It’s a New Year and you have made a New Start. You’ve taken the first steps to becoming your own boss and formed a Limited Company. While you are busy juggling running your business, making sales and managing cash flow it is important to be aware of your legal duties as a Company Director.
Companies House and HM Revenue & Customers will now have you on file, and will start their process of sending you correspondence, reminders advising you of what they need from you as the Director of your Limited Company. This can be overwhelming, with late filing fees, penalties and threats to strike off a company all possible but avoidable threats to your business.
Here’s a quick summary of your responsibilities to help make sure you stay on the right side of Companies House and HMRC:
Try to Make the Company a Success
It sounds obvious because your Company’s success will be your success. But you are expected to make the right decisions for the Company not yourself using the best skills and judgement you have.
Follow the Rules set out in the Articles of Association
The Articles of Association define terms and conditions for your Company, so don’t ignore them and get to know what is in them. It sets out the rules for running the Company, so as Director it is your responsibility to make sure they are followed.
File Your Company Accounts
Every year, you are legally obliged to keep financial & accounting records and will need to file statutory and, probably, abbreviated accounts with Companies House. Under typical circumstances, these are due within 10 months of your Annual Reference Date (commonly referred to as ‘year end’).
HMRC works separately to Companies House so once you have prepared your accounts, you need to prepare and file a Corporation Tax return. Here you declare your profits (or losses) made by the Company. Your Corporation Tax Return is due 12 months after your accounting year end but any tax you need to pay is due 9 months and 1 day after your accounting year end.
As the Director you are responsible for making sure these returns are filed and any Corporation Tax is paid. So although you may hire someone to help you with your financial obligations, ultimately it is your legal duty as Director to make sure it gets done.
If you are the director of a limited company, you are legally obliged to file a Confirmation Statement (until recently this was call an Annual Return). This document provides a snapshot of the general information about the company – the directors, the shareholders and registered office amongst other things. Generally your confirmation statement is due every 12 months, on the day that you formed your Limited Company.
Our accountants recommend that the most efficient way to file this return, as well as receive e-reminders of when it is due by email is via the Companies House web filing system. It is a criminal offence not to deliver this on time and you risk facing penalties for late filing or worse still, could have your company struck off. Register for Web Filing Here.
Annual Self-Assessment Tax Returns
Regardless of how much you earn as Director, each company director has to complete a self-assessment tax return and declare all their income, not just what they receive from their company.
Quarterly VAT Returns
All businesses, not just limited companies, whose turnover exceeds the VAT threshold in the previous 12 months, must become VAT registered.
Being registered for VAT means you need to complete an online VAT Return. This is due at the end of the month following the quarter end date. It is essential to bring all of your accounts up to date so that this can be completed on time.
Even if you haven’t begun trading yet (or maybe you have stopped trading), you are still required to file dormant Company accounts and an Annual Return. As Corporation Tax is also your responsibility, you should notify HMRC that your Company is dormant otherwise they will be expecting a Corporation Tax Return too.
It could be wise to make a note of all of your filing deadlines in your diary now, just to make sure you avoid incurring any fines, penalties and interest payments.