General Business Files

It is a common belief that management and leadership are the same role. While it is common that a manager also plays the part of the leader, these two roles are truly separate in function and in the way they add to the success of an organization. By understanding the difference between management and leadership you will become more effective in helping others see the road ahead.

To understand the difference between management and leadership, consider the construction of a new road. To build that road there are workers, machinery and tools which are all vital in the road’s construction. Managers help ensure those workers, machinery and tools work together in the most efficient way possible. A manager makes sure those workers are well-trained, motivated, rested and that they know what they’re supposed to do next.

The manager does the same thing with the tools and the machinery to make sure that they’re working correctly and that the workers are able to use them efficiently and safely. This is the role of management. On the other hand, a leader makes sure that the road is going in the right direction before the construction begins. That leader also monitors conditions in new situations to ensure that the road under construction is still the correct one and is still going in the right direction.

How does this affect you as a leader? Are you spending your time managing people when you should be making sure that the road ahead is the one that you want to be on? To expect to be an effective leader you must present a clear vision and a trail you are willing to walk on first. While there are times when it is appropriate for a leader to fill a management role, it is vital to understand the difference between leadership and management so you can be effective no matter which role you happen to be filling at a given time. If you are a leader overseeing managers, it is important that you provide them with the correct perspective so they may be effective in their management role. Don’t manage the managers. Lead them.

If you are not in a formal leadership role, it is also important that you understand that when a leadership opportunity arises there is a difference between being a leader and managing the effort. Even if you end up filling both sets of shoes it’s important to understand the difference in roles in order to fill them effectively. If, on the other hand, you learn how to lead by showing people that you are walking down the right road, you will become a natural leader and will be able to help many others find success as your achieve your own.

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So you’ve written all your plans, you’ve got any financing you need, and you’re all ready to set up your company. Uh, wait a minute… how do you do that?

The Basics.

A company is an entity, separate from you, that you need to create before you can do business. You decide what type of company it will be, you give it a name, and then you send off all the relevant papers to your government and pay any fees that need to be paid. Even for a one-person home business, it’s good to form a company — it keeps the finances apart, and means that you can sell your company to someone else if you want to. Besides, it might be a legal requirement where you live anyway.

Before you do anything else, you should send off for the forms you need to start a company — in the US, for example, you would talk to the SBA (Small Business Administration), while in the UK you would need to get in touch with Companies House. If you’re not sure, your local Chamber of Commerce or your lawyer should be able to advise you.

Types of Company.

The chances are that you will want your company to be ‘limited’, which means that your own liability when it comes to debts and other legal issues is limited to a certain amount, usually the amount that you invested originally. While it is possible to start an ‘unlimited’ company, it offers no real benefit — it just means that you take far more legal risk.

The choice between ‘private’ and ‘public’ companies should be equally easy. A private company can be of any size, and is owned only by the people who started it. A public company, by contrast, is one that can be traded publicly, and may be listed on the stock market — there will be a high minimum share issue requirement for this type of company that will put it well out of your reach, and formal qualifications may also be required.

So the kind of company you need is very probably a limited liability company, usually abbreviated as ‘LLC’.

Legal Requirements.

Before you can start a company, there are a few legal requirements you need to fulfill. You generally need to be over 18 and otherwise permitted to enter into contracts. You must not have been disqualified from being the director of a company, and you also can’t be bankrupt.

So far so simple, right? One last sticking point is that you will usually require two people to act as the directors of your company, not just one — you might have to ask your partner or a lawyer to be another director, or to act as a ‘secretary’.

Fee Time.

You’re likely to be hit for lots of different fees as you go through the process of setting up your company, but none of them should be too large. There will be a company registration fee, as well as a witnessing fee and perhaps some charges for stationery. You may be able to pay extra to have your company registered more quickly.

An Alternative.

If setting up a company sounds like hard work, you’ll be relieved to learn that almost all sorts of people offer comprehensive company registration services that don’t even cost all that much. Expect to pay about twice as much as the standard do-it-yourself fees, but it’s hardly going to break the bank anyway, and it can save you a lot of trouble both now and later on to get things done properly. If this is what you want to do, speak to a lawyer, an accountant, or even a specialized ‘company formation agent’.

Your Obligations.

Finally, be aware that from the moment you set up a company, you may have some obligations placed on you. The largest of these is tax reporting, where you will be required to send in a tax report every tax year. Forgetting to deal with tax issues could land you with a fine, so make sure you understand exactly what you’ve signed up for. You might also be required to do things like putting a small sign with your business’ name on the front of your business premises (your house), or to start writing your company registration number on business-related letters you send.

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