Avoiding Personal Liability as A Company Director
As a company director you can be faced with a lot of challenges and these are not always from the running of a company. Legally, being on the board of directors makes you responsible for the ‘well being’ of the business. This also means making sure you are operating within the bounds of the law lest you receive a garnishee notice one day!
The most important thing you can do as a director is to stay informed of all the operations of the business. There will always be signs that something is going wrong in the company so it is vital to read all communications especially at a board of directors level. Here are some other developments you should keep in mind:
Government Legislation – Because the political landscape can change quickly, so can current laws. This is especially so with tax laws so make sure your accounting firm is on the ball.
Industry Developments – If the industry your business is reliant upon or selling to starts to fail then you need to know about it.
Employee Relations – Do you have a competent and happy workforce? If you answered yes then you need to maintain it, if you don’t know then find out!
Board of Directors – If you are on the board then you will understand that you need to know what is going on. Never vote blindly and use all of the previous knowledge to steer your company to success.
Get the Right Advice
No matter how much you learn and stay in touch with your company there will always be factors that are beyond your own understanding. This is what professionals are for, so depending on your problem you need to contact the senior person in your company and if that fails to find answers go outside the company.
While your company may employ any number of professionals to deal with accounts, staff, marketing and more it is sometimes healthy to get an outside opinion. It is common for people within medium and large businesses to suffer tunnel vision when it comes to toxic problems within a company. This is common especially with accountants and the myriad of consulting professionals you can deal with which can help you avoid receiving a Director Penalty Notice like:
Accountants – the most common outside help businesses seek.
Human Resources – this can be helpful if staffing costs are over budget or you are lacking staff in certain areas.
Solicitors – Having a solicitor is crucial to having legal jargon translated and protection in case of legal proceedings.
Read Before You Sign
You must always remember that as a Director you can become personally liable for the debts and actions of the company. The situation can worsen if, by negligence, you have signed documents that leave you open for the liabilities of the business. Always stay up to date on the debts of the company and make sure you are kept informed by the right people within your organisation.