A company director is a registered director of a limited company. Companies have two main arms of control:
- Board of directors
To become a company director, you first have to register with Companies House to sit in the role. You’re then legally responsible for running the company. This includes sending HMRC updated information on the company’s accounts.
How big does the company need to be?
The size of the limited company doesn’t affect your status as a director. Whether it’s a one-man-band limited company or a company with multiple employees, your status as director stays the same.
What are the director’s responsibilities?
Here are a few things that you have to do:
- Participate in board meetings
- Make strategic and operational decisions
- Manage the business’s day-to-day affairs
- Avoid any conflicts of interest, such as:
- Being an advisor and director of the same company
- Multiple dictatorships, especially ones where you’re also a shareholder
- Taking advantage of company information for your own personal gain
- Decide on and implement company policy
For more information on the specific roles and responsibilities, take a look at the Companies Act 2006.
Can I be a director and shareholder?
Yes. Some directors are both employees and shareholders, as well as being directors.
Important things to know as a company director
- You don’t need to file a Self Assessment unless you pay yourself dividends over the Dividend Allowance (£2,000). This is also the case if you were paid a directorship from a foreign company. That said, HMRC usually asks foreign companies with local staff, including directors, to register for PAYE
- If you’re the only person in your company, it might be better to switch to being a sole trader (self-employed). From April 2021, the new IR35 regulations came into force. They encouraged companies hiring contractors who work through limited companies to treat them as employees and pay employer’s National Insurance. You can use the CEST status tool to see if this applies to you
- If you close your company, you might be eligible for Entrepreneurs’ Relief