CHAPTER 1

Executive Summary

Brief description of the project

Accounting services are a necessity for the survival of a business and can even

save a ton of money by increasing business efficiency and allowing to make better

financial decisions by providing valuable information such as the assessment of

business solvency and productivity.

Accounting firms provide services such as bookkeeping, accounting, consulting,

business registration, payroll, tax services, trainings, and workshops. The proposed

business of the researchers is an accounting firm which provides business services such

as business process outsourcing which includes bookkeeping, payroll, preparation and

computation of Bureau of Internal Revenue (BIR) mandatory reports ( monthly, quarterly,

annually), preparation and computation of statutory reports Social Security System

(SSS), Philippine Health (PhilHealth), and Home Development Mutual Fund (HDMF, or

previously called as PAGIBIG), accounts payable, receivable management, financial

reporting, and account reconciliation.

Although the proposed business offers wide range of accounting and business

services, it does not include audit services.

1
Brief Profile of the Entrepreneurs

This feasibility study came up through the collaborated efforts, ideas and capital of

the partners, namely: Elaine Organista, from Sual Pangasinan and Razzel Kaye Santos,

from San Fabian Pangasinan. The partners agreed to invest Php 70,000 each for the

establishment of the said business.

Project's Contribution to the Economy

In establishing a business, labor or manpower is a necessity. Providing job

opportunities does not only benefit the people but also the economy itself. Through the

establishment of the business, employment rate will be improved.

An accounting firm provides services such as tax services, and also pays taxes to

the government. Taxation, in government sense, is the life blood doctrine of the

government. Taxes are collected to provide services to the people governed by the

state. In essence, the proposed business not only helps in lessening the unemployment

rate but also through taxes paid which is beneficial to the people.

Project background and history

The project came through the initiative of both proponents. With a finished business

course specifically a Bachelor's degree, this triggered the proponents to establish their

own accounting firm. The proponents decided to be self-employed and to be able to

handle their time freely.

2
Rationale

Basic services of the proposed business are accounting, tax filing and planning,

management consulting, and specialty services. The proposed business has to

outsource its auditing services.

Outsourcing accounting services reduces cost by approximately 40%. However, this

does not reduce job opportunities for accounting graduates. Sectors such as

government, academe, private and public are the open fields that an accounting

graduate could choose.

Establishing an accounting firm requires meaningful experience from any sectors

mentioned above. Meaningful experience is estimated by the proponents at 3 to 5 years

of meaningful work experience related to accounting functions of a business entity.

Proposed name of the business

The proposed business name is OrTos Accounting Firm and Business Services

from the last name of the both researchers. They come up with that business name

because it is easy to remember and catchy.

3
 CHAPTER 2

MARKETING PLAN

The researchers decided to conduct a study on the possibility of

establishing a business firm which will provide its target clients accounting

services in Calasiao, Pangasinan.

The researchers agreed to establish a partnership. A partnership,

according to Article 1767 of Civil Code of the Philippines, is a contract of two or

more persons who bind themselves to contribute money, property, or industry to

a common fund, with the intention of dividing the profit among themselves.

Earning profit is the main reason of the researchers in establishing the

business. The proposed study could give them an opportunity to earn income

based on their efforts and based on the success and failure of the business.

Outsourcing is a business practice of hiring a party outside a company to

perform services that are traditionally performed by the company’s employees

and staffs. By outsourcing accounting services, the company can reduce costs

because establishing accounting departments can be expensive since

accountants receive fixed salary, bonus packages, and employee benefits.

4
Description of the Services

Accounting services are a necessity for the survival of a business and can

even save you a ton of money by increasing business efficiency and allowing you

to make better financial decisions by providing valuable information such as the

assessment of business solvency and productivity.

Accounting services offered by OrTos Accounting Firm and Business

Services includes day-to-day bookkeeping services, taxation services, business

consulting services, and payroll services.

The proposed business produces financial records of the client’s day-to-

day transactions from source documents to the summarized totals.

Tax management is a challenge to businesses the reason why the

proposed business offers assistance to relieve them from worry relating to tax

compliance by providing services in complying tax requirements and deadlines.

OrTos Accounting Firm and Business Services offers range of services

based on the understanding of the business needs designed to address them

directly. However, the proposed business shall only serve as a consultant and

the implementation is directly controlled by the client.

OrTos Accounting Firm and Business Services would also provide payroll

solution from the computation of the employee salaries, bonuses, loans and

government deductions to the preparation of all the required poems and reports

that need to be submitted to different government offices.

5
Comparison of services with its Competitors

OrTos Accounting Firm and Business Services offers the same range of

services as to what its competitors provide. The difference lies with the quality of

service that could be offered.

The direct competitors of the proposed business are those firms who also

offer bookkeeping, taxation, business consulting and payroll services. The

indirect competitors of the firm are those who offer auditing services since the

proposed business does not offer auditing services.

Individuals may also be considered as competitor. These individuals may

have passed the Bookkeeping Examination accredited by the government.

Although some may only understand the basic functions and activities of

bookkeeping, they are still considered competitors of the firm.

6
 Table 1

Comparison of services with the competitors

Ortos
Competitor Competitor Competitor Competitor
Services Accounting
A B C D
Firm
Bookkeeping High Quality Quality Quality Quality High Quality

Payroll Quality High Quality Quality Quality Quality

Taxation
Quality Quality Quality High Quality Quality
Services
Business
Quality Quality High Quality Quality Quality
Consulting

Table 1 shows the comparison of services with the competitors. It is

assumed by the proponents that the competitors offer quality services. The

proponents, however, emphasized bookkeeping to be of high quality. Before

starting the proposed business, the proponents must have passed the

Bookkeeping Examinations and have gained an experience from any accounting

related fields.

Location of the Business

The proposed business will be located at Calasiao, Pangasinan.

