Combining roles does have its advantages, such giving CEO multiple perspectives on company as a result of their multiple roles, and empowering them to act with determination. However, this allows for little transparency into CEO’s acts, and as such their actions can go unmonitored, it paves way for scandal and corruption.

According to Ira Millstein, an expert in corporate governance, an effectively independent board is a shareholder’s best protection. Separating roles allows chair to check up on CEO, and in turn company’s overall performance, on behalf of stockholders.

Separating roles also allows CEO and chairman to focus on different, equally vital aspects of company’s performance.

“We think it is an appropriate segregation of duties. As a business grows, CEO can focus on business and chairman can help with ever-growing regulatory requirements,” noted Lino P. Matteo, CEO for Montreal-based management accounting firm Mount Real.

Ultimately, when chair does not also occupy role of CEO, they are able to govern board in a more impartial manner, meaning that investor returns could potentially be higher.

However, a new survey by three consultants for international management consulting firm Booz Allen Hamilton found that companies that divided roles actually had smaller shareholder returns, leading some to rethink CEO-chairman split.

Dear Reader, These articles will provide a step by step guide on how to start and run a home based business based on my experiences and other home business owners. This is part 2 in a series of 5 articles. They are written in a basic format and where possible main points are summarised in an attempt to be understood by all. I have tried to minimise technical jargon as much as possible.

So lets jump right in and see what we need to know about starting and running a home based business.

Regards, Alvin http://www.parttimeincome.org

I publish Home Business Tips, a fresh and informative newsletter dedicated to supporting people like YOU! If you’re looking for best rated home business opportunities, latest time saving tools and helpful support from a friend in business, come by and a grab a F-R-E-E subscription today at: http://www.parttimeincome.org

Legal Structures

The legal structure of your business is very important as it is a function of liabilities and tax deduction. The most common structures are:

§Sole trader §Partnership §Company §Trust

Sole Trader

When you are a sole trader you are personally responsible and liable for business and its activities. Commonly you may start out as a sole trader, and as you expand, you will need to seek out partners or investors. Your accountant is best person to advise you if this is best structure for your business.

Partnership

This arrangement is where you and your partner are liable for anything related to your business. It is a very good idea to get a solicitor to write up a partnership agreement to avoid disputes down track.

Company

This is a legal entity liable for debts it incurs and paying tax on income. Your accountant can help you set a company up, or you can buy one off shelf, which may be more cost effective.

Trust

Depending on your personal circumstances, and country you live in, trusts can be useful in business and estate planning. They can be quite complex, and again, your accountant is best person to speak too.

Registering Your Business Name

You can operate a business under your own name or register a business name. Registration of a business name allows you to operate under that name. Select a name for your business that describes to your customer what you do. A descriptive name promotes and advertises your business more effectively.

Licences And Permits

Depending on your municipality, you may need licences and permits. Do right thing and check with your local council. Doing right things now will save you a lot of unnecessary leg work later.

Insurance

Often overlooked, insurance is an important part of your risk management plan. There are two types of insurance: general insurance for loss/damage of assets and risk insurance which is your personal insurance cover. Ensure your business insurance is separate to your personal insurance. To establish type and amount of insurance you need for your home based business, check with an insurance broker.

Managing Risk