These points cover the most important things directors should know to ensure you’re on track, whether you’re a new or experienced director.
1. Directors’ responsibilities
Knowing and fulfilling your responsibilities is crucial for company directors to ensure legal compliance, protect the interests of the company and its stakeholders, and avoid personal liability and legal repercussions.
- Run the company
- Keep company records
- File accounts and tax return annually
- Pay taxes
- Confirmation statement filed annually
- Report changes to Companies House
2. Directors’ duties
Be aware of your duties, these are a guide to what being a company director should involve:
- Follow company rules as set out in articles of association
- Act in the best interests of the company
- Don’t allow other people to control your actions
- Avoid conflicts of interest
- Don’t accept benefits from a third party
- Tell other directors and members if you might personally benefit from a transaction
- Don’t misuse company’s property
- Be confidential about the company’s affairs
3. Profit extraction
As a director you can take money out of a company as a salary, expense claim or benefit. Directors should not take drawings in the same way that a sole trader can. A director, who is also a shareholder, can receive a dividend. Directors receiving remuneration in the form of salary are not subject to the National Minimum Wage.
Taking money from a company that is neither salary nor dividend is a directors’ loan. Complex rules are in place for directors’ loans and it’s important to speak to your accountant if you have a directors’ loan.
4. Company register details
Public and private registers record director and shareholder details, these include:
- Name
- Nationality
- Occupation
- Month and year of your date of birth (private register)
- Correspondence/service address (public register)
- Home/residential address (private register)
Please speak to CB Reid about using a service address to protect your personal information.
5. Self-assessment obligations
Directors don’t need to register for self-assessment or file a tax return unless they have other reasons to do so. Directors who have untaxed earnings, and/or taxable income above £100,000 may need to register for self-assessment.
The deadline for self-assessment registration is 5th October after the end of the tax year.
Seeking professional advice and staying updated on relevant laws and regulations is essential for effective corporate governance. If you want to ensure that you are meeting your director commitments correctly, please speak with a member of the CB Reid team who will be able to advise you accordingly.