Question 1

Directors' responsibilities

Accepted Answer

As a director of a limited company, you must:

follow the company’s rules, shown in its articles of association
keep company records and report changes
file your accounts and your Company Tax Return
tell other shareholders if you might personally benefit from a transaction the company makes
pay Corporation Tax

You can hire other people to manage some of these things day-to-day (for example, an accountant) but you’re still legally responsible for your company’s records, accounts and performance.

You may be fined, prosecuted or disqualified if you do not meet your responsibilities as a director.

Contact your professional adviser or trade association to find out more.

Question 2

Taking money out of a limited company

Accepted Answer

How you take money out of the company depends on what it’s for and how much you take out.

Salary, expenses and benefits

If you want the company to pay you or anyone else a salary, expenses or benefits, you must register the company as an employer.

The company must take Income Tax and National Insurance contributions from your salary payments and pay these to HM Revenue and Customs (HMRC), along with employers’ National Insurance contributions.

If you or one of your employees make personal use of something that belongs to the business, you must report it as a benefit and pay any tax due.

Dividends

A dividend is a payment a company can make to shareholders if it has made a profit.

You cannot count dividends as business costs when you work out your Corporation Tax.

Your company must not pay out more in dividends than its available profits from current and previous financial years.

You must usually pay dividends to all shareholders.

To pay a dividend, you must:

hold a directors’ meeting to ‘declare’ the dividend
keep minutes of the meeting, even if you’re the only director

Dividend paperwork

For each dividend payment the company makes, you must write up a dividend voucher showing the:

date
company name
names of the shareholders being paid a dividend
amount of the dividend

You must give a copy of the voucher to recipients of the dividend and keep a copy for your company’s records.

Tax on dividends

Your company does not need to pay tax on dividend payments. But shareholders may have to pay Income Tax if they’re over £2,000.

Directors’ loans

If you take more money out of a company than you’ve put in - and it’s not salary or dividend - it’s called a ‘directors’ loan’.

If your company makes directors’ loans, you must keep records of them. There are also some detailed tax rules about how directors’ loans are handled.

Question 3

Company changes you must report

Accepted Answer

You must report certain changes to Companies House.

Changing your company’s registered office address

You must tell Companies House if you want to change your company’s registered office address. If the change is approved, they will tell HM Revenue and Customs (HMRC).

Your company’s new registered office address must be in the same part of the UK that the company was registered (incorporated).

For example, if your company was registered in England and Wales, the new registered office address must be in England or Wales.

Your address will not officially change until Companies House has registered it.

Other changes you must report

You must tell HMRC if:

your business’ contact details change - for example, your name, gender, business name or your personal or trading address
you appoint an accountant or tax adviser

You must tell Companies House within 14 days if you make changes to:

the address where you keep your records, and which records you keep there
directors or their personal details, like their address
‘people with significant control’ (PSC), or their personal details like a new address
company secretaries (appointing a new one or ending an existing one’s appointment)

You must tell Companies House within a month if you issue more shares in your company.

How to report changes to Companies House

You can:

use the Companies House online service
fill in and send paper forms

Changes that shareholders must approve

You may need to get shareholders to vote on the decision if you want to:

change the company name
remove a director
change the company’s articles of association

This is called ‘passing a resolution’. Most resolutions will need a majority to agree (called an ‘ordinary resolution’). Some might require a 75% majority (called a ‘special resolution’).

Companies House has more details about the types of changes and resolutions you must report to them.

Your new company name will not take effect until it’s registered by Companies House - they’ll tell you when this happens.

Shareholder voting

When you’re working out whether you have a majority, count the number of shares that give the owner the right to vote, rather than the number of shareholders.

You do not necessarily need to have a meeting of shareholders to pass a resolution. If the right amount of shareholders have told you they agree, you can confirm the resolution in writing. But you must write to all shareholders letting them know about the decision.

Question 4

Company and accounting records

Accepted Answer

You must keep:

records about the company itself
financial and accounting records

You can hire a professional (for example, an accountant) to help with your tax.

HM Revenue and Customs (HMRC) may check your records to make sure you’re paying the right amount of tax.