Proponents choose the location because there are only four (4) direct

competitors.

7
Market Area

Since the location of the proposed business is at the town proper,

prospective clients are business owners whose business area is in Calasiao.

Nevertheless, the OrTos Accounting firm and Business Services will not limit its

accounting services to other town or cities, the proposed business will also

accept clients from nearby and neighbouring municipalities of Calasiao.

Main Customers

The main clients of the proposed business are business owners whether

sole proprietorship, partnership, or corporation within the locality of Bued,

Calasiao, Pangasinan. However, this does not limit the proponents to accept

clients who have business located outside the municipality of Calasiao.

8
Total Demand

Table 2

Total Business Establishment in Calasiao, Pangasinan

Year Total Business Establishments

2013 999

2014 1042

2015 1139

2016 1180

2017 1341

Table 2 presents the total business establishments in Calasiao,

Pangasinan. The data was collected by the proponents from the municipal office

of Calasiao, specifically at the One-Stop Shop Business Center. The proponents

were given a list of registered business establishments from the said office

including the business’ nature and data.

9
 Table 3

Frequency and Percentage of Business Establishments as to

Willingness to Avail Accounting Services from OrTos Accounting Firm

Response Frequency Computation Percentage

Yes 246 246/320 77

No 74 74/320 23
Total 320 320/320 100

Table 3 shows the frequency and percentage of business establishments

as to willingness to avail accounting services from Ortos Accounting Firm and

Business Services. It is presented that out of 320 business establishments, 246

or 77% of the total sample population are willing to avail accounting services

while 74 business establishments or 23% are not willing to avail the said

accounting services.

The sample population was derived through the Slovin’s formula

presented below:

𝑝
𝑁=
1 + 𝑁𝑒 2

Where:

N = sample population

P = population

e = margin of error (0.05)

10
 Table 4

Frequency and Percentage Distribution of the Respondents as to the

Accounting Services they are willing to Avail

Answer Frequency Percentage

221 29
Bookkeeping
Payroll 165 21

Taxation Services 201 26

Business Consulting 185 24

Total 772* 100

*246 respondents chose more than one (1) service.

Table 4 shows the percentage distribution of the respondents as to the

services they are willing to avail. In this table, there are 246 respondents who

chose more than one service. Out of the 246 respondents; 221 or 29% are willing

to avail the bookkeeping service, 165 or 21% are willing to avail the payroll

preparation service, 201 or 26% are willing to avail the taxation service, and 185

are willing to avail business consulting service.

11
 Table 5

Historical Demand of Bookkeeping, Payroll, Taxation Services and

Business Consulting

HISTORICAL DEMAND
SERVICES
Year Payroll Taxation Business
Bookkeeping
Preparation services Consulting
Total

2013 223 162 200 185 770

2014 233 168 209 193 803
2015 254 184 228 210 876
2016 263 191 236 218 908
2017 299 217 268 248 1032

Table 5 shows the historical demand of bookkeeping, payroll, taxation

services and business consulting services from the years 2013-2017. The total

business establishments in Calasiao, Pangasinan were used to arrive at its

historical demand. The historical demand is computed by multiplying the number

of business establishments by the percentage of the business establishments

that were willing to avail accounting services and by the percentage of the

business establishments that are willing to avail accounting services specifically

bookkeeping, payroll, taxation services and business consulting services.

12
 Figure 1

Historical Demand Data Graph

350

300

250

Bookkeeping
200
Payroll Prepartion
150 Taxation Services
Business Consulting
100

50

0
2013 2014 2015 2016 2017

Figure 1 shows the historical demand data graph of bookkeeping, payroll,

taxation services and business consulting services. The historical demand data

graph shows the trend is constantly increasing. Arithmetic straight line method is

used to present the projections. From this projection, the average annual

increase is computed for the demand of the four services using the formula on

the following page:

For bookkeeping:

Average Annual Increase in Demand = 2017 demand – 2013 demand

No. of years – 1

= 299 – 223
5–1
= 76
4
= 19

13
For payroll preparation:

Average Annual Increase in Demand = 2017 demand – 2013 demand

No. of years – 1

= 217 – 162
5–1
= 55
4
= 14

For taxation services:

Average Annual Increase in Demand = 2017 demand – 2013 demand

No. of years – 1

= 268 – 200
5–1
= 68
4
= 17

For business consulting:

Average Annual Increase in Demand = 2017 demand – 2013 demand

No. of years – 1

= 248 – 185
5–1
= 63
4
= 16

14
 Table 6

Projected Demand of Bookkeeping, Payroll, Taxation Services and

Business Consulting

SERVICES
Year Payroll Taxation Business
Bookkeeping
Preparation services Consulting
Total

2018 318 231 285 264 1098

2029 337 245 302 280 1164
2020 356 259 319 296 1230
2021 375 273 336 312 1296
2022 394 287 353 328 1362
2023 413 301 370 344 1428
2024 432 315 387 360 1494
2025 451 329 404 376 1560
2026 470 343 421 392 1626
2027 489 357 438 408 1692

Table 6 shows the projected demand of bookkeeping, payroll, taxation

services and business consulting services from 2018-2027. The projected

demand was calculated using the formula below:

Projected Demand = Annual Average Increase + Previous Year Total Demand

15
 Figure 2

Projected Demand Data Graph

600

500

400
Bookkeeping

300 Payroll Preparation

Taxation Services

200 Business Consulting

100

0
2018 2019 2020 2021 2022 2023 2024 2025 2026 2027

Figure 2 shows the projected demand data graph of bookkeeping, payroll,

taxation services and business consulting services from 2018-2027. The

numbers stated in Table 6 (projected demand of bookkeeping, payroll, taxation

services and business consulting) are plotted in the graph above. It can be

observed that the graph is in an increasing linear form which means that the

demand for these services increases for the next nine (9) year projection of

demand. It only means that the proponents would be gaining clients annually,

subject to differential changes if the projection of supply would increase also.

