As a limited company director, you have certain duties and legal responsibilities. These include:
Your newly set up limited company must be registered at Companies House
Annual accounts and Confirmation Statements must be completed and filed with Companies House every year.
HMRC must receive your accounts every year
An annual Corporation Tax return must be completed and any tax owed must be paid to HMRC within nine months and one day of the limited company year end.
Register for Self Assessment and send a personal tax return to HMRC every year (this
requirement does not apply if your company is a non-profit organisation, such as a charity, and you didn’t get any pay or benefits).
Follow the company’s rules, as shown in its articles of association
Keep company records and report changes
Tell other shareholders if you might personally benefit from a transaction the company makes
You may engage other people to manage some of these things day-to-day (for example, an accountant), but you’re still legally responsible for your company’s records, accounts, and performance. You may be fined, prosecuted, or disqualified if you don’t meet your responsibilities as a director.
Certain people are prohibited from acting as a director of a company, including persons under 16 years of age, bankrupts, and disqualified persons. While there is no mandatory qualification required to be a director, a director is required to perform the duties outlined above and must be capable of doing so.
As a director, you must 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 adversely affect the company’s performance.
But isn’t it difficult to be a limited company director?
Traditionally, being a sole trader has been thought of as the easiest option for running a small business. As a sole trader your tax responsibilities are easy to account for, if not necessarily as efficient as they could be. But many of our clients have enjoyed the benefits of switching from a sole trader set-up to a limited company business structure.
It seems wrong for a freelancer, contractor or small business owner to be put off saving tax because of the perceived hassle involved.
The key to getting it right
As a freelancer, contractor or small business owner, it’s important to have the systems in place to take advantage of the tax-savings afforded by a limited company without having to spend ages on irritating admin duties. You shouldn’t have to pay astronomical accountancy fees, either.
You’ll know you’ve got the right accountancy solution when your accountant is doing most of the work for you and leaving you with greater take-home pay. Being a limited company director should be blissfully easy, and Crunch ensures it is.
Preparing a business plan
Writing a business plan can help you figure out whether or not your business idea has any legs.
Once you’re able to prove that you’ve done the market research and know how you’re going to provide the service to customers sold on the basics, you can use your business plan to convince potential sources of finance, investors, partners, and employees that you’re worth working with.