Working as a limited company is now the most popular choice for contractors, freelancers and consultants. One of the main reasons for this is because it's often the most tax efficient way of managing your finances. But it's not all plain-sailing: the administrative burden involved with a limited company can be hard work.

  • Register a limited company with the Companies House.
  • You become the director and the shareholder of the limited company.
  • Liability of shareholders is limited, and their personal assets are protected from creditor’s claims.
  • Even if a limited company is wholly owned by you, it is legally distinct from yourself.
  • Allows you to pay yourself a combination of director’s salary and dividends.
  • Corporation tax is 20%
  • Shareholders are subject to additional income tax on the dividends paid to them.
  • Tax efficiency. Legally save on tax; retain more of your profits.
  • Low liability. Your business’ and your own personal financial and tax affairs remain separate. Any liability or loss is the company’s, not yours.
  • Kudos. Gain instant credibility from being a company director. Plus, some organisations work exclusively with limited companies.
  • Established name. Because your company must register at Companies House, the name of your business legally belongs to you.
  • Moving on. If you decide you want to sell your company and move on, it’s easily done.

It is the responsibility of the directors under Sections 171 to 177 Companies Act 2006 to ensure that the company is functioning within its own laws and law in the wider sense. The director must act within powers conferred upon by the Companies Act 2006, Section 171 and powers derived from Article of association. That means:

  • Directors must adhere to the Articles of Association at all times.
  • A satisfactory degree of skill and care in the role of the director must be proved.
  • If the company was established on or before 1 October 2009, directors have no restrictions unless the Articles of Association states otherwise.
  • Companies established prior to 1 October 2009 will have listed their objectives in the Memorandum of Association. Such objectives are now part of the Articles.
  • Acting outside objectives can lead to legal action against directors.

It is vital that as a company director, you effectively manage and balance the interest of shareholders, employees and various other groups, along with the reputation of the company as a whole.

Directors must always consider the effects of a decision on everyone – no matter how big or small their role in the company – before putting it into practice.

Directors are not entitled to make any personal profit from the company. Similarly, if a conflict of interest arises, this must be declared.

It is the responsibility of the directors to ensure their company is functioning within its own laws and law in the wider sense. That means:

  • Filing statutory returns with the Registrar of Companies.
  • Filing accounts with Companies House and officially recognising personal responsibilities regarding the company’s accounts.
  • Holding AGMs when requested to do so by 5% or more of members.
  • It is illegal to continue running a business while incurring debts when possessing no reasonable plan for paying salaries or delivering on customer promises. As director, you must ensure this does not happen. You must also place appropriate values on your assets.

I used to dread accounting month but the last 2 years have been utterly pain free because of this super lot! Efficient, professional, thorough and really dedicated to saving you money. The savings they made me more than paid for their services! Many thanks.

Ms Amy Dear, PAVMAY LTD

Accounts Direct helped reactivate the company, get books up to date and all formalities in order as it should be. I'm very happy with how they approached the challenge and came through all the way. Solution oriented, agile, available and fast. 

Mr. Tor Karstensen, NOVYTEC LIMITED

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