16
 Table 7

Historical Supply of Bookkeeping, Payroll, Taxation Services and

Business Consulting

HISTORICAL SUPPLY
SERVICES
Year Payroll Taxation Business
Bookkeeping Total
Preparation services Consulting
2013 185 135 173 161 654
2014 191 140 182 168 681
2015 201 146 189 175 711
2016 213 155 198 184 750
2017 219 163 205 192 779

Table 7 shows the historical supply of bookkeeping, payroll, taxation

services and business consulting services. The number of clients that the

competitors of the firm serve increase annually, however the increased is not

fixed. The data was retrieved by the researchers through interviews. It should be

noted that only estimates were given by the accounting firms.

17
 Figure 3

Historical Supply Data Graph

250

200

150 Bookkeeping
Payroll Preparation

100 Taxation Services

Business Consulting

50

0
2013 2014 2015 2016 2017

Figure 3 shows the historical supply data graph of bookkeeping, payroll,

taxation services and business consulting services for the years 2013-2017. The

historical supply data graph shows constant increase of supply for the four

services. Arithmetic straight line method is used to compute the average annual

increase of supply. Based on the projected method used, the average annual

increase can be computed as:

For bookkeeping:
Average Annual Increase in Supply = 2017 supply – 2013 supply
No. of years – 1

= 219 – 185
5–1
= 34
4
= 9

18
For payroll preparation:
Average Annual Increase in Supply = 2017 supply – 2013 supply
No. of years – 1

= 163 – 135
5–1
= 28
4
= 7

For taxation services:

Average Annual Increase in Supply = 2017 supply – 2013 supply

No. of years – 1

= 205 – 173
5–1
= 32
4
= 8
For business consulting:
Average Annual Increase in Supply = 2017 supply – 2013 supply
No. of years – 1

= 192 – 161
5–1
= 31
4
= 8

19
 Table 8
Projected Supply of Bookkeeping, Payroll, Taxation Services and
Business Consulting

SERVICES
Year Payroll Taxation Business
Bookkeeping Total
Preparation Services Consulting
2018 228 170 213 200 811
2019 237 177 221 208 843
2020 246 184 229 216 875
2021 255 191 237 224 907
2022 264+25 198+14 245+19 232+17 1014
2023 273+28 205+16 253+21 240+19 1055
2024 282+31 212+18 261+24 248+21 1097
2025 291+34 219+20 269+27 256+23 1139
2026 300+37 226+22 277+30 264+25 1181
2027 309+40 233+24 285+33 272+27 1223

Table 6 shows the projected supply of bookkeeping, payroll, taxation

services and business consulting services from 2018-2027. For the year 2022,

the proponents assumed new competitors because the proponents would

establish their business after four (4) years wherein there is a big possibility that

new competitors might exist. It was added to the projected supply of the services.

The projected supply was calculated using the formula below:

Projected Supply = Annual Average Increase + Previous Year Total Supply

20
 Figure 4
Projected Supply Data Graph

400

350

300

250
Bookkeeping

200 Payroll Preparation

Taxation Services
150
Business Consulting
100

50

0
2018 2019 2020 2021 2022 2023 2024 2025 2026 2027

Figure 4 shows the projected annual supply graph of bookkeeping, payroll,

taxation services and business consulting services from 2018-2027. Refer to

Table 8 (projected supply of bookkeeping, payroll, taxation services and business

consulting), it is to be observed that the numbers is in an increasing linear

pattern. One of the reasons of the increase is that the competitors gain new

clients in their firm. This however, doesn’t mean that the proponents will not be

able to increase their number of clients annually. Based on the projected demand

of bookkeeping, payroll, taxation services and business consulting services, it

can be estimated that the proponents will also have their increase in their number

of clients annually.

21
Demand and Supply Analysis

Table 9
Demand and Supply Analysis of Bookkeeping Service

DEMAND AND SUPPLY ANALYSIS

Demand- Percentage
Year Demand Supply
Supply Gap Unsatisfied
2022 394 289 105 27

2023 413 301 112 27

2024 432 313 119 28

2025 451 325 126 28

2026 470 337 133 28

Table 9 shows the demand and supply analysis of bookkeeping service.

Demand-Supply Gap is computed by deducting the supply from the demand. It

represents the difference that the supply does not meet. Percentage unsatisfied

is computed by dividing the demand-supply gap from the demand. It represents

those who were not able to outsource service. It can be observed that the

percentage unsatisfied for the first two (2) years of operations is constant and the

next three years (3) of operations is also constant. Factors that increase the

demand include the realization of establishments of the advantages of acquiring

services from accounting firms. Factors that increase the supply is the new

businesses being established that offers such services.

22
 Table 10
Demand and Supply Analysis of Bookkeeping Service with Market Share

DEMAND AND SUPPLY ANALYSIS

Demand-
Year Demand Supply Market Share
Supply Gap
2022 394 289 105 19 18%

s2023 413 301 112 21 19%

2024 432 313 119 24 20%

2025 451 325 126 27 21%

2026 470 337 133 30 23%

Table 9 shows the demand and supply analysis of bookkeeping service.

Demand-Supply Gap is computed by deducting the supply from the demand. It

represents the difference that the supply does not meet. Refer to table 9,

(analysis of bookkeeping service), proponents assumed their market share by

reasonably estimating the market share they would gain from the percentage

unsatisfied. Market share represents the clients that the proponents would be

able to gain for the next five (5) years. It should be noted that the percentages of

the market share stated above is based on the reasonable estimate of the

proponents. Refer to table 1, (comparison of services with competitors), it is

observed that bookkeeping service offered by the proponents would be of high

quality. However, this does not guarantee that the proponents would gain

substantial market share from this service.

