Limited Company - Directors Responsibilities

It can be tricky to manage a Limited Company without using an accountant to help you. In order to be a successful director of a Limited Company, organisation needs to be made a priority as well as having a reasonable level of accounting knowledge. This is so you can keep track of tasks being carried out all whilst ensuring you are working within the Companies Act 2006.

If you choose to run your Limited Company without the help of an accountant, you have to be conscious of certain responsibilities that need to be carried out and when. To give you a bit of guidance, we have put together a list of our top ten most important tasks that you must complete as a Limited Company director.

1. Submit your Annual Accounts

With your Annual Reference Date being at the end of the month of which your company was setup, Companies House must receive your limited company accounts annually nine months after this year end. If these accounts:

a) are the first accounts you are filing for your limited company

b) cover a period longer than 12 months

You should send them within 21 months of the setup date across to Companies House. It is also important to file detailed accounts with HMRC, but a more concise version can be submitted to Companies House. This is considered the most crucial task that you have to do as a director.

2. Making Legal Dividends

If you have a decent amount of profit, you will be able to be tax efficient using dividends through your Limited Company. For you to successfully pay yourself using this method, you must use a mix of dividends and low salary which minimises the extent of tax and National Insurance you pay.

3. Declaring your Dividend through Records & Minutes

Each time a limited company creates a dividend payment, they must create a voucher with minutes from the director’s meeting (to declare the dividend), the date, names of shareholders who are being paid, company name, dividend amount and dividend tax credit amount.

4. Correctly Pay Yourself

If you do not have much experience in this stage, it can be particularly overwhelming to be certain you are paying the correct tax and National Insurance but also maximising your pay in the most tax efficient way.

If you are not working with an accountant, the best method of doing this is figuring out your management accounts as well as establishing the legal dividends. This way you ensure that your Company Tax Return and Annual Accounts are completely accurate.

5. Filling Annual Returns

You should regard an Annual Return as a database of your company. This is because it includes the Limited Company type, the business type and the registered address of the office.

Take note – any company can be closed down by Companies House if an annual return is not sent within 28 days of the company’s start date anniversary. Not only this, but they have the capability to prosecute the director of the company. Returning the annual account is made easy by Companies House – you can do this online (£13 cost) or in the post sent to their address (£40 cost). Regardless of which option you go with, make sure you do this before the deadline to avoid potentially being prohibited from being the director of a company in the future.

6. Keeping Company Records up to date

Has your surname changed recently because you got married? Has your registered address changed because you have moved? You must let Companies House know.

7. Notifying of Changes to your Shares

If your shares are adjusted in any way, Companies House must be informed. This could involve share allocation, company share capital changes and any unique changes that are made to them.

8. Keeping your Company's Financial Liabilities up to date

As a Limited Company director, it is up to you to act based solely on the success of your company as stated in the Companies Act 2006. This means acting in your company’s best interest and bearing in mind what is best for creditors.

9. Complete a Director's Personal Tax Return

With the tax year ending on 5 April and the deadline for this form being completed on next 31 January, it is essential that you complete your tax return to run your Limited Company successfully. It is a legal requirement, and if you do not submit it before the closing date, there is an initial penalty of £100. If three months pass by, daily penalties will then be issued.

10. Keep Adequate Accounting Records

You can make your life as a director of a Limited Company much easier by keeping track of your important accounting documents (like VAT Returns) close to hand, irrespective of whether your company is currently trading or not.

This process has been made easier by HMRC as you can now complete your returns online, but if you choose to do it this way, you must calculate the VAT amount you owe and work within your given deadline. This recorded information should show the amounts received as well as the company’s expenditure, providing details of assets and liabilities.

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