Being a company director carries a certain amount of prestige, as it indicates success and a vast amount of experience. But the role doesn’t only bring benefits, as there is a certain amount of risk to bear in mind.
Vital Role
Before accepting the offer to be a company director, it’s important to do your homework on the company, as it will put your career and reputation on the line if anything goes wrong. If you’re happy that the risk is minimal, bear in mind that you may be liable for any funding in the form of loans, which could put your personal assets at risk. You may be asked to sign a directors personal guarantee, which means you are responsible for paying back any debt if the company fails.
It’s important to check all aspects of a directors personal guarantee before you sign. Consider consulting a legal expert, of which there are many at firms such as Parachute Law.
However, as a company director, you can also negotiate to limit your liability and make the owners liable for any debts.
Day-to-Day Tasks
As well as being the overseer of the company’s everyday operations, you’ll be responsible for filing annual accounts with Companies House, as well as a confirmation statement. Although the title comes with high status, it’s important to remember you’ll have to have robust filing and reporting in place.
You will have a heavier workload and be under more pressure and potentially stress, which is reflected in a higher salary.
Tax Breaks
A company director can choose to pay themselves a small salary but receive dividends in order to avoid the 20% tax on company profits. You can also choose to keep any extra income within the company and take it out of a future tax year.
Other Opportunities
As a company director, you are likely to command a higher salary both at the current time and in future. And you may also be able to pursue training and employment opportunities to advance your career further.