23
 Table 11
Demand and Supply Analysis of Payroll Preparation

DEMAND AND SUPPLY ANALYSIS

Demand- Percentage
Year Demand Supply
Supply Gap Unsatisfied
2022 287 212 75 26

2023 301 221 80 27

2024 315 230 85 27

2025 329 239 90 27

2026 343 248 95 28

Table 11 shows the demand and supply analysis of payroll preparation.

Demand-Supply Gap is computed by deducting the supply from the demand. It

represents the difference that the supply does not meet. Percentage unsatisfied

is computed by dividing the demand-supply gap from the demand. It represents

the portion of businesses that were not able to outsource service. It can be

observed that the percentage unsatisfied for the first year of operations is

increasingly constant and the next three years (3) of operations is the same.

Majority of businesses recognize the importance of outsourcing accounting

services, however on a seldom basis.

24
 Table 12
Demand and Supply Analysis of Payroll Preparation with Market Share

DEMAND AND SUPPLY ANALYSIS

Demand-
Year Demand Supply Market Share
Supply Gap
2022 287 212 75 12 16%

2023 301 221 80 14 18%

2024 315 230 85 16 19%

2025 329 239 90 19 21%

2026 343 248 95 21 22%

Table 12 shows the demand and supply analysis of payroll preparation.

Demand-Supply Gap is computed by deducting the supply from the demand. It

represents the difference that the supply does not meet. Refer to table 11,

(analysis of payroll preparation), proponents assumed their market share by

reasonably estimating the market share they would gain from the percentage

unsatisfied. Market share represents the clients that the proponents would be

able to gain for the next five (5) years. It should be noted that the percentages of

the market share stated above is based on the reasonable estimate of the

proponents.

25
 Table 13
Demand and Supply Analysis of Taxation Service

DEMAND AND SUPPLY ANALYSIS

Demand- Percentage
Year Demand Supply
Supply Gap Unsatisfied
2022 353 264 89 25

2023 370 274 96 26

2024 387 285 102 26

2025 404 296 108 27

2026 421 307 114 27

Table 13 shows the demand and supply analysis of taxation service.

Demand-Supply Gap is computed by deducting the supply from the demand. It

represents the difference that the supply does not meet. Percentage unsatisfied

is computed by dividing the demand-supply gap from the demand. It represents

the portion of businesses that were not able to outsource service. It can be

observed that the percentage unsatisfied for the first year of operations is

increasingly constant and the next two years (2) and the 4 th and 5th year of

operations is the same.

26
 Table 14
Demand and Supply Analysis of Taxation Service with Market Share

DEMAND AND SUPPLY ANALYSIS

Demand-
Year Demand Supply Market Share
Supply Gap
2022 353 264 89 15 17%

2023 370 274 96 17 18%

2024 387 285 102 19 19%

2025 404 296 108 21 19%

2026 421 307 114 23 20%

Table 12 shows the demand and supply analysis of payroll preparation.

Demand-Supply Gap is computed by deducting the supply from the demand. It

represents the difference that the supply does not meet. Refer to table 13,

(analysis of payroll preparation), proponents assumed their market share by

reasonably estimating the market share they would gain from the percentage

unsatisfied. Market share represents the clients that the proponents would be

able to gain for the next five (5) years. It should be noted that the percentages of

the market share stated above is based on the reasonable estimate of the

proponents.

27
 Table 15
Demand and Supply Analysis of Business Consulting Service

DEMAND AND SUPPLY ANALYSIS

Demand- Percentage
Year Demand Supply
Supply Gap Unsatisfied
2022 328 249 79 24

2023 344 259 85 25

2024 360 269 91 25

2025 376 279 97 26

2026 392 289 103 26

Table 15 shows the demand and supply analysis of business consulting

service. Demand-Supply Gap is computed by deducting the supply from the

demand. It represents the difference that the supply does not meet. Percentage

unsatisfied is computed by dividing the demand-supply gap from the demand. It

represents the portion of businesses that were not able to outsource service. It

can be observed that the percentage unsatisfied for the first year of operations is

increasingly constant and the next two years (2) and the 4th and 5th year of

operations is the same.

28
 Table 16
Demand and Supply Analysis of Business Consulting Service with Market

Share

DEMAND AND SUPPLY ANALYSIS

Demand-
Year Demand Supply Market Share
Supply Gap
2022 328 249 79 14 18%

2023 344 259 85 16 19%

2024 360 269 91 19 21%

2025 376 279 97 21 22%

2026 392 289 103 23 22%

Table 12 shows the demand and supply analysis of payroll preparation.

Demand-Supply Gap is computed by deducting the supply from the demand. It

represents the difference that the supply does not meet. Refer to table 13,

(analysis of payroll preparation), proponents assumed their market share by

reasonably estimating the market share they would gain from the percentage

unsatisfied. Market share represents the clients that the proponents would be

able to gain for the next five (5) years. It should be noted that the percentages of

the market share stated above is based on the reasonable estimate of the

proponents.

29
 Revenue Forecast

The proponents charged P1,000 monthly for bookkeeping. Payroll

preparation service is charged at P500 monthly. Monthly tax services are

charged P300 monthly and quarterly tax services are charge at P1,000.

Proponents estimated that the business owners will only aim for once (1) a year

consulting service. Consulting is charged at P3,000 per client. Service fee on

each service offered is to be increased by 5%.

Costing Method

Cost allocation to each services offered by the proponents is reasonably

estimated by the proponents. Bookkeeping consists of two (2) basic functions

which is the preparation of financial statement. The allocation estimated by the

proponents on this service is 30%. Payroll preparation is estimated to be

allocated at 15%. Tax services mainly consist of two (2) basic tax returns which

are monthly and quarterly tax returns. Monthly tax return has an allocation of

20% while quarterly tax return has an allocation of 15%. Consulting consist

mainly of the balanced scorecard which is the basic guide towards the

achievement of goals of the business. In this service, proponents may evaluate

the degree of congruence of the balanced scorecard to the management of the

business. The allocation estimated by the proponents on this service is 20%.