Records about the company

You must keep details of:

directors, shareholders and company secretaries
the results of any shareholder votes and resolutions
promises for the company to repay loans at a specific date in the future (‘debentures’) and who they must be paid back to
promises the company makes for payments if something goes wrong and it’s the company’s fault (‘indemnities’)
transactions when someone buys shares in the company
loans or mortgages secured against the company’s assets

You must tell Companies House if you keep the records somewhere other than the company’s registered office address.

Register of ‘people with significant control’

You must also keep a register of ‘people with significant control’ (PSC). Your PSC register must include details of anyone who:

has more than 25% shares or voting rights in your company
can appoint or remove a majority of directors
can influence or control your company or trust

You still need to keep a record if there are no people with significant control.

Read more guidance on keeping a PSC register if your company’s ownership and control is not simple.

Accounting records

You must keep accounting records that include:

all money received and spent by the company
details of assets owned by the company
debts the company owes or is owed
stock the company owns at the end of the financial year
the stocktakings you used to work out the stock figure
all goods bought and sold
who you bought and sold them to and from (unless you run a retail business)

You must also keep any other financial records, information and calculations you need to prepare and file your annual accounts and Company Tax Return. This includes records of:

all money spent by the company, for example receipts, petty cash books, orders and delivery notes
all money received by the company, for example invoices, contracts, sales books and till rolls
any other relevant documents, for example bank statements and correspondence

You can be fined £3,000 by HMRC or disqualified as a company director if you do not keep accounting records.

How long to keep records

You must keep records for 6 years from the end of the last company financial year they relate to, or longer if:

they show a transaction that covers more than one of the company’s accounting periods
the company has bought something that it expects to last more than 6 years, like equipment or machinery
you sent your Company Tax Return late
HMRC has started a compliance check into your Company Tax Return

If your records are lost, stolen or destroyed

If you cannot replace your records after they were lost, stolen or destroyed you must:

do your best to recreate them
tell your Corporation Tax office straight away
include this information in your Company Tax Return

Question 5

Confirmation statement (annual return)

Accepted Answer

You need to check that the information Companies House has about your company is correct every year. This is called a confirmation statement (previously an annual return).

Check your company’s details

You need to check the following:

the details of your registered office, directors, secretary and the address where you keep your records
your statement of capital and shareholder information if your company has shares
your SIC code (the number that identifies what your company does)
your register of ‘people with significant control’ (PSC)

Check the Companies House register.

Send your confirmation statement

Send your confirmation statement online or by post. It costs £13 to file your confirmation statement online, and £40 by post.

If you need to report changes

You can report changes to your statement of capital, shareholder information and SIC codes at the same time.

You cannot use the confirmation statement to report changes to:

your company’s officers
the registered office address
the address where you keep your records
people with significant control

You must file those changes separately with Companies House.

When it’s due

You’ll get an email alert or a reminder letter to your company’s registered office when your confirmation statement is due.

The due date is usually a year after either:

the date your company incorporated
the date you filed your last annual return or confirmation statement

You can file your confirmation statement up to 14 days after the due date.

You can be fined up to £5,000 and your company may be struck off if you do not send your confirmation statement.

Question 6

Signs, stationery and promotional material

Accepted Answer

Signs

You must display a sign showing your company name at your registered company address and wherever your business operates. If you’re running your business from home, you do not need to display a sign there.

Example

If you’re running 3 shops and an office that’s not at your home, you must display a sign at each of them.

The sign must be easy to read and to see at any time, not just when you’re open.

Stationery and promotional material

You must include your company’s name on all company documents, publicity and letters.

On business letters, order forms and websites, you must show:

the company’s registered number
its registered office address
where the company is registered (England and Wales, Scotland or Northern Ireland)
the fact that it’s a limited company (usually by spelling out the company’s full name including ‘Limited’ or ‘Ltd’)

If you want to include directors’ names, you must list all of them.

If you want to show your company’s share capital (how much the shares were worth when you issued them), you must say how much is ‘paid up’ (owned by shareholders).

There are different rules for what you need to include on invoices.

Running a limited company

Directors' responsibilities

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Running a limited company

Directors' responsibilities

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