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Your duties and obligations as a limited company director
Posted May 5, 2011
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 accountancy firm to perform all (or most) of these tasks, you are ultimately responsible to ensure that all tasks are carried out:
- You are responsible for keeping good accounting records which accurately reflect the financial position of your company.
- You must submit accurate annual 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), change to the share capital, or if any charges have been registered.
- You must ensure that the company abides by employment, company and other relevant rules and regulations.
- You must always act in the interests of your company shareholders. Its directors are not allowed to 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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