Only directly attributable expenses to the service shall be charged to cost.

30
 Table 17

Service Revenue Forecast (Bookkeeping)

BOOKKEEPING

Number of
Year Fee Frequency Total
Clients
2022 19 1,000 12 228,000

2023 21 1,050 12 264,600

2024 24 1,103 12 317,664

2025 27 1,158 12 375,192

2026 30 1,216 12 437,760

Table 17 shows the service revenue forecast for bookkeeping for the

years 2020 to 2024. Frequency represents the number of months in a year that

the clients will avail the service. The clients are billed at the fixed price of P1,000

per month. Proponents assumed an increase of 5% service fee based on the

previous year service fee.

31
 Table 18

Service Revenue Forecast (Payroll Preparation Service)

PAYROLL PREPARATION SERVICE

Number of
Year Fee Frequency Total
Clients
2022 12 500 12 72,000

2023 14 525 12 88,200

2024 16 551 12 105,792

2025 19 579 12 132,012

2026 21 608 12 153,216

Table 18 shows the service revenue forecast for payroll preparation

service for the years 2020 to 2024. Frequency represents the number of months

in a year that the clients will avail the service. The clients are billed at the fixed

price of P500 per month. Proponents assumed an increase of 5% service fee

based on the previous year service fee.

32
 Table 19

Service Revenue Forecast (Monthly Tax)

MONTHLY TAX

Number of
Year Fee Frequency Total
Clients
2022 15 300 12 54,000

2023 17 315 12 64,260

2024 19 331 12 75,468

2025 21 348 12 87,696

2026 23 365 12 100,740

Table 19 shows the service revenue forecast for monthly tax for the years

2020 to 2024. Frequency represents the number of months in a year that the

clients will avail the service. The clients are billed at the fixed price of P300 per

filing. Proponents assumed an increase of 5% service fee based on the previous

year service fee. Monthly tax service includes the preparation of percentage tax

or value added tax. An addition of excise tax to either percentage tax or value

added tax payers, if the business owners sell sin products.

33
 Table 20

Service Revenue Forecast (Quarterly Tax)

QUARTERLY TAX

Number of
Year Fee Frequency Total
Clients
2022 15 1,000 4 60,000

2023 17 1,050 4 71,400

2024 19 1,103 4 83,828

2025 21 1,158 4 97,272

2026 23 1,216 4 111,872

Table 20 shows the service revenue forecast for quarterly tax for the years

2020 to 2024. Frequency represents the number of months in a year that the

clients will avail the service. The clients are billed at the fixed price of P1,000 per

filing. Proponents assumed an increase of 5% service fee based on the previous

year service fee.

34
 Table 21

Service Revenue Forecast (Business Consulting Service)

BUSINESS CONSULTING SERVICE

Number of
Year Fee Frequency Total
Clients
2022 14 3,000 1 42,000

2023 16 3,150 1 50,400

2024 19 3,308 1 62,852

2025 21 3,473 1 72,933

2026 23 3,647 1 83,881

Table 21 shows the service revenue forecast for business consulting

service for the years 2020 to 2024. Frequency represents the number of months

in a year that the clients will avail the service. The clients are billed at the fixed

price of P3,000 per consultation. Proponents assumed an increase of 5% service

fee based on the previous year service fee.

35
Promotional Measures

Accounting firms are not allowed to explicitly advertise the services they

render. They are only allowed up to a minimum size of tarpaulin to advertise the

services they render. Extravagant strategies in accounting firms are not allowed.

The proponents see that the use of calling cards, tarpaulin and creating a

Facebook page is fit as promotional measures. With this, the partners would be

able to indicate their names, business locations, contact numbers and the types

of services being rendered. The partners may distribute the calling cards to the

business establishments of Calasiao, Pangasinan or they can also do it with

nearby towns. They would also be able make their business location easier to

find because of the tarpaulin used. And, since social media is a trend nowadays,

making an online page would make the prospect clients be more aware of the

business. Proponents however, may also gain clients through referrals from other

acquaintances or even other accounting firms.

Table 22

Advertising Expense

Account Number Cost Annual Cost

Tarpaulin 1 300 P300

Calling Card 320 4.65 1,488

Total P1,788

36
 Table 22 shows the advertising expense of the proposed business. The

tarpaulin (4x5 ft.) costs P300. Each calling card on the other hand, costs P4.65

each, and total cards that will be distributed is 320 cards. The total cost is

P1,788. This expense is only incurred at the first year of operations.

Table 23

OrTos versus Competitor

Ortos
Competitor Competitor Competitor Competitor
Accounting
A B C D
Firm
Customer
Excellent Excellent Quality Quality Excellent
Service

Organized
Excellent Quality Quality Excellent Quality
Office

Pressure
Quality Quality Quality Quality Quality
Handling

Table 23 shows the marketing strategy of the accounting firm which is not

prohibited by the Philippine Accountancy Act of 2004.

37
Terms and Conditions

The proponents will only accept business owners who were duly

registered in their respected town and revenue district. Permits such as mayor’s

permit, barangay clearance, BIR permit, and other necessary permits in a certain

business hall be required by the proponents. Valid identification cards together

with birth certificates shall also be presented to the proponents.

Clients will be billed accordingly to the services rendered by the

accounting firm and the rate shall depend upon the nature, timing and extent of

the work done by the accounting firm. Any necessary expenses incurred by the

accounting firm in bringing the files to the clients for purposes such as signing

and billing could also be added to the billing amount of the accounting firm.

Financial records, working papers, and other information of the business

of the clients shall be kept confidential.

