CEO or Managing Director? Who will i be?

Ok, i would say i am still a freelancer. One of my client who is CEO of his company, an Omani wanted me to start a business and he is ready to sponsor me. He would provide me with the Visa. He gave me three options like
1. Work as an employee
2. Partnership Business
3. Sole Proprietorship

Well since am just an engg student i would like to know what sole proprietorship means. I dont know is it something that i assume right now. If i select the Sole Proprietorship option, what would be my designation? Is it a CEO or Managing Director? I know i will be the owner of the business but which one would be correct to say CEO / Managing Director ?

THANKS IN ADVANCE!

Well, yes, it means you own the business. It almost means you are personally responsible for any lawsuits or debts.

Yeah! i own that business.....but am i the CEO or MD what??

Originally Posted by unikorndesigns Yeah! i own that business.....but am i the CEO or MD what??

The term CEO is used fairly loosely, but I generally associate that title with a board of directors of a corporation. The title of OWNER would be better suited to your choice. There's a lot of prestige associated with being the owner of your company, whether it's a 3 person shop or has 100's of employees.

alright thanks....thats what i call a reply....!

Unikorndesigns,

Your sponsor offered you three choices. It seems to me that they represent varying levels of his involvement. They are:

1. Work as an employee

In this case I assume you would work in an appropriate division of his business. It's not clear whether he would be creating this division for you or you would become part of an existing department.

The advantage to this would be your employer would give you work and handle administrative tasks. Social benefits (vacation, sick days & holiday pay, at least some insurance and possibly pension) would be taken care of. You could concentrate on work.

The disadvantage is that you wouldn't be your own boss.

2. Partnership Business

In this situation, I imagine you would have more autonomy than you might as an employee, but you would be self employed in a partnership. The trick to a good partnership is a solid legal agreement that outlines the responsibilities of each partner.

This would be a good choice if your sponsor has a lot of business experience or business contacts that you don't have. On the other hand, you and your partner would be legally responsible for each other in the business. And you may find that managing a partnership is as time consuming and as managing a business--this is a personality thing.

3. Sole Proprietorship

This is one of several forms a small business might take and if your sponsor suggested this I imagine that he would provide start up funding and expect some kind of accountability from you but you would be on your own in terms of finding clients and managing your business.

In this scenario, you would be a business owner, as you would be in a partnership, and typically you might call your self "sole prop.," "owner," "principal" or something else.

CEO and Managing Director, like President to some extent, imply a much larger organization than you suggest yours would be. Each of these titles usually indicates a position that reports to a Board of Directors. You need a Board of Directors if you are a corporation but you probably want to avoid this if you're a solo entrepreneur.

Seems to me your choice should depend not on the title you'd have, but on your confidence in your ability to run and manage a business, and your experience in the work you plan to do.

Well, for me CEO is US and Managing Director is UK.

Titles are just that, titles. They mean nothing to your actual ability, you can give your janitor the title of CEO but he is still a janitor. I always figure that a sole proprietor who needs to call himself a CEO is compensating for other shortcomings they might have. A CEO, as it is normally defined, can only exist in the context of the board of directors. If you dont have a board you aren't really a CEO, you are an owner. But you can title yourself anything you want to.

A sole proprietorship is more of a tax provision and freedom than a form of business. Any citizen can at any time choose to do business under their own name, no paperwork or anything like that is required. Since it is a single member you are whatever title you give yourself. The downsides are that you can not operate a real business name and you have unlimited personal liability for what happens. Understand that personal liability means that you can loose anything you own as payment if someone is aware money in a lawsuit. Other forms of business allow for insurance and other provisions that make this impossible. This is not a good form of business to use.

Single member LLCs or corporations (like what I run) are often regarded as sole proprietorships and we can select to be taxed as one as well. That may have been what he was referring to. In either case that option seems to indicate he wants you to work on your own or he himself did not understand what the option means.

It seems that he is giving you three options:

1. Work for his business.
2. Run the business with him
3. Run the business

Each comes with its ups and downs, as you gain power you also gain responsibility and liability. If you are in a partnership you cant just say "pay me" even when the business is going bad, if you don't carry proper insurance you can also be liable for anything he does in the business (and vice versa).

Here is what I would recommend for each option:

1. Come to the US and do what he says, it isn't your company.

2. Get familiar with US law and read a few books specifically on the subject of contracts because you are going to want to understand the one you will be asked to sign (or will insist he signs). Do not enter a partnership without a contract, I've had two law teachers say that doing so is the fastest known way to court.

3. Get familiar with US law and read a few books about starting a US business especially until you understand how the tax process works. Do not just start a sole proprietorship, its just a bad idea.

+1 for Single member LLC