of this activation message, log-in and create a profile that will serve as a comprehensive online resume to be viewed by participating employers. 5. For applicants who don't want to pre-register online, visit the Public Employment Service Office nearest you.

10. TAX REGISTRATION

Government Office : Barangay Micro Business Enterprise City Treasurers Office Address Function/Purpose : MC. Briones Street, Cebu City :To have a chance to avail the tax exemption of the minimum wage law and other benefits. Steps: 1. Register with the Department of Trade and Industry (DTI) for Business Name Certificate. 2. Apply for business permit and license from the City/Municipality where the business is to be located. Get sector specific clearances: For example: Travel agency Department of Tourism (DOT) Food and Cosmetics Food and Drugs Administration (FDA) Pawnshop Bangko Sentral ng Pilipinas (BSP) Learning centers Department of Education (DepEd) Wood crafts/furniture Department of Environment and Natural Resources (DENR) 3. Register with the Bureau of Internal Revenue (BIR) District Office where the business is to be located for Authority for Print Invoice and Book of Journal. 4. Register your business with the following offices for compliance to good employer-employee relationships, incentives and benefits, and social, community, and environmental responsibilities: Social Security System (SSS) Department of Labor and Employment ( DOLE) Phil Health

PAG-IBIG

5. Start the business.