Costs incurred by the accounting firm to each client shall remain

confidential. Any information shall not be disclosed to competitors or even to the

clients of the accounting firm.

A client is allowed to visit the accounting firm if he or she may wish.

However, it shall only be done during office hours. The firm is available from

Mondays to Fridays, 8;00 AM to 5:00 PM, excluding the lunch break at 12:00 NN

to 1:00 PM.

38
 Chapter 3

Technical Feasibility

This chapter of the study deals with the analysis of the technical feasibility

of establishing a business for bookkeeping, payroll, taxation services and

management consulting in Calasiao, Pangasinan. The strength of the technical

feasibility of the business will depend on the availability of the resources to meet

the demands of the people and assurance of the continuous availability of

supplies.

Trading Process

A bookkeeper’s responsibility is to provide financial statements of the

business so that it is for the accountant to perform its legal and tax management

in a timely manner. The proponents should be able to produce financial records

that give business a reliable and accurate business information. The said record

is not only for the compliance to the law, it is essential for the business for it is

helpful for the decision making for the success of the business. The financial

record must be kept accurate and reliable for a period of 5 years at least, from

the date that the documents or record were obtained, prepared or completed,

whichever is the latest.

A. Bookkeeping

Proponents shall prepare the financial statements of the clients. There are

five (5) basic financial statements for businesses which are the following:

39
statement of financial position, statement of comprehensive income, statement of

changes in equity, statement of cash flows, and notes to financial statements.

Statement of Comprehensive Income includes net income and unrealized

income, such as unrealized gains/losses on hedge/ Derivative financial

statements and foreign currency transaction gains/ losses; Statement in Financial

Position refers to the summary of the financial balances of an individual or

organization. The information on the statement of financial position can be used

for a number of financial analyses, such as comparing debt to equity or

comparing current assets to current liabilities; Statement of Changes in Equity,

views the details the change in owners’ equity over an accounting period by

presenting the movement in reserves comprising the shareholders equity;

Statement of Cash Flows, is a financial statement that shows how changes in

balance sheet accounts and income affect cash and cash equivalents and break

the analysis down to operating, investing and financing activities; and Notes to

Financial Statements, these provide additional information pertaining to a

company’s operation and financial position and are considered to be an integral

part of the financial statements.

B. Payroll Preparation

Proponents shall prepare the salaries of the employees of the business

including the computation for their bonuses, incentives, Social Security System

(SSS), Philippine Health (PhilHealth), and Home Development Mutual Fund

(HDMF, or previously called as PAGIBIG).

40
C. Taxation Services

Proponents shall prepare the tax returns, which are mainly the monthly

and quarterly tax returns of the clients. Monthly tax return shall take form the type

of business tax such as percentage or VAT. Business owners which earn an

amount equal to more than P1,919,500 shall pay VAT and if not shall pay

percentage tax. An addition of excise tax shall be paid monthly. Quarterly tax

returns mainly take form the income earned by the business which shall be

subjected to a tax rate. Taxes shall be paid to accredited banks of the Bureau of

Internal Revenue. Before payment, validation from the BIR District shall be

acquired before proceeding to banks for payment.

D. Consulting

Proponents shall provide consulting services to clients. Business owners

sometimes experience financial problems, marketing dilemmas, and business

growth. Proponents shall provide basic consulting advices to the business

owners. Mainly, the proponents can use the financial reports of the business

owners to determine on how to improve their business’ finances. Consulting

packages are tailored with regard to the nature, timing and extent of the services

to be provided. Also, the nature of the business that the client is engaged in such

as merchandising, manufacturing, and service can also affect the scope of the

consultancy services. The types of organization such as sole proprietorship,

partnership, and corporation may also affect the scope of the consultancy

services.

41
Fix Capital

The following are the needed equipment of OrTos Accounting firm and

Business Services;

Table 24

Operational Equipment

(In Pesos)

ITEMS QUANTITY UNIT PRICE TOTAL

Computer Sets 2 27,250 P54,500

Printer 2 6,500 13,000

Electric Fan 2 1,200 2,400

TOTAL P69,900

Table 21 denotes the cost of the equipment needed in putting up the

proposed business which amounted to P69,900. The amount consists to two (2)

computer sets; two electric fan; and two (2) printers. Equipments are availed by

cash basis to avoid meeting unnecessary credit terms.

42
 Table 25

Furniture and Fixtures

(In Pesos)

ITEMS QUANTITY UNIT PRICE TOTAL

Computer table 2 2,300 P4,600

Table 3 1,355 4,065

Sofa 1 6,000 6,000

Steel Cabinet 1 4,000 4,000

Wooden Chairs 4 500 2,000

Swivel Chairs 2 1,000 2,000

TOTAL P22,665

Table 25 shows the furniture and fixtures of the proposed business

which amounted to P22,665, consisting of two (2) Computer tables; three (3)

tables; one (1) sofa; one (1) steel cabinet; four (4) wooden chairs; and two(2)

swivel chairs. Also this shall be purchased on a cash basis by the proponents.

43
Life of Fixed Capital

The estimated economic benefits of equipment are essential to determine

the depreciation expense to be included in the expenses of the proposed

business. The equipment has an estimated useful life of five (5) years while the

furniture and fixtures will be expensed outright.

