Are you ready to be a director?

Are you ready to be a director?

In order to fulfil legal requirements and responsibilities to the various company stakeholders (any other shareholders, creditors, employees etc), a director’s obligations and responsibilities are significant. If you are currently a company director then use the checklist below as a tool to ensure that you stay on the right track, and if you are considering setting up your own limited company, use the list to double check that you are aware of exactly what’s involved, so that you can make an informed decision when you ask yourself the ultimate question – Am I up for the challenge?!

General obligations and responsibilities

Promote the long term success of the company using your skills, experience and independent judgement (ie take advice but not instruction from a third party)

Exercise reasonable care and diligence

Follow the company’s rules as shown in its articles of association

Ensure that any decisions you make in your role as director are for the benefit of the company rather than yourself

Avoid any “situational” conflicts of interest.  This includes making sure that you do not exploit any of the company’s property, information or opportunities

Disclose to other shareholders if you are likely to benefit personally from a transaction that the company makes or a relationship that it is entering into

Make sure that the company’s accounts are a true and fair reflection of its finances

Obligations and responsibilities relating to Companies House and HMRC

Ensure that your company’s details are up to date with Companies House (especially any changes to your company’s registered office) and HM Revenue and Customs (HMRC)

File the company’s annual accounts and annual tax return with Companies House on time – you have a legal responsibility to do this

Be aware that information that you submit to Companies House will be available for public inspection including any personal information that you will have to submit when you appoint yourself as a director of your business

Register for Self Assessment and submit a Self Assessment tax return every year

On a day to day basis, your Accountant will take care of some of the obligations and responsibilities mentioned above, but ultimately, as a director of the company, you are legally responsible for your company’s records, accounts and performance.  Failure to live up to your responsibilities could result in you being fined, prosecuted or disqualified as a director.

We hope that this article has been interesting and informative.  If you have any questions or would like to discuss director’s responsibilities for your business or the accountancy services we offer with a Free Consultation, please contact Sam on 0800 954 2099 or complete our online form.

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