What are my responsibilities as a limited company director?

Benefits of becoming a limited company contractor

Running your own limited company is the most tax efficient method of contracting compared to other routes, such as working through an umbrella company or becoming a sole trader.

Other benefits include:

• Your business is seen as a completely separate entity to you with its own identity and bank account, so if your business were to face any genuine financial difficulty, you wouldn’t be at risk of losing your personal possessions and assets. This wouldn’t be the case if you were contracting as a sole trader.
• Being able to claim back a much wider range of expenses.
• Having more tax benefits.
• Having complete control.

Take a look at our Benefits of Contracting page for more information on this.

So, what are my responsibilities as a limited company director?

As a director of a limited company, you will need to:

• Follow the company’s rules, as is shown in its ‘memorandum of association’ (a legal statement signed by all initial shareholders or guarantors agreeing to form the company) and ‘articles of association’ (written rules about running the company agreed by the shareholders or guarantors, directors and the company secretary).
• Keep company records, including accounts and details of shareholders/directors/company secretaries etc
• Report any changes, such as a change of business address or if you’ve appointed an accountant for example.
• File accounts with Companies House and complete a self-assessment tax return.
• Pay Corporation Tax.

Hiring an accountant

Contracting through your own limited company can seem a bit overwhelming, which is why it might be worth considering hiring an accountant to take on some of the administrative burden.

A good accountant can be an invaluable asset to any business, by:

• Taking care of certain tasks, such as filling in and filing forms, leaving you to concentrate on running your business.
• Ensuring you remain compliant with your financial liabilities and keep on top of important deadlines.
• Providing useful financial advice that you might not have been aware of, which could potentially save you money in the long run.

Here are a few points to take into consideration when looking for a good accountant:

• Do they specialise in contractor tax? There will be a number of taxes and legislations that will only apply to your way of working so your accountant must understand this area completely.
• Are they qualified? Although not required by law to have official qualifications, it might give you more peace of mind knowing that your accountant does have them.
• Do they have a fixed monthly amount? Not every accountant works on a fixed monthly fee, so it’s worth finding out if yours does – otherwise, you could find yourself with a surprise bill at the end of the year. Check that their package includes everything you need, such as tax returns, VAT returns, payroll etc.
• Will I have my own dedicated accountant? Having just one point of contact will be beneficial for you and your business, as it means you’ll receive personalised advice instead of being passed around by a team of people.
• Do they have a good reputation? It’s really important to do your research on any potential accountant to make sure that they are professional and can be trusted. Look for reviews and forums, and speak to other self-employed workers.

Read out Is it Easy to Switch Accountants? page for more information on this.

If you’d like to sign up or need any further information, please give us a call on 01442 795 100 or you can email sophie.lewis@dolanaccountancy.com. There’s also the option to contact us via live chat.