Table 26

Depreciation Expense

(In Pesos)

ITEMS QTY UNIT TOTAL SV ESTIMATED DEPRECIATION

PRICE COST ECONOMIC EXPENSE
BENEFIT IN
YEARS
Computer 2 27,250 54,500 6,000 5 P9,700
Sets
Printer 2 6,500 13,000 2,000 5 2,200

Electric 2 1,200 2,400 300 5 420

Fan
TOTAL P12,320

The table 26 presents the annual depreciation expense to be incurred by

OrTos Accounting Firm and Business Services. The equipment has an estimated

salvage value and depreciated trough straight line method. Salvage value was

based on the reasonable estimate of the proponents. The total annual

depreciation expense of the proposed business is P12,320

44
 Table 27

Office Supplies Expense

(In pesos)

ITEMS QUANTITY UNIT PRICE ANNUAL

COST
Pencil 10 7 70
Ballpoint pen 20 7 P140
Correction tape 4 15 60
Continuous Ink* 6 1,000 6,000
Coupon Bond (Short) * 15 120 1,800
Coupon Bond (Long) * 15 130 1,950
Folders (Short) 30 5 150
Folders (Long) 30 6 180
Official receipts 5 40 200
Columnar Book 4 35 140
Journal 4 25 100
Record book 1 40 40
Calculator * 2 450 900
Puncher 1 70 70
Stapler 3 60 180
Stapler Wire 15 boxes 15 225
Heavy Duty Stapler 1 150 150
Heavy Duty Stapler Wire 15 boxes 20 300
Paper Clips 3 boxes 20 60
Fasteners 5 boxes 20 100
Heavy Duty Sharpener 1 120 120
TOTAL P12,935
*Office supplies chargeable to cost amounted to P10,650

Table 27 shows the office supplies of the proposed business in 1 year with

the corresponding quality and cost for a total of P2,285. Office supplies that are

chargeable to cost amounted to P12,935. The office supplies expense is

expected to increase 5% annually.

45
Land and Building

Table 28

Rent Expense

MONTHLY ANNUALLY

Rent Expense 8,000 P96,000

TOTAL P96,000

Table 28 shows the rent expense amounting to P96,000 annually. It is

constant for five (5) years of operation. The rent is paid annually with a monthly

payment of 8,000. The said location has 80 square meters at Bued, Calasiao,

Pangasinan.

Maintenance and Repairs

Table 29

Maintenance and Repair Expense

MONTHLY ANNUALLY

Maintenance and Repair 500 P6,000

Expense
TOTAL P6,000

Table 29 shows the monthly and annual cost of maintenance and repair of

all the equipment to be used in the business, P500 and P6,000, respectively.

46
Source of Equipment

The equipment and furniture and fixture of the proposed business will be

purchased on a cash basis from Calasiao, Pangasinan during the month of

November

Planned Capacity

The proponents conducted this feasibility and study for them to know their

capacity to operate the proposed business. And they found out that it is feasible

and therefore the proponents have the capacity to operate the proposed

business.

Future Capacity

Maintenance, continuous and modern marketing strategies and being

competitive means more profits. That makes OrTos Accounting firm and

Business Services continuously serve the business establishments of Calasiao

and its nearby municipality.

Terms and Conditions of Purchase of Equipment

The proponents agreed to purchase the equipment on cash basis in order

to avoid unnecessary problems regarding the credit terms.

47
Office Overhead Expenses

Table 30

Operating Expenses

MONTHLY COST ANNUAL COST

Utilities 3,000 P36,000

PLDT Bundle 2,500 30,000

TOTAL 5,500 P66,000

Table 30 shows the monthly and annual cost of operating expenses

incurred by the proposed business amounting to P5,500 and P66,000

respectively. The amount paid in utilities includes the electricity usage of air-

conditioning unit, computers and printers; this also includes the water

consumption. PLDT Bundle consists of the telephone and internet to be used in

the day to day operations of the firm. It is assumed by the proponents that the

operating expenses will increase by 1% annually. The expenses are paid in cash

when falls due. The proponents shall avoid delayed payments to avoid

unnecessary charges and disconnection notices or fees.

48
 Chapter 4

Organization and Management Plan

This aspect will discuss the organization’s accomplishment plan. This

includes the form of business, the qualifications, duties and function of the

entrepreneurs, organizational structure with its personnel workforce together with

their basic salary, and the pre-operating activities to be undertaken before the

operation of the business.

Form of Business

OrTos Accounting firm and Business Services shall operate as a

partnership with two partners namely, Elaine T. Organista and Razzel Kaye M.

Santos. Both, agree to carry on the business, contribute money, property and

industry to a common goal and the intent to divide profits among themselves,

absorb loses and be responsible for the debs of the business, if any.

Organizational Structure

Another challenging task in putting up a business is achieving optimally

effective organizational set-up. Business organization requires a good

management for the development of the business as a whole. Skills and

knowledge of each partner are keys for making the business successful. The

proposed business shall be composed to two partners, one acting as an

operation manager and the other as a finance manager. Three (3) staff will be

hired for additional manpower of the accounting firm.

49
 Partner/ Operation Partner/ Cashier/
manager/ Supervisor Finance Manager

ore

Staff Staff Staff

Figure 5

Organizational Chart

Figure 5 shows the composition of the organizational chart the operation

manager, finance manager and the three (3) staff it shows the direct relationship

between the partners and the employees.

Qualifications and Responsibilities of the Entrepreneurs and Employees

Partner: Operation Manager/ Supervisor

Qualifications:

 At least 21- 35 years old

 Male or Female

 Must be a graduate of any business course

 With excellent communication skills

 Can manage ethical and unethical problem

 Must be a computer literate

50
  Must be a flexible and with pleasing personality

Duties and Responsibility:

 Responsible for over-all operation of the business.

 Executes on behalf of the partners, all contracts and agreement affecting

the affair s of the business

 Responsible for the screening of the applicants, appoints, and suspend

employees, prescribe their duties and determines their salaries.

 Responsible for establishing and maintaining good relationship with the

clients and employees.

