What are the responsibilities of a director of a limited company?

If you’re transitioning from being a sole trader or a partnership, things can feel a little different when it comes to being a limited company. Maybe you’ve chosen to start off your business as a limited company but just need to be aware of your responsibilities. So here’s what you need to know…

 Director’s responsibilities 

 As a director of a limited company you will take on responsibilities such as:

 Articles of association – this is an agreement you make to form the limited company and take on the responsibilities. If you register your business online this will be part of the process.

 Keeping company records and reporting any changes – you must keep records of the company such as;

1. Shareholders, directors and company secretaries.
2. The results of any shareholder votes. 
3. Agreements for the company to repay back any loans
4. Indemnities – payments made by the company if something goes wrong.
5. Transactions if someone buys shares in the company.
6. Loans or mortgages secured against the company’s assets.
7. Register of people with significant control.
8. Accounting records.

 Taking money out of the business

 Taking money out of your limited company is much different from that of a sole trader as the company’s finances do not belong to you like they do when you’re a sole trader.

 There are various ways you can take money out of the business;

• Salary, expenses and benefits
• Dividends
• Directors’ loans

 Company changes

 You have an obligation to tell HMRC if your contact details change and if you appoint an accountant or tax advisor. You also need to report if the persons with significant control change for any reason. 

 Any changes which are made within the business must be agreed by the shareholders and minutes of the meetings should be recorded.

 Confirmation statement

 Every year you have to confirm that your business details are correct, this is called a confirmation statement. There’s a fee of £13 to submit your confirmation statement online or £40 by post. 

 Signage, stationery and promotional material

 With the exception of running your business from home, you must display signage of your company name at your business premises. It must be visible and easy to read.

 Company stationery such as letterheads should include your company name, registered address, company number and whether it’s registered in England and Wales, Scotland or Northern Ireland. You must display that you are a limited company with the use of the word Limited or Ltd. 

 It is your responsibility as a limited company director to ensure that you are complying to all of these rules set out by HMRC. If you don’t you will be fined or worst-case scenario you could be struck off as a director.

 If you want to ensure your compliant, seek advice from a professional.