So you’ve decided to take the plunge and start a business. You’ve legally formed your company and are raring to go. Congratulations… you are now officially a company director!
But what exactly does that mean?
Almost anyone can become a company director, we are lucky enough to live in a country where anyone can start a business with an idea and some determination. But being a director does have some responsibilities, by signing that form you are agreeing to take on the significant undertaking. You have obligations with HMRC, companies house and of course your own company.
A limited company is its own legal entity. So it’s worth noting that even though as a start-up you may be a 50-100% shareholder and a director, those two things are distinctly separate. A director is someone who must always act in the best interests of the company and manage the company on behalf of the shareholders. A shareholder simply owns a portion of the company.
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What Are Your Duties as a Director?
Boring bit alert… The companies act 2006 sets out the statutory duties and responsibilities as a director. There are 7 requirements a director must comply with when running a company. These are as follows;
- Duty to act within powers
- Duty to promote the success of the company
- Duty to exercise independent judgment
- 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
Nothing that you wouldn’t expect there! But what about the day to day obligations?
Your Day to Day Obligations as a Director
Before we talk about these it’s worth mentioning that your main job as a director is to steer the company to profitability and growth (within the rules). You don’t need to get bogged down with the director’s obligations. Know what you need to do and then set calendar alarms or engage the services of an accountant and then forgot about it.
We are accountants but we are also entrepreneurs and investors ourselves. There’s simply no need to let the obligations of running a company become a burden. Don’t bury your head in the sand of course, but make provision for the requirements and then focus on your business.
What do you need to do? Let’s simplify things:
Pay your taxes – Register for and pay your corporation tax, PAYE, VAT and National Insurance dues. (Your accountant can deal with all of this)
Submit a confirmation statement to companies house – A simple form sent annually to give an insight into the current status of the company. (Very simple and easy to do, just remember when it’s due!)
File an annual financial statement – Prepared by your accountant, this is filed with both HMRC and companies house.
File a corporation tax return with HMRC – Another annual requirement, this is a detailed calculation of how much tax you owe. (if any)
It can seem complicated, and in some cases, it is. But having an accountant like RJF can help you and your start-up navigate the business waters successfully.