Benefits of being a Director

Just after a little advice.  I've been asked if I would like to be a director of a small company I currently work for, will include a pay rise and a dividend payment.  But the owner has not such a great track record, liquidating a few companies in the process.  Now obviously I'd be happy to get more money for basically doing the same job as i am now, but would it be a good move for me?  What risks are there to me?

Good question BTID. Never having climbed to such dizzying heights, I genuinely don't know what you should do. I would only suggest that before, possibly, getting even more involved, especially with your doubts, you should take a step back, and have an overarching look at the company, its market, and how it is managed in the circumstances. Not forgetting what such a commitment would expect from you, both in time and financial expectations, especially post-Brexit. 
Why has he asked you to share the role at this time ? How will it go for you if you decide not to ?
Whatever you decide, good luck, and I hope it works out.

If you think the company is financially stable then it's worth the risk - only in extreme cases are Directors liable for debts - usually when something illegal has gone on.

If the company might not be here in 2 years I'd avoid it like the plague. Nothing but hassle can come of it.

Be careful of this if the guy has a track record of liquidating companies and especially if any of the companies have folded with outstanding creditors.
There are a few websites which show you the responsibilities of a director under the Companies Act 2006. All directors are responsible for maintaining  the financial records and producing Accounts-( in legal terms they all rank pari passu). You might find yourself responsible should there be any fraud, trading whilst insolvent, or you might even find that you have unwittingly acted as a guarantor for borrowing money.
Being a director sounds great-but it does have some responsibilities with it and you need to make sure that you are aware of this, and that the company has indemnity insurance against any fraud or criminal activity. Make sure also that you understand the taxation of dividends- it's not as straightforward or tax efficient  it use to be. It avoids National Insurance-and that's the biggest benefit of dividends- but they're not guaranteed as the majority shareholder will control them. If there's no salary then you might find yourself working for nothing if he decides not to pay any dividends. Pesumably if he has promised you a dividend then you will be allocated shares as well as dividends are only paid to shareholders. Ask for a share of profits if you think that will guarantee some income (but it probably wont because if he's a fly-by-night then its quite possible to minimise profits )

You might need to engage an accountant for professional(paid for) advice

What Rammy said. (Obviously because this is what he does.)

It's a lot more complicated nowadays than it used to be and if you're not careful, you can tie yourself in knots when it comes to the salary / dividend thing.

And it may wind up affecting your personal monthly cashflow because HMRC don't like the idea of people receiving regular dividends instead of a wage because it looks like tax avoidance.

So you end up paying yourself a small weekly wage and receiving the dividends at less frequent intervals.

ie, on £1000 a week, the most tax efficient way to do it is pay yourself roughly £150 a week (£600 a month) and draw the rest as dividends every couple of months.

As Rammy says, get yourself a decent accountant. One you can sit in front of and not just one of these online services where you never get to see a face.

Welcome back BTW!

Don't know what they're all going on about. If it's good enough for Spielberg,it's good enough for BTID.

By the way,who let Breadman back?

I'm deleting my account!

I guess you need to think about the reason he is asking you to be a director? do you trust the guy.

The only thing i can add is that if you fail to file your accounts then if it goes tits up the directors can go to jail. It's a double edge sword reap the rewards but your liable if it goes wrong. Oh and all the work force will think your a bastard just goes with the territory lol

Why don't you ask to sit in on a couple of Board meetings as an observer? Perfectly legit and will give you an insight into how the Board is run and what you might bring.

wanderlust wrote:Why don't you ask to sit in on a couple of Board meetings as an observer? Perfectly legit and will give you an insight into how the Board is run and what you might bring.

......presuming they have board meetings. As a small private company they might not bother

karlypants wrote:Welcome back BTW!

Natasha Whittam wrote:

karlypants wrote:Welcome back BTW!

I was actually being nice. 

Not sure what's wrong with that?

karlypants wrote:

Natasha Whittam wrote:

karlypants wrote:Welcome back BTW!

I was actually being nice. 

Not sure what's wrong with that?

Ignore her KP. She's just weighed herself,and is in a bad mood.