Being a director of a company is a big responsibility, and failing to meet the responsibilities can have negative consequences.
There is more to being a company director than simply overseeing the business – it’s the role of a company director to ensure all finances are under control and all tax is recorded, reported, and paid on time.
Read on to learn more about what a company director does, including the tax responsibilities of a company director, and what happens if the responsibilities aren’t met.
What is a Company Director?
A company director is somebody who is registered as the director of a company with the Companies House. The Companies House is the registrar of companies in the UK, and some of the duties of Companies House include both maintaining and inspecting information on limited companies and limited liability partnerships.
It’s a requirement for all limited companies in the UK to have a minimum of one director – and it’s important to note that company directors can not be under the age of 16.
The role of a director (or of the Board of Directors) is to run the company – it’s their legal responsibility to run the company. There are countless company director responsibilities – as well as overseeing the general goings-on of the business, avoiding potential conflict situations, and following procedures, the directors of a company are also responsible for filing accounts on time and the financial health of the company.
When it comes to small limited companies, it’s not uncommon that the director (or directors) own all of the company shares – making them shareholders as well as directors.
A Company Director’s Tax Responsibilities
As well as overseeing the day to day running and management of a limited company, any listed directors company directors also have tax responsibilities.
As a director, you are legally responsible for the company – which means that if you’re a director of a company that has broken the law, you could be accountable. Read on to learn more about the potential consequences of failing to meet the director’s responsibilities.
If you are the director of a company/ multiple companies, then it is your role to keep company records, as well as report any relevant changes. Regardless of whether your business/ businesses make a profit, you’ll need to file the business accounts and the Company Tax Return, including paying corporation tax. It is also your duty as a director to inform other shareholders of potential benefits from transactions.
Although you can benefit from employing people to take care of some of these responsibilities, for example, an accountant or a solicitor, the legal responsibility of company records, accounts, and business performance ultimately falls in your hands.
What If The Requirements Aren’t Met?
If you don’t meet the legal requirements that fall upon a director, then you can be disqualified from being a company director. You can also be fined or even imprisoned if you are found guilty of wrongdoing – and be required to pay off the company debts yourself.
You can also be deemed unfit as being a director – and anybody can report you. To report a limited company, all you have to do is visit the government (gov UK) website and include details of wrongdoing.
Some examples of when you may be found unfit include not paying the relevant tax that the company owes, not filing the right accounts or keeping accounting records, using company funds or assets for personal gain, or not ceasing company trading if unable to pay debts.
If you are under bankruptcy restrictions or a debt relief order, then you most likely won’t be allowed to be a director.
At LJS Accounting Services, we can provide you with quality advice on company formations, and provide you with effective start-up advice if you’re considering starting your own limited company, or you’ve recently taken the plunge into the business world. We can give you advice on all aspects of running a small business.
Our dedicated team at LJS Accounting Services can help you to purchase your company, and provide the right tax and financial advice to ensure that you don’t face fines or worse, imprisonment.
