If you are contracting via your own limited company, there are a number of duties you must perform by law as a company director. You also have several financial and legal responsibilities that you should be aware of.
Limited Company Director – Duties
The duties and obligations of limited company directors were codified for the first time by the introduction of the Companies Act 2006.
The seven duties are (in summary):
1. You must always act within your powers as a director.
2. Directors must promote their companies.
3. Directors must exercise independent judgement.
4. You must use reasonable care, skill and diligence.
5. You must try to avoid conflicts of interest.
6. You must not accept benefits from third parties.
7. You must declare any interests in any proposed transactions/arrangements with your company.
Main Financial Duties
Although most limited company owners hire an accountant to take care of their tax and accounting obligations, the company directors are ultimately responsible to ensure that all accountancy tasks are completed accurately, and in a timely manner.
Some of the main responsibilities you have as a company director are:
- You must maintain accurate accounting records.
- You must submit your company annual accounts to Companies House on time.
- You must submit a Corporation Tax Return (CT600) each year, and settle any outstanding tax liabilities due to HMRC.
- You must ensure that you pay any employees correctly, and account for income tax and National Insurance deductions at source, where applicable.
- You must always trade solvently.
- You must only declare dividends when profit is available in the company to distribute legitimately.
Main Legal / Statutory Duties
Some of the key legal responsibilities you will have as a company director include:
- You must complete and submit your Confirmation Statement to Companies House each year.
- You must inform Companies House if any of your company or personnel details change at any time (e.g. changes to address / name / share capital). You can submit most of these changes online via WebFiling.
- Your company must abide by all prevailing employment, health & safety, and company laws and regulations.
- You must always act in the best interests of your shareholders.
- The company directors must not enrich themselves to the detriment of the company.