As a director of a limited company, the law says you must:

• Try to make the company a success, using your skills, experience and judgment.
• Follow the company’s rules, shown in its articles of association.
• Make decisions for the benefit of the company, not yourself.
• Tell other shareholders if you might personally benefit from a transaction the company makes.
• Keep company records and report changes to Companies House and HMRC.
• Make sure the company’s accounts are a ‘true and fair view’ of the business’ finances.
• Register for Self Assessment and send a personal Self Assessment tax return every year.     

You can ask other people to manage some of these things day-to-day. For example, an accountant can manage your accounts for you - but you’re still legally responsible for them.

Your company has extra responsibilities if it employs people or its turnover goes above £77,000.

Company and accounting records

You must keep:

• Records about the company itself.
• Financial and accounting records.

Records about the company

You must keep details of:

• Directors, shareholders and company secretaries.
• The results of any shareholder votes and resolutions.
• Promises for the company to repay loans at a specific date in the future (‘debentures’) and who they must be paid back to.
• Promises the company makes for payments if something goes wrong and it’s the company’s fault (‘indemnities’).
• Transactions when someone buys shares in the company.
• Loans or mortgages secured against the company’s assets.

You must tell Companies House if you keep the records somewhere other than the company’s registered office address.

You must keep accounting records that include:

• All money received and spent by the company.
• Details of assets owned by the company.
• Debts the company owes or is owed.
• Stock the company owns at the end of the financial year.
• The stocktakings you used to work out the stock figure.
• All goods bought and sold.
• Who you bought and sold them to and from (unless you run a retail business).

You must also keep any other financial records, information and calculations you need to complete your Company Tax Return.

If you don’t keep accounting records, you can be fined £3,000 by HMRC or disqualified as a company director.

How long to keep records

You must normally keep records for at least six years from the end of the last company financial year they relate to.

You may need to keep records longer if:

• They show a transaction that covers more than one of the company’s accounting period.
• The company has bought something that it expects to last more than six years, like equipment or machinery.
• You sent your Company Tax Return late.
• HMRC has started a compliance check into your Company Tax Return.

By David White, Partner, Charterhouse, based in Beaconsfield