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.
Duties of limited company directors
The Companies Act 2006 outlines the statutory duties of company directors as seven general duties;
- Duty to act within your powers as a company director
- Duty to promote the success of your company
- Duty to exercise independent judgement
- Duty to exercise reasonable care, skill and diligence
- Duty to avoid conflicts of interest
- Duty not to accept benefits from third parties
- Duty to declare interest in proposed transaction or arrangement with the company
You can read more about these duties, in much greater detail, in our article – Companies Act 2006 and Directors’ Duties.
As a company director, you have several accounting-related obligations. Although you should employ a small business accountant 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.
- 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. The Confirmation Statement replaced the old Annual Return (Form AR01) om 1st July, 2016.
- 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.
More on limited companies
You can find out more about limited companies and their administration in these other ByteStart guides;
- How to set up a limited company
- Which business structure should you choose for your new business – sole trader, limited company, partnership or LLP?
- 10 advantages of running your business as a limited company over being a sole trader
- Can directors be personally liable for a company’s debts?
More on starting and running your own business
ByteStart is packed with help and tips on all aspects of starting and running a small business. Check out some of our most popular guides;
- 5 things you must do when you go self employed
- 10 Do’s and Don’ts of writing a business plan
- How to choose the best online accounting software for your business
- A 60-second guide to Value Added Tax (VAT) for start-ups and small businesses
- 15 Questions to ask when hiring an accountant for your new business
Funding your business
- How to maximise your chances of securing a small business loan
- A Guide to ‘Alternative Finance’ – the new funding options for startups and small businesses
- Finding finance for your new business – funding advice for start-ups
- How peer-to-peer lending offers businesses a new funding option
- What to do when the bank says “NO”!
Money & Tax matters
- 10 ways small business owners can pay less tax
- Sole trader tax – a guide for start-ups and the newly self employed
- Dividend tax changes from April 2016 – A summary of the financial effects for small business owners
- ByteStart’s Guide to the main business taxes
- Corporation Tax – How to reduce your bill
Leading a business
- Developing your startup’s greatest asset – YOU
- The Founder’s dilemma – Managing the transformation from start-up to growth business
- Building your resilience to help you cope with the ups and downs of starting and running your own business
- 6 common leadership traps to avoid in your new business
- Why the best leaders do less
Going for growth
- The 3 issues you’ll need to overcome if you want your start-up to reach £1m turnover
- How finding a great mentor could help you to grow, and your business to flourish
- Barriers to growth – how to identify them and how to overcome them
- How to avoid self-destruction and achieve your business goals
- The 4 Rs of getting more business from your existing customer base
- Which types of insurance must your business have?
- Becoming an employer – Your responsibilities when you hire staff
- Health & Safety compliance for small businesses – where do you start?
- A Guide to the National Living Wage for small business owners
- Why it’s vital you have clear ‘Terms & Conditions’ for your business