Responsibilities of running a limited company
There are loads of reasons why self-employed professionals decide to open a limited company, including higher pay retention, more control, better tax-efficiency, and more. However, there are many responsibilities of running a limited company, and failure to abide by HMRC rules and regulations could land you in trouble.
The government’s website includes plenty of information about your responsibilities as a limited company directory. We have summarised these below. For more information, please visit the page on the government’s website entitled: Running a limited company.
Throughout the following guidance, we’ve included numerous links to the government’s website. We recommend you take a look if you’re after more information. We hope you find them useful!
Responsibilities as the Director
- Follow the company rules, as set out by HMRC (read the articles of association)
- Keep important company records, and report any changes that are incurred by the company to HMRC.
- File company accounts
- Submit company tax return
- Pay the right amount of Corporation Tax
Withdrawing money from your limited company
- Salaries – Ensuring salaries are subjected to PAYE and the correct tax and National Insurance Contributions are applied. Employer’s National Insurance must also be taken into account. The company will need to be registered as an employer.
- Dividends – Paid to shareholders if the limited company is profitable. There are processes involved if you’re paying dividends, including the issuing of dividend vouchers. Dividends are not subjected to tax, but shareholders may be required to pay Income Tax (if dividend is greater than £2,000).
- Directors Loan – If a Director takes our more money from a company (not via dividends or salary etc.), it may be referred to as a Directors loan, and tax rules apply.
- Benefits – If an employee benefits from something directly owned by the company, it may need to be reported as benefit because tax may be due.
Company changes that must be reported to HMRC
- Registered address – You need to let HMRC know your new registered address.
- Contact information – Update HMRC should your contact information change (and directors or people with a role within your limited company).
- Accountant – HMRC must know who your accountant is, or your tax adviser (if you have appointed one)
- Shareholders – If new shareholders are added or existing shareholders are no longer associated with your limited company.
- Changes can be reported to Companies House by this link, or by completing forms.