Becoming a limited company director is a genuine milestone, but nobody hands you a manual on day one. This page gives you a clear order of priorities for your first 90 days, so you can get the essentials right and avoid the mistakes that cost new directors time and money.
Your First 90 Days: Essential Checklist
1. Confirm Companies House details
Check your registered office address, director details and share structure. Errors here follow you around, so fix them early.
2. Register for corporation tax
Register with HMRC within 3 months of trading. Confirm HMRC has issued your Unique Taxpayer Reference (UTR).
3. Open a dedicated business bank account
Your company is a separate legal entity. A dedicated account keeps records clean and protects your limited liability.
4. Set up payroll for your salary
Register as an employer with HMRC and run PAYE, even if you are the only person on payroll.
5. Decide how you will pay yourself
Most small company directors use a mix of salary and dividends. Read our salary vs dividends guide first.
6. Set up a record-keeping system
Keep invoices, receipts, dividend vouchers and board minutes. HMRC requires records for at least 6 years.
7. Consider VAT registration
Compulsory once taxable turnover passes threshold, but voluntary registration can make sense earlier.
8. Arrange personal protection
As a director you have no employer sick pay or death-in-service. Our director protection guide covers key options.
Paying Yourself: The Basics
You cannot simply transfer company money to your personal account. Money leaves a limited company in defined ways: salary through PAYE, dividends from post-tax profit, pension contributions, expense reimbursements, or a director’s loan. Each has different tax treatment, and dividends can only be paid from available profit.
When to Get an Accountant
Most directors benefit from an accountant from day one. A good accountant typically saves more in tax and avoided penalties than they charge, and they will handle payroll, VAT and filings. Start with a firm that works with small limited companies day in, day out.
⚠️ Common First-Year Mistakes to Avoid
- Mixing personal and company money.
- Taking dividends without checking there is enough post-tax profit.
- Missing the corporation tax registration deadline (3 months).
- Ignoring the annual confirmation statement at Companies House.
- Leaving personal protection unarranged because “the company is small”.
Understanding your legal duties and personal liability
As a director you take on legal duties that don’t apply to an ordinary employee, set out mainly in the Companies Act 2006. In plain terms, you’re expected to act within the company’s powers, promote its success, exercise independent judgement, avoid conflicts of interest, and exercise reasonable care, skill and diligence. These duties apply from the day you’re formally appointed at Companies House, regardless of how small the company is or how much of it you own.
A common worry for new directors is personal liability for company debts. The general position is that a limited company is a separate legal entity, so its debts belong to the company, not to you personally — that’s the whole point of limited liability. However, that protection isn’t absolute. You can become personally liable if you’ve given a personal guarantee on a loan or lease, if you continue trading while insolvent and it can be shown you knew (or should have known) there was no reasonable prospect of avoiding insolvency, or if you’re found to have acted fraudulently. Directors who breach their duties can also face disqualification, and in serious cases personal financial consequences.
None of this is designed to alarm you — the overwhelming majority of directors never come close to these situations. But understanding where the line sits matters, particularly around insolvency, because the point at which “the company is struggling” becomes “I need to take specific care about how I act” is exactly the point most new directors don’t recognise until later. If you’re ever genuinely unsure whether a decision could expose you personally, that’s the moment to get advice from an accountant or insolvency practitioner rather than guess.
Frequently asked questions
What are a director’s main legal duties in the UK?
Under the Companies Act 2006, directors must act within their powers, promote the success of the company, exercise independent judgement, avoid conflicts of interest, and act with reasonable care, skill and diligence. These duties apply to every appointed director, however small the company.
Can a director be personally liable for company debts?
Generally no — a limited company’s debts belong to the company, not the director personally. Exceptions include personal guarantees you’ve given, continuing to trade while insolvent in certain circumstances, and fraudulent conduct.
What happens if a director breaches their duties?
Consequences can range from being asked to put things right, through to disqualification as a director, and in serious cases personal financial liability. The severity depends heavily on the nature of the breach and whether it was deliberate.
Do these duties apply to non-executive and sole directors as well?
Yes. The legal duties apply to anyone formally appointed as a director at Companies House, including non-executive directors and sole directors of one-person companies, regardless of day-to-day involvement in running the business.
This article is for information only and does not constitute financial, tax or legal advice. For advice tailored to your circumstances, speak to a qualified adviser or accountant.