Lets explore the role and responsibility of a Director.
What is a director?
Directors act as the overseers of a company and make the daily decisions in managing a company’s operations.
On becoming a director you are entrusted with the legal responsibility of presiding over a company. Even as the creator of the company you are bound by a code of practice and certain legal obligations.
By forming a limited company you are in effect establishing it as a separate legal entity to yourself. It has its own legal rights and accountability and any losses or profits incurred belong to the company alone.
Who can be a company director?
There are no formal qualifications or special badges that are required to become a company director.
Actually, there are very few restrictions as to who can qualify
– A director must be 16 years old, have no history of bankruptcy and can’t be prohibited by a court order.
In special circumstances, a court can permit a formerly bankrupt or disqualified person to become a director.
What are a directors duties?
These are not just loose suggestions or rough guidelines to skirt around, but legally enforced rules.
The company comes first. Don’t forget it – your duty to the company is the underlying and foremost legal principle to uphold. It means the interests of the company, as it stands as a separate legal identity, are paramount, above that of the shareholders, yourself, or any other interested parties. This still applies even if you are the sole shareholder and director.
- You must run the company in accordance with the law and the rules laid out in the Articles of Association. These are the guidelines to making decisions which you and any shareholders agreed to when you incorporated the company.
- Make decisions for the benefit of the company and not yourself. This may seem confusing if you are the sole shareholder, employee and director, but a decision that may benefit you personally may be retrograde to the company’s welfare.
- You have a duty to exercise reasonable care, skill and diligence, as expected of someone in your position
Tax filing and return dates
As a director, you need to ensure that you register for all the relevant taxes and that any returns are submitted correctly to HMRC and Companies House within the statutory deadlines. Ultimately, you are the person who is legally accountable.
The following is a list of returns and registrations that directors are responsible for:
- Registering for Corporation Tax and setting up a PAYE scheme with HMRC
- PAYE is automated every time you pay an employee through real time information software – which is a requirement
- Companies likely to earn in excess of the VAT threshold over a 12 month period and those who want to voluntarily register for VAT or the VAT flat rate scheme will need to contact HMRC.
You will need to account for your VAT – there are a variety of schemes and payment plans available, although the most common for small limited companies is likely to be quarterly VAT returns and payments.
- Annual Returns detailing a snapshot of company information to be filed initially within 12 months and 28 days of the company’s formation and then each year thereafter
- Filing your company’s annual financial statements to Companies House 9 months within your accounting Year End
- Filing your company’s annual financial statements and Corporation Tax return (CT600) within 12 months of your accounting Year End
- Corporation Tax needs to be paid 9 months and 1 day after the accounting year end. You will need to personally register for Self Assessment for your personal tax. Your Self Assessment needs to be submitted online by the 31st January each year with severe fines set in place if you don’t.
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