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Free impartial start-up advice From pcg.org.uk, the association supporting freelance contractors |
Limited company directors - what are your duties and obligations?
Posted Jan 6, 2009
If you are contracting via your own limited company, there are a number of duties you must perform by law as company director. You also have several financial and legal responsibilities which you should be aware of.
Directors' Duties
The Companies Act 2006 codifies the duties of company directors into a statutory statement of seven general duties, as follows:
1) Duty to act within your powers as a company director
2) Duty to promote the success of your company
3) Duty to exercise independent judgement
4) Duty to exercise reasonable care, skill and diligence
5) Duty to avoid conflicts of interest
6. Duty not to accept benefits from third parties
7) Duty to declare interest in proposed transaction or arrangement with the company
Financial Responsibilities
As a company director, you have several accounting-related obligations. Although you may employ a contractor accountant to perform all (or most) of these tasks, you are ultimately responsible to ensure that all tasks are carried out:
- Keep good accounting records from which accounts can be prepared which give a true and fair representation of the financial position of the company
- You must submit accurate company accounts, and file them on time with Companies House
- You must submit your corporation tax return (Form CT600) to HMRC and pay any tax liabilities due.
- You must deal with the correct payment of staff (and yourself) - including the deduction of income tax and national insurance contributions, where they apply.
- You must trade solvently, ensuring that you are able to meet the financial liabilities of your business.
Legal Responsibilities
- You are responsible for completing and returning the annual return (Form AR01)
- Submit forms to Companies House to notify of any changes in the particulars of company director(s) or secretary (Forms AP01,AP03,TM01,TM02,CH01 and CH02).
- Notify Companies House if you change your registered company address (Form AD01)
- You must always act in the interests of the company shareholders. This means that the directors cannot enrich themselves in a way that damages the company.
Further Resources
- Companies House - Company Director information.
- Companies Act and Directors' Duties - Good legal guide.
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