In the first instance, a company director must remember that the company always comes first! Therefore, the underlying and most important legal principle to uphold is your duty to the company.
This quick guide to a company director's financial responsibilities will help you fully understand the director's duties and everything you need to know to ensure you act effectively and, most importantly, legally.
As part of your financial responsibilities in business, various forms and returns must be submitted regularly to HMRC and Companies House. This is because, as a limited company director, you owe it to both institutions to keep them up to date on your business.
Every company must keep financial records for each fiscal year and prepare a summary at the end of the fiscal year. These condensed records are referred to as annual accounts or statutory accounts and are part of the company director responsibilities.
The profit and loss (P&L) statement is a financial statement that summarises the revenues, costs, and expenses incurred during a given period, which is usually a fiscal quarter or year. The profit and loss statement is the same as the income statement.
These records reveal a company's ability or inability to generate profit by increasing revenue, lowering costs, or both.
One of the responsibilities of company directors is to maintain a balance sheet. A balance sheet is a detailed listing of a company's financial resources. Therefore, it is essential to understand what to record on a balance sheet and input the information.
The notes to the accounts are a collection of notes that appear in the main body of the financial statements. The accounts include additional data given in the notes. Never underestimate numbers. Incomplete accounts lack relevant notes. Company director responsibilities include the notes to the account.
A directors' report is a document created by the board of directors according to UK company law that details the state of the company and its compliance with a set of financial, accounting, and corporate social responsibility standards.
A directors' report is a document created by the board of directors according to UK company law that details the state of the company and its compliance with a set of financial, accounting, and corporate social responsibility standards.
The corporation tax return summarises a company's financial transactions during the corporation tax accounting year. It falls under the umbrella of company director responsibilities UK and is a vital component of running your company.
A confirmation statement is filed to confirm that the company's information on file with Companies House is up to date. Even if no changes have been made to the relevant details, this must be filed. In addition, every company, whether dormant or active, is required to file a confirmation statement.
This must be filed at least once a year with Companies House, but a company may choose to file it more frequently.
If your business exceeds or expects to exceed £85,000, you must register for Value Added Tax (VAT). As a company director, it is your responsibility to make sure the company is registered for VAT, and a VAT return is filed.
The return shows the amount of VAT owed to HMRC as well as the amount owed to you. In addition, it displays total sales and purchases, the amount of VAT owed, the amount that can be reclaimed, and any HMRC refunds for a specific VAT accounting period.
Even if a business does not have any VAT to pay or reclaim, every company registered for VAT must submit a return, regardless of whether the business registered compulsorily or voluntarily.
Before each payday, every employer must report to HMRC its employees' payments and deductions. As a company director, this is a financial responsibility in business.
Keeping information in the public domain up-to-date and correct is critical for any business. Therefore, a responsible company director must report any changes in the critical information to Companies House as soon as possible. Failure to do this can lead to litigation or the company being dissolved.
If you want to find out more about your financial responsibility in business as a company director, contact GGM Accountancy to see how we can help you prepare and file all your financial obligations.
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