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4 Things to Consider When Forming a Company

4 Things to Consider When Forming a Company

Everyone wants to live the American Dream and own a successful business. The expansion of the internet has made it very easy for you to register a company and attract a worldwide audience. However, running a business is difficult, especially within the first two years of operation. It’s stated that 75% of new businesses don’t survive more than three years because of strict competition and the lack of experience.

However, you can protect yourself from losing everything if you know what business type you should be registering. For example, did you know when you register a limited liability company your personal wealth will not be impacted because the banks and loan companies won’t be able to come after you? Today, we’ll be going over the different types of companies you can register when starting out in business. Specifically, we’ll be exploring the following types:

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  • Companies limited by shares
  • Sole proprietorship
  • Companies limited by guarantee
  • Limited liability partnerships

Companies Limited by Shares

This accounts for the majority of companies registered around the United States, Canada, and the United Kingdom. With this structure, you have completely separated yourself from the company so if anything happens, you personally won’t be held liable. For example, with this type of company, owners have limited financial liability and their personal finances will be protected. If anything happens to the company, the banks can only liquidate the belongings of the company, i.e. inventory, the building, credit registered in the company name, etc. When structuring this type of company, it’s important all lines of credit and purchases are made under the company name.

Some other benefits include:

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  • The status of “limited corporation” greatly increases your brand and credibility
  • You can sell shares to increase cash that’s available
  • Increased chance of acquisition by another company
  • Owner can easily be passed on by selling your shares
  • Larger tax breaks and credits

Sole Proprietorship

This type of company can be registered very easily by going online to the local business bureau website. A sole proprietorship is registered under your own name so you are personally liable for financial losses afterwards. It’s a risky type of business model, but people proceed with registration because they have very little start-up money. It’s recommended to avoid this type of business model when starting or switching over to limited liability as you start to grow. The only benefit of such a model is that you’ll pay very little tax compared to any other type of business structure.

Company Limited by Guarantee

This company structure is mostly associated with non-profit organizations, like charities, NGO’s, sports clubs, and membership organizations. When you open a limited guarantee company, you will hold no financial responsibility as most of the debt is protected by guarantors who have invested to support the non-profit cause. This type of company has no shareholders and are funded by a small group of private companies wishing to sponsor your cause and no profits will be distributed to them since they re-invested to help promote the non-profit objectives of the company.

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Some other benefits of this type of company formation:[1]

  • No financial loss to the non-profit organization
  • Higher tax breaks because money is given to charitable causes
  • Debt is protected by guarantors

If you will be operating a non-profit organization, then always register this type of business model.

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Limited Liability Partnerships

If you will be operating as a partnership, then a limited liability partnership (LLP) is the best type of structure to follow. Normally professionals will register this type of company to make sure everyone has a say in the decision process. Not to mention, the partners are the owners of shares never being sold so they can keep full control of the LLP. However, financial consequences can be huge if one partner decides to pursue fraudulent business deals because the whole partnership will be held responsible.

Some other benefits include:

  • Larger tax breaks for everyone in the LLP
  • Profits are shared equally amongst all partners
  • LLP members can be located anywhere in the world
  • You can appoint another company to be part of the LLP (grow company through partnerships)

Final Thoughts

If you are planning on registering a company, then use this guide to explore your options and decide which type of business works well with your objective. I would recommend a limited liability because you have full control of your company and can sell shares at any time to raise capital. All financial burden will be on the company so your personal finances and assets will be protected no matter what the outcome. I would also recommend consulting a lawyer before getting started so you have all the important information you need.

Reference

[1]https://www.1stformations.co.uk/introduction-to-company-formation/

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Last Updated on August 16, 2018

10 Huge Differences Between A Boss And A Leader

10 Huge Differences Between A Boss And A Leader

When you try to think of a leader at your place of work, you might think of your boss – you know, the supervisor in the tasteful office down the hall.

However, bosses are not the only leaders in the office, and not every boss has mastered the art of excellent leadership. Maybe the best leader you know is the co-worker sitting at the desk next to yours who is always willing to loan out her stapler and help you problem solve.

You see, a boss’ main priority is to efficiently cross items off of the corporate to-do list, while a true leader both completes tasks and works to empower and motivate the people he or she interacts with on a daily basis.

A leader is someone who works to improve things instead of focusing on the negatives. People acknowledge the authority of a boss, but people cherish a true leader.

Puzzled about what it takes to be a great leader? Let’s take a look at the difference between a boss and a leader, and why cultivating quality leadership skills is essential for people who really want to make a positive impact.

1. Leaders are compassionate human beings; bosses are cold.

It can be easy to equate professionalism with robot-like impersonal behavior. Many bosses stay holed up in their offices and barely ever interact with staff.

Even if your schedule is packed, you should always make time to reach out to the people around you. Remember that when you ask someone to share how they are feeling, you should be prepared to be vulnerable and open in your communication as well.

Does acting human at the office sound silly? It’s not.

A lack of compassion in the office leads to psychological turmoil, whereas positive connection leads to healthier staff.[1]

If people feel that you are being open, honest and compassionate with them, they will feel able to approach your office with what is on their minds, leading to a more productive and stress-free work environment.

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2. Leaders say “we”; bosses say “I”.

Practice developing a team-first mentality when thinking and speaking. In meetings, talk about trying to meet deadlines as a team instead of using accusatory “you” phrases. This makes it clear that you are a part of the team, too, and that you are willing to work hard and support your team members.

