As a director of a limited company, you have many responsibilities.
And as your company grows bigger, doing what’s required to meet those responsibilities becomes more onerous and time-consuming. That’s because there are more opportunities within larger companies for mistakes to be made outside the purview of a director.
Companies Act 2006
The Companies Act 2006 details the statutory duties of all directors into seven categories:
- Act within your powers as a director
- Actively work to make your company successful and profitably
- To use your independent judgement
- To act with reasonable “care, skill, and diligence”
- Avoid conflicts of interest (you can not enrich yourself to the detriment of your firm).
- Do not accept benefits from third parties
- Declare any interest you have in proposed transactions or arrangements with your company (for example, if your company purchases something from another company in which you have a shareholding and/or controlling interest)
Tax and accounting issues
As a director, you must:
- keep good company records
- file your accounts to Companies House
- file your Company Tax Return
- pay Corporation Tax
- send HMRC a personal Self Assessment every year
In most cases, directors involve accountants like Kelsall Steele to assist them with tax and accounting issues.
It is very important that you are 100% open, honest, and up-front with your accountant because your accountant can only work on the information they have been given. Always provide your accountant with everything they ask for.
That’s because even when you hire an accountant, you and your other directors are personally legally responsible for the maintenance of proper records, the filing of accounts and reports, and the payment of any taxes due.
You have a duty to make sure that your business trades solvently, that you correctly pay staff at the National Living/Minimum Wage or higher, and that you make payments of income tax and National Insurance to HMRC on time.
Keeping Companies House and HMRC up-to-date
You must inform HMRC if your business name, your personal name, or your personal/trading address changes or if you appoint a tax advisor or an accountant like Kelsall Steele.
You also must let Companies House know within a fortnight if the following change:
- the location of your business records
- directors’ personal details
- appointing or ending the appointment of the company secretary.
In addition, you need to complete and file a Confirmation Statement each year to Companies House – these new Statements have replaced the old Annual Return form. You must also produce and keep up to date a register of Persons with Significant Control (PSC) within your company. The PSC register is filed as part of the Confirmation Statement.
Your confirmation statement will also contain details of your company capital, shareholder information, and your SIC code (Standard Industry Classification which denotes your line of business).
Working with shareholders
Shareholders own the business and have the right to vote on:
- whether to change the company’s name
- whether to remove a director
- whether to change the Articles of Association.
In most cases, a vote can be carried by a simple majority whereas others may require a higher level of agreement (“special resolution”).
Other important considerations
The board and every director serving on the board must work to the responsibilities required under the Health and Safety at Work Act of 1974. Failure to do so may result in a criminal offence against one or all of the directors.
You must make sure that you take out all relevant insurances (for example, Employers’ Liability, Public Liability, Professional Indemnity) and follow the relevant display notices for each insurance certificate.
Talk to your accountant
If you want to talk to us about the responsibilities involving in being a director, call us at any time on 01872 271655 or email firstname.lastname@example.org.