So you’ve done your research and decided that the limited route and becoming a company director might be for you – good choice!
Before you take the plunge, however, it’s a good idea to get your head around the various responsibilities you’ll have as a company director. Don’t worry, as help is at hand.
We’ve prepared this brief overview of the duties you’ll need to carry out as a limited company director.
Every company director has to complete a number of accounting duties, such as submitting annual accounts to Companies House and filing various tax returns with HMRC. If this leaves you quaking in your boots, fear not! Most contractors turn to a specialist accountant, such as ourselves, for help.
You’ll also need to stick to the rules when drawing dividends, such as checking you have enough profits in your business to cover any payments. Believe us, it will save you a lot of hassle in the long run!
The last thing you’ll want is for your payments to become void or for HMRC to reclassify illegal dividends as employment income – as you’ll then need to pay additional Income Tax and National Insurance contributions.
For more information on dividends, read our dividends guide here.
As a director, you can’t accept any gifts from a third party unless it directly benefits your business. So, accepting an invitation to a top sporting event is fine as long as it’s for relationship building – but not if you just fancy a day out!
There’s a really fine line between what’s acceptable and what’s not, so you’ll need to set up a clear policy around benefits.
Companies Act duties
As well as the things we’ve mentioned above, there are a few more statutory duties in the Companies Act 2006. These include:
- Acting with reasonable skill and care – basically use any specialist skills or knowledge you have to benefit the company
- Avoiding conflicts of interest
- Promoting the success of the company
- Acting in the best interests of the company and not letting judgement cloud decisions
- Avoiding risk and minimising losses
What financial records should a company director keep?
You’ll also need to keep up-to-date and accurate records that present a ‘true and fair’ view of your company’s financial position. HMRC can ask for anything from the past six years so make sure you’ve got a filing system in place for invoices, bank statements and expense receipts.
Get in touch
At ClearSky Contractor Accounting, we understand that you might not have enough time in your busy WorkStyle to get your head around your duties right away. That’s why our dedicated team is on hand to answer any queries you may have.
Our experts will help guide you through your responsibilities, ensuring you remain whiter than white at all times – just another example of how we’re with you all the way.