Let me explain:

A “we” mentality shifts the office dynamic from “trying to make the boss happy” to a spirit of teamwork, goal-setting, and accomplishment.

A “we” mentality allows for the accountability and community that is essential in the modern day workplace.

3. Leaders develop and invest in people; bosses use people.

Unfortunately, many office climates involve people using others to get what they want or to climb the corporate ladder. This is another example of the “me first” mentality that is so toxic in both office environments and personal relationships.

Instead of using others or focusing on your needs, think about how you can help other people grow.

Use your building blocks of compassion and team-mentality to stay attuned to the needs of others note the areas in which you can help them develop. A great leader wants to see his or her people flourish.

Make a list of ways you can invest in your team members to help them develop personally and professionally, and then take action!

4. Leaders respect people; bosses are fear-mongering.

Earning respect from everyone on your team will take time and commitment, but the rewards are worth every ounce of effort.

A boss who is a poor leader may try to control the office through fear and bully-like behavior. Employees who are petrified about their performance or who feel overwhelmed and stressed by unfair deadlines are probably working for a boss who uses a fear system instead of a respect system.

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What’s the bottom line?

Work to build respect among your team by treating everyone with fairness and kindness. Maintain a positive tone and stay reliable for those who approach you for help.

5. Leaders give credit where it’s due; bosses only take credits.

Looking for specific ways to gain respect from your colleagues and employees? There is no better place to start than with the simple act of giving credit where it is due.

Don’t be tempted to take credit for things you didn’t do, and always go above and beyond to generously acknowledge those who worked on a project and performed well.

You might be wondering how you can get started:

  • Begin by simply noticing which team member contributes what during your next project at work.
  • If possible, make mental notes. Remember that these notes should not be about ways in which team members are failing, but about ways in which they are excelling.
  • Depending on your leadership style, let people know how well they are doing either in private one-on-one meetings or in a group setting. Be honest and generous in your communication about a person’s performance.

6. Leaders see delegation as their best friend; bosses see it as an enemy.

If delegation is a leader’s best friend, then micromanagement is the enemy.

Delegation equates to trust and micromanagement equates to distrust. Nothing is more frustrating for an employee than feeling that his or her every movement is being critically observed.

Encourage trust in your office by delegating important tasks and acknowledging that your people are capable, smart individuals who can succeed!

Delegation is a great way to cash in on the positive benefits of a psychological phenomenon called a self-fulfilling prophecy. In a self-fulfilling prophecy, a person’s expectations of another person can cause the expectations to be fulfilled.[2]

In other words, if you truly believe that your team member can handle a project or task, he or she is more likely to deliver.

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Learn how to delegate in my other article:

How to Delegate Work (the Definitive Guide for Successful Leaders)

7. Leaders work hard; bosses let others do the work.

Delegation is not an excuse to get out of hard work. Instead of telling people to go accomplish the hardest work alone, make it clear that you are willing to pitch in and help with the hardest work of all when the need arises.

Here’s the deal:

Showing others that you work hard sets the tone for your whole team and will spur them on to greatness.

The next time you catch yourself telling someone to “go”, a.k.a accomplish a difficult task alone, change your phrasing to “let’s go”, showing that you are totally willing to help and support.

8. Leaders think long-term; bosses think short-term.

A leader who only utilizes short-term thinking is someone who cannot be prepared or organized for the future. Your colleagues or staff members need to know that they can trust you to have a handle on things not just this week, but next month or even next year.

Display your long-term thinking skills in group talks and meetings by sharing long-term hopes or concerns. Create plans for possible scenarios and be prepared for emergencies.

For example, if you know that you are losing someone on your team in a few months, be prepared to share a clear plan of how you and the remaining team members can best handle the change and workload until someone new is hired.

9. Leaders are like your colleagues; bosses are just bosses.

Another word for colleague is collaborator. Make sure your team knows that you are “one of them” and that you want to collaborate or work side by side.

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Not getting involved in the going ons of the office is a mistake because you will miss out on development and connection opportunities.

As our regular readers know, I love to remind people of the importance of building routines into each day. Create a routine that encourages you to leave your isolated office and collaborate with others. Spark healthy habits that benefit both you and your co-workers.

10. Leaders put people first; bosses put results first.

Bosses without crucial leadership training may focus on process and results instead of people. They may stick to a pre-set systems playbook even when employees voice new ideas or concerns.

Ignoring people’s opinions for the sake of company tradition like this is never truly beneficial to an organization.

Here’s what I mean by process over people:

Some organizations focus on proper structures or systems as their greatest assets instead of people. I believe that people lend real value to an organization, and that focusing on the development of people is a key ingredient for success in leadership.

Learning to be a leader is an ongoing adventure.

This list of differences makes it clear that, unlike an ordinary boss, a leader is able to be compassionate, inclusive, generous, and hard-working for the good of the team.

Instead of being a stereotypical scary or micromanaging-obsessed boss, a quality leader is able to establish an atmosphere of respect and collaboration.

Whether you are new to your work environment or a seasoned administrator, these leadership traits will help you get a jump start so that you can excel as a leader and positively impact the people around you.

For more inspiration and guidance, you can even start keeping tabs on some of the world’s top leadership experts. With an adventurous and positive attitude, anyone can learn good leadership.

Featured photo credit: Unsplash via unsplash.com

Reference

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