What Are The Responsibilities Of A Company Director

If you have set up in business via a limited company, there are a number of duties you will have – as well as legal and financial responsibilities – if you are a director of the company.

This article provides an overview of what to expect as a limited company director.

On becoming a director you are entrusted with the legal responsibility of running a company. Even as the founder of the company, you’re bound by a statutory code of practice and have certain legal obligations.

By forming a limited company you are establishing it as a separate legal entity to yourself. It has its own legal framework and accountabilities, and any profits losses incurred belong to the company. So, when you’re managing the company you need to treat it as a separate entity. Even if you’re the sole director and sole shareholder, you must always act on behalf of the company.

As a director, you must make decisions for the benefit of the company and not yourself. This may seem confusing if you are the sole shareholder, employee, and director, but a decision that may benefit you personally may adversely affect the company’s performance.

Duties of limited company directors

The Companies Act 2006 outlines the statutory duties of company directors as seven general duties;

1. Duty to act within your powers as a company director

2. Duty to promote the success of your company

3. Duty to exercise independent judgement

4. Duty to exercise reasonable care, skill and diligence

5. Duty to avoid conflicts of interest

6. Duty not to accept benefits from third parties

7. Duty to declare interest in proposed transaction or arrangement with the company

Financial responsibilities

As a company director, you have several accounting-related obligations. Although you should employ a professional to perform all (or most) of these tasks, you are ultimately responsible to ensure that all tasks are carried out:

• Keep good accounting records from which accounts can be prepared which give a true and fair representation of the financial position of the company.

• You must submit accurate company accounts, and file them on time with Companies House.

• You must submit your corporation tax return (Form CT600) to HMRC and pay any tax liabilities due.

• Your first Corporation Tax return is due 12 months after your first year end, and then each year within 12 months of your Accounting Period end.

• You must deal with the correct payment of staff (and yourself) – including the deduction of income tax and national insurance contributions, where they apply.

• You must trade solvently, ensuring that you are able to meet the financial liabilities of your business.

Legal responsibilities of company directors

• You are responsible for completing and filing a Confirmation Statement every year.

• To produce and maintain a register of Persons with Significant Control (also known as a “PSC register”). The PSC Register must be filed, as part of the Confirmation Statement, with Companies House annually.

• To submit forms to Companies House to notify of any changes in the particulars of company director(s) or company secretary.

• Notify Companies House if you change your registered company address.

• You must always act in the interests of the company shareholders. This means that the directors cannot enrich themselves in a way that damages the company.

Statutory Accounts (also known as Year-end Accounts)

Details about your company finances must be made public in accordance with the Companies Act 2006 and accounting standards. You must submit a set of accounts to Companies House every year (at the end of your accounting period), which includes the company’s Income Statement, Statement of Financial Position and other information in accounting notes.

A company’s first accounting period is by default set to finish the last day of the month one year after incorporation. Your first set of accounts are normally due nine months after your first company year end (or within 21 months of the company’s incorporation date if the company’s first accounting period is longer than 12 months). The deadline for submitting year-end accounts to Companies House is calculated to the exact day.

Get a professional to help you

Well, we would say this, but it doesn’t make it any less true! When running a limited company, it’s always best to seek specialist advice from a professional from a such JR Bookkeeping Services. I will remind you of important tax dates and payments due, show you ways of keeping your accounts in excellent shape, advise you on allowable expenses and how to report them so you’re as tax efficient as possible. Even better, we’ll be able to do a lot of the work for you!

I can help you with things like estimating how much tax and NI you’ll need to pay every, or how much VAT you’ll pay each quarter.

Find out more about my services at www.jrbookkeepingservices.biz