Responsibilities of a Company Director

Responsibilities of a Company Director

No matter the size of your business, as a company director, you take control of all the pivotal decisions. Whilst it might be daunting, it can also be extremely rewarding – as long as you know what you’ve signed up for.

We’ve put together a list of the major responsibilities you should know about before you say ‘count me in!’.

1.Upholding the company’s constitution

Think of your business as its own little country or state. Within that land mass, there are rules which must be followed by everyone which inhabits it, including the leaders. When you establish a company, you draw up these rules as ‘articles’. As you continue to operate the business, you must abide by these articles at all times. If you overstep the mark or exceed your powers, your decisions could be reversed.

For example, there be several stakeholders or directors. Under one of the company articles, it may state that a certain number of stakeholders or directors must vote of actions before they are taken. As the company director, you must stick to this rule too.

2. Promoting the company’s success

Under the Companies Act 2006, a director of a company “must act in the way he considers, in good faith, would be most likely to promote the success of the company for the benefit of its members as a whole”. In this sense, ‘promoting’ doesn’t mean advertising – it means acting under the best interests of the company. This may include looking after relationships with clients, stakeholders, employees and suppliers. It also refers to sensible economical and environmental decisions which do not endanger the company, the employees or the environment.

3. Operating with reasonable care, skill and diligence

Similar to the above rule, directors are expected to have a level of skill with which to conduct the running of a company. If someone is not skilled, they may prefer to take on other director’s with specific specialisms – such as law or accountancy.

Under ‘reasonable care’, you may consider taking out various insurance policies to protect the business and it’s dependants. You must also uphold the company’s constitution, as stated above, in order to be directing in a diligent manner.

4. Exercising independent judgement

As stated above, there is a presumed level of skill when you become a company director. It is not the role of the director to simply implement the thoughts and suggestions of stakeholders. As a company director you must take a very active role in the decision making process and have a clear and concise vision for the company’s future. If you do not know, yourself, where the business is going, it will be very difficult to direct others in how to operate it.

5. Disclosing conflicts of interest

There are several different types of conflict of interest. This might include relationships with friends or family, in conjunction with your business. As a director, you may not accept benefits from a third party – as this could be considered a conflict of interest. If you feel there may be a potential conflict of interest, you are supposed to be fully transparent with other directors and stakeholders, allowing them to have a say in how the situation should be handled. Failure to make these conflicts known could result in a director being struck off.

6. Keeping up to date records

In order to prove your compliance with your responsibilities as a director and the constitution of the company, you must become very organised with keeping records. For every action or decision that is taken in the business, you should keep a note of it. If you have multiple directors or stakeholders, take minutes at meetings and make them accessible to all pivotal parties involved. This protects the company and yourself – for example, in the event that someone questions a decision that was made, you can display evidence that the issue was debated and deliberated appropriately.

If you’re ever concerned about your responsibilities as a director, it’s best to seek legal counsel, look up specific legislation or check with HMRC. When it comes to making financial decisions, of course, we would recommend that you seek out a suitably qualified accountant

7 ways to incentivise your employees and make them happy!

7 ways to incentivise your employees and make them happy!

Employee retention is incredibly important – as is creating a pleasant and happy work environment. One of the ways in which we can do this is by offering incentives to our employees – making them aware of just how much you value them.

  • Throw staff parties

At certain points in the year, it’s nice to offer your employees the chance to celebrate their achievements. You can throw 1 party a year (on a recurring basis) and be exempt from paying tax if the cost is under £150 per head. You can throw more than one party without needing to pay tax on it, if the combined cost of all the parties is under £150 per head. Summer BBQs and Christmas parties are popular ways to give back.

  • Offer company cars

In a variety of companies, employees are offered a company car. Many employees look for companies which offer this incentive as it’s an easy way to save money on their outgoings.

  • Allow flexible working hours

Growing in popularity, flexible working hours allow employees to ‘flex’ their days. This might mean taking a morning off and making it up over the week, or shifting their working day an hour earlier or later. Plus, 87% of professionals think having a flexible job would lower their stress and 97% say a job with flexibility would have a positive impact on their overall quality of life. Offering flexible working means your workforce will take less time off, because they can fit their job around their appointments.