Partner 2: Cashier/ Finance Manager

Qualifications:

 At least 21- 35 years old

 Male or Female

 Must be a graduate of any business course

 With excellent communication skills

 Can manage ethical and unethical problem

 Must be a computer literate

 Must be a flexible and with pleasing personality

Functions:

 Responsible for bookkeeping activities of the business

51
  Accountable for cash receipts and disbursement transactions of the

business

 Responsible for the cash outflows, inflows and investments of the

business

Staffs

Qualifications:

 Must be of legal age

 Graduate of any business related course

 Must have good moral character

 Must have excellent good habits

 Must be highly skilled in use of Excel Spread Sheets

Employee Benefits

To promote the welfare of the proposed business, the employees shall

enjoy the following benefits:

 The employees will have their days-off during Saturdays and Sundays

 PhilHelth and SSS benefits

Management Policies

The management polices serves as guide to an effective and resourceful

management of the proposed business of quick and reliable decision of the top

management. Below are the following policies of the management:

52
 Secure and maintain organized the accounting firm

 Maintain the confidentiality of the clients

 In order to be organized partners and employees should perform their

assigned duties and responsibilities.

 Avoiding tardiness towards work

Failure or non-observance of the policies stated shall be subjected to

suspension/ dismissal from service depending on the degree.

First Offence : Oral Reprimand

Second Offence : Written Reprimand

Third Offence : Suspension or Dismissal

Employees are only allowed to have three (3) absences every month

except for sick and vacation leaves. The management will have a “No work

no pay” policy. The employee salary will be based on the number of days they

have worked.

53
Pre- Operating Activities

Figure 6

Project Implementation and Timetable

Pre- Operating Year 2021-2022

Activities
Months November December January
Weeks 1st 2nd 3rd 4th 1st 2nd 3rd 4th 1st
Secure the location
Obtain lease
contract
Application and
Registration
Requirements
Secure permits &
Licenses
Purchase business
equipments
Purchase office
supplies
Hire employees
Train employees
Start of operations

Figure 6 shows the Pre- operating activities of OrTos Accounting Firm and

Business Services. On the 1st week of November, the securing of the location

and obtaining the lease contract will be undertaken, on the 2nd week of November

the application and registration requirements; securing of the permits and

licenses of the business will be completed. On the 3 rd week of November the

purchasing of the business equipments will be done and on the last week of

November the purchasing of office supplies will be completed. On the 1st and 2nd

week of December the hiring of employees will be undertaken. On the 3 rd to 4th

54
 week of December the training of the employee will be held. The start of the

operation will be on the 1st week of the month of January year 2022.

Table 31

Salary Expense

Position No. Of Daily Rate Monthly Annual Total

Position Rate Rate Annual
Salary
Staff 3 260 5,200 62,400 P187,200

13th Month 3 260 5,200 5,200 15,600

Pay
Total Salary Expense P202,800

Table 31 shows the details of the salary of the employees per day that is

given by the proponents. The staff will receive P260 a day or P5200 a month with

an annual salary of P60,720. The annual salary of three (3) staff has a total of

P187,200. The number of working days is estimated by the proponents is 20;

absences, otherwise approved is considered deduction to the salary of the staff.

The partners shall receive P300 on a daily rate.

In case of sick leaves, the employees shall file sick leave after (3) days on

the day of absence as not to deduct the daily salary from their monthly salary.

55
Pre-Operating Expenses

Table 32

Mobility Expenses

Activities Amount

Business Registration process

Transportation P700

Hiring & Training of Employees

Communication 100

Encoding & Printing 100

Purchase of Equipment, Furniture & Fixtures and Office Supplies

Transportation 1000

Total 1,900

Table 32 shows the detailed mobility expenses to be incurred by the

proposed business and has a total of P1,900, it includes the business registration

process; hiring & training of employees; and purchase of equipment, furniture &

fixtures and office supplies. These shall be presented on the first year statement

of comprehensive income and not be allocated on the second to fifth year of

projected financial statement since these are incurred before the start of the

business.

56
 Table 33

Administrative Expenses

Admin Expenses Amount

Legal fees P3,000

Total P3,000

Table 33 notes the incurred admin expenses of the proposed business

amounting to 10,000. These are expenses that are necessary before the

proponents shall start its operations. To avoid unnecessary problems, these

expenses are paid in cash. Also, these expanses shall be presented annually

since renewal of permits and licenses are required annually by the government.

57
 CHAPTER 5

FINANCIAL PLAN

This chapter presents the financial statements of the business from 2022

to 2026. These statements are analysed to determine the profitability of the

business within the next five (5) year projection of the financial statements.

Table 34

Total Projected Cost of Capital

Business Essentials Cost

Pre-Operating Expenses P1,900

Furniture and Fixture 22,665

Equipment 69,900

Cash Provisions 45,535

Total P140,000

Table 34 shows the total projected cost of capital which amounts to

P140,000 which shall cover the expenses before the start of operations,

acquisition of equipment, furniture and fixture. Cash provision is the balancing

amount of initial investment less the pre-operating expense, furniture and fixture,

and equipment. The initial investment of each partner shall be P70,000 each.

58
Major Assumptions

a. Service fees are collected on cash basis.

b. Service fees collected by the proponents from the clients are to be

increased by 5% based on the previous year service fee.

c. Office supplies, utilities, and PLDT bundle will increase by 1% annually.

d. Depreciation expense is computed using the straight-line method. Briefly

explained, salvage value will be deducted from the purchase price. The

computed result is divided by estimated useful life.

e. Salary of the staffs will increase by 2% after three (3) years of operation

f. Asset method is used by the proponents wherein 85% is recognized as an

expense for the period.

g. The business will have pay percentage tax which is 3% of the gross

revenue. It is recorded as a liability which shall be paid the following year.

h. Partners will share on profits and losses equally.

i. Partners will not receive salary but are assumed to have an annual

withdrawal from the year 2022-2026 at 30,000, 70,000, 110,000, 150,000,

and 200,000 respectively for each partner.

j. General professional partnership is not subjected to income tax but only

the individual share of the proponents in the profits of the business.

59
60