Directing a Limited Company effectively can be challenging. Impeccable organisational skills and a competent understanding of accounting – keeping track of all tasks in order to stay within the Companies Act 2006, is vital to guarantee your success.
Deciding to manage your Limited Company by yourself without the assistance from an accountant, it is imperative to know the tasks that need to be completed and when. Below, we have comprised a guide of our top ten most important responsibilities a director of a Limited Company must undertake. For an annual fee specialized contractor accountant firm can assist you with all but one (filling your tax returns) of these responsibilities for running a tax efficient and successful company, making your life as a Limited Company director easier.
1. Submit your Annual Accounts
The Annual Reference Date for your company is the end of the month in which your company was started. Nine months after the year end you will need to send your limited company annual accounts to Companies House. It is crucial you deliver these accounts to Companies House within 21 months of the company start date if: this is the first year you are filing these accounts for your company; or these accounts are covering a period longer than 12 months.
Tip: One of the most important tasks for company directors is to file fully detailed accounts with HMRC of which you can file a condensed version with Companies House.
2. Making Legal Dividends
In order for your Limited Company to be tax efficient, you can use dividends – providing you have enough profit. Through the use of low salaries and dividends to pay yourself you are effectively minimising the amount of Tax & National Insurance that you pay.
3. Declaring your Dividend through Records & Minutes
In order for a limited company to make a dividend payment a voucher must be created coupled with the minutes from a directors meeting (declaring the dividend). The voucher must also contain the following: the date, company name, the names of the shareholders being paid, the dividend amount and the amount of the dividend tax credit.
4. Correctly Pay Yourself
Paying the correct tax and National Insurance whilst simultaneously paying yourself the maximum amount and being tax efficient may seem daunting, especially if you are not experienced in this.
To do this effectively without an accountant it is best to adopt the format working out your own management accounts to establish the legal dividends, ensuring your Company Tax Return and Annual Accounts are correct.
5. Filling Annual Returns
Think of an Annual Return as a portfolio for your company including the registered office address, the type of Limited company it is and the services you run from it.
Be warned: If the annual return is not sent within 28 days of the yearly anniversary Companies House is entitled to close down companies and prosecute directors. You can do this simply by completing the online form from Companies House (£13) or by printing and sending to their address (£40). Be sure to complete this before the deadline to comply with regulations.
6. Keeping Company Records up to date
Companies House will need to be updated by any details including changes of address, and changing of surnames after getting married.
7. Notifying of Changes to your Shares
Companies House must also be updated if the allocation of your shares changes or if the company share capital or any additional unique changes with your shares occur.
8. Keeping your Company’s Financial Liabilities up to date
The Companies Act 2006 states part of a director’s role is to promote and share the success of the Limited Company, including acting in the best interests of the company keeping in mind the interests of creditors.
9. Complete a Director’s Personal Tax Return
The tax year ends on 5th April and your personal tax return is one of the most important components of effectively running a Limited Company and is a legal requirement. You have until 31 January to complete the form with HMRC. Be warned: if the form is not completed and submitted on time there is a £100 penalty which will increase to daily penalties after three months.
10. Keep Adequate Accounting Records
HMRC have simplified the process for you by creating online services for you to for your returns which must include the amounts that you have received, expenditure incurred by the company ensuring the details of assets and liabilities are included. It is essential to keep accounting documents such as VAT Returns to hand – even if you’re not trading. This will make your life as a Company Director easier. Using HMRC’s online service you will have to calculate the amount of VAT you owe whilst keeping within the deadline.
As a further reading you may also be interested in making tax digital and how your business can prepare for it.