How directors should behave when involved in a company

1. Always keep your accounting records up to date. A director should be up to speed with the company’s financial position at all times.

2. Ensure that annual returns and accounts are posted on time. Likewise, make sure that payments and returns such as PAYE, NIC, VAT, Duty and Corporation Tax are calculated correctly and posted.

3. Constantly consider the interests of creditors and employees. Since 2008 a number of small businesses have been trading on the verge of insolvency. In that situation, directors are required by law to consider what is in the best interests of the credi- tors.

Hide Ad
Hide Ad

4. Take the long-term view. As a director you must always consider the future prospects of the company: that includes its reputation. Don’t make decisions based on advice from a guy in the pub just because you run a small business!

5. Give equal consideration to all shareholders and consider their interests as a whole when making decisions, even if you are the majority shareholder.

6. Never use your position as a director to make a secret profit.

7. Declare any conflicts of interest immediately. This could include an interest in another business which, for example, your company is planning to trade with, or that you have a relative who is behind a new contract for your business which isn’t uncommon in the SME market.

8. Exercise good credit control.

Hide Ad
Hide Ad

9. Involve fellow directors and senior staff in vital decisions.

10. Always remember that company’s money and assets do not belong to the directors or even its shareholders. They belong to the company.

Related topics: