Director responsibilities for limited companies
When setting up a limited company, it is crucial to understand, as a Director, what you and any other Directors are responsible for. There are severe penalties imposed if you don’t comply with the regulations. Here’s a rundown of what you need to know:
As a director of a limited company, you must:
- follow the company’s rules, shown in its articles of association
- keep company records and report changes
- file your accounts and your Company Tax Return
- tell other shareholders if you might personally benefit from a transaction the company makes
- pay Corporation Tax
You are allowed to hire someone else to assist with the responsibilities above, such as an accountant. However, it is essential to note that you are still legally responsible for your company’s records, accounts and performance. This is why it is crucial to maintain a good relationship with any professionals you work with and understand what action they are taking and why. Find out more about running a limited company on the gov.uk website.
You may be fined, prosecuted or disqualified if you do not meet your responsibilities as a director. Anyone can report a company director’s conduct as being ‘unfit’.
‘Unfit conduct’ includes:
- allowing a company to continue trading when it can’t pay its debts
- not keeping proper company accounting records
- not sending accounts and returns to Companies House
- not paying the tax owed by the company
- using company money or assets for personal benefit
You’re not usually allowed to be a company director if you’re under restrictions from bankruptcy or a Debt Relief Order. Find out more about company director disqualification on the gov.uk website.
If you found this information useful, you may also want to check out the following:
- Business structures in the UK
- Reducing your risk of corporate tax evasion
- Why getting to know your customer is essential
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