  • Open up remote working

It is predicted that half of the UK’s workforce will work remotely by 2020 – why? Because it’s great! Employees love the freedom and save money on costly commutes. Not only that, but it’s a great benefit to company owners too. Save money on overheads such as office space, catering, utility bills and services.

  • Establish an employee rewards scheme

Keep staff motivated with regular awards and rewards. Whether that’s by offering them profit-shares or giving prizes to the employee of the month, you’re simply providing a benchmark for staff to aim for. Rewards for great work encourage more great work – which is all the incentive you need as an employer.

  • Offer training opportunities

You know the saying, “the only thing worse than training an employee and having them leave, is to not train them, and have them stay.” By investing in training for your employees, you’re investing in your company’s future. Poorly trained employees aren’t going to do a perfect job – so why would you expect them to?

  • Prioritise a good work-life balance

Check in on employees who are staying late, offer mindfulness or yoga sessions once a month, offer a good rate of holiday and don’t give employees work to do in the evening or on weekends. Burnout isn’t just their greatest fear – it should be your gravest concern.

As an employer, it’s easy to prioritise profits over culture. However, a positive working environment will have an incredible impact on your employees productivity. High staff turnout, burnout and a tense office vibe is not conducive with great work.

If you’re looking for ways to free up capital to reinvest in your staff – we can help. At gHawk, we’re not just accountants. We’re here to make a real difference to our clients. Take a look at our business development services and let’s start incentivising!

7 ways to avoid Construction Industry Scheme pitfalls

7 ways to avoid Construction Industry Scheme pitfalls

What is the Construction Industry Scheme?

The Construction Industry Scheme (CIS) is a compulsory scheme for contractors in the construction industry. Under the scheme, contractors pass money from the subcontractors payments, to HMRC – as an advance payment towards the subcontractor’s tax and National Insurance contributions. The scheme was established to ensure proper tax compliance within the industry.

For contractors who do not follow the rules, there are financial penalties. If you want to ensure compliance, look out for these potential pitfalls.

1. Not registering for CIS

Firstly, make sure that you are required to register. If you carry out any of the following works, you must register for CIS: site preparation, alterations, dismantling, construction, repairs, decorating and demolition. This scheme applies to companies carrying out work in the UK – whether the company itself is UK based or not. Companies, partnerships and self-employed individuals are all eligible for the scheme.

2. Not verifying subcontractors

Before paying a subcontractor, the contractor must check that the subcontractor is registered. This allows HMRC to inform the contractor of the correct level of deduction that must be made – to avoid over or under reducing the subcontractors rate of pay.

3. Not deducting the payment properly

In order to calculate proper deductions, the contractor must take the subcontractor’s tax status into account. A record of the details of the payment must be made and the subcontractor must receive a statement that reflects this.

4. Not submitting a return

Each month, the contractor must complete a return which details: all subcontractors used, details of all payments made, a declaration that the employment status of the subcontractor has been considered, and a declaration that all subcontractors have been verified.

5. Not paying the deductions to HMRC

It goes without saying that once the monies have been deducted from the subcontractors pay, they must be passed to HMRC. Failure to do so could result in a serious fine.

6. Not deducting payments for mixed labour subcontractors

In some cases, a subcontractor may carry out a mixture of works – some which are within the CIS remit, and some which are not. All labour costs must have a CIS deduction applied, unless operated under individual, separate contracts.

7. Adding employees to the scheme

Employees of a construction company are not under the remit of CIS. An employee is a member of staff who is paid through PAYE. PAYE covers the employees tax responsibilities and, therefore, negates the need for CIS.

What is a contractor?

According to HMRC’s official guidelines on CIS terminology, a contractor is:

A contractor is a business or other concern that pays subcontractors for construction work.

Contractors may be construction companies and building firms, but may also be government departments, local authorities and many other businesses that are normally known in the industry as ‘clients’”.

What is a subcontractor?

According to HMRC’s official guidelines on CIS terminology, a subcontractor is:

A subcontractor is a business that carries out construction work for a contractor.”

If you are ever confused or concerned about your CIS obligations, it’s best to consult an expert. You can find HMRC’s detailed guidance on CIS on the HMRC website or speak to your accountant about filing appropriate CIS declarations and returns.