Your Responsibilities as the Director of a Limited Company
If you are the director of a limited company, you are required to complete and submit numerous forms to HMRC and Companies House.
Keeping up-to-date with these and their deadlines can often be confusing, particularly for new businesses. We have created a brief overview of these requirements, as well as shedding some light on group classifications and responsibilities.
Who is a limited company director?
The restrictions regarding whom can qualify to be a company director of a limited company are in fact very loose. A person must only be 16-years old or more, have never previously been declared bankrupt and not be subject to a specific such ban imposed by Court. Therefore, anyone falling outside of these restrictions can legally register themselves as a company director. Of course, with the title of company director come certain responsibilities that must be met in order to remain in such a position.
Company director responsibilities
As a director, you hold a certain level of legal responsibility for the company, and it is therefore important that you meet these obligations. A limited company means that you and it have different individual rights in terms of accountability. Therefore, you must think of the company as being separate from yourself – this includes making decisions that are in the best interest of the company, even if they are perhaps not in your best personal interest. This holds true no matter what the size of your company, even if you are the sole director and shareholder.
Be aware of different deadlines & requirements
As the company director of a limited company, you are required to keep HMRC and Companies House constantly updated as to the state of your business. Each of these have their own requirements and deadlines that must be met. Companies House for example provides all new companies with an ‘Accounting Reference Date’. What this means is if you register your company with them on January 21st 2019, your 1st Accounting Reference Date would likely be January 31st 2020. After which, you would be required to submit this information every 12-months after this.
HMRC meanwhile will give you an ‘Accounting Period’ for you to submit your Corporation Tax and Company Tax Return. This period usually begins when you commence business operations and ends on your Accounting Reference Date.
What needs to be filed & when
Below is a brief outline of some of the most important and common requirements you must meet, as well as their respective deadlines. Whilst these will in general apply to everyone, there are numerous variations on these that can occur depending on a person’s own unique circumstances. It is therefore highly recommended that you seek the advice of a qualified accountant for further clarification.
Confirmation statement
You must send a Confirmation Statement to Companies House when you register as a company, and then repeat this every year thereafter. You must remember to reregister every year as it is considered a criminal offence not to file this statement within 14-days of the end of your 12-month period. Your Confirmation Statement must contain details and records of your company, including directors and all admin-related activities.
Corporation tax
You are required to pay Corporation Tax to HMRC if your business makes a profit in its accounting period. This tax should be paid within 9-months of the end of your accounting period.
CT600
This must be filed with HMRC once every year and is a record of your company’s profits – that is, your company’s total income minus all tax allowances and expenses. HMRC then use this remaining figure to work out how much Corporation Tax your company will need to pay. For new businesses, the first CT600 must be submitted 1-year from the start of operations, and then within 12-months of your company’s Accounting Period thereafter.
National Insurance
Currently, anyone earning over £8,424 must pay National Insurance (NI). Therefore, if you run a business and you and your employees earn more than this, then you will be required to pay NI. This is usually done monthly – but can change to reflect the timescale you make salary payments. These payments are also dependent on certain thresholds – with the amount you are required to pay increasing when you cross these. As such, you are advised as to seek what options are available to you as a limited company so that you are able to best navigate these.
P60
This is a document that you as a director, must provide every year to yourself – and any other directors. It should contain information regarding salary and how much tax has been deducted the previous year. This document is important as you and other directors will need the information contained on it to complete other important documentation that you are required to submit. You must provide a P60 by May 31st every year.
P11D
This is a document required by HMRC that describes any benefits and expenses provided to directors and employees during the previous tax year. If no such benefits or expenses are provided, you are still required to submit a nil P11D form or inform HMRC directly of this situation. Directors and employees must be provided with their P11D before July 6th every 12-months.
Self-assessment
All directors of limited companies must submit a Self-Assessment of their personal finances to HMRC every year. Details required include salary, dividends and any rental income. This must be submitted to HMRC before 31st January.
VAT returns
Currently, all businesses with an annual turnover of more than £85,000 are required by law to register for VAT. This also applies to business that have underestimated annual turnover and which suddenly find themselves likely to cross the £85,000 threshold.
Get help!
As you can see from above, there is a large amount of information required by both HMRC and Companies House. This information is considered very important by both groups, and therefore it is crucial that you ensure you abide by them. Failure to do so can lead to heavy monetary fines, financial restrictions and even becoming prevented from serving as a company director again in the future. As such, it is recommended that businesses seek the advice and services of a qualified accountant, such as our excellent team here at Quant Accountants, in order to ensure they do not fall foul of such penalties.
