If an individual or entity is planning on incorporating a new limited company, Companies House requires the limited company being incorporated to have at least one director appointed at any point in time. Although, there has always been confusion about whether a limited company director is self-employed or whether they are an employee of the company. Today we will answer this question and provide clarity about limited company director's employment status.
What is a Limited Company Director?
When an individual is appointed as a limited company director they are not self-employed. Instead a limited company director would be referred to as an Office Holder. An office holder is someone who has been appointed to a position within a company or organisation but they do not have a contract with the company or receive regular payments.
An office holder is neither an employee or a worker of the company but this is not to say that as an office holder you cannot receive a salary to compensate yourself for all of the hard work that you put into the company in addition to your duties as a limited company director. As an office holder it is possible for you to also become an employee of the company as long as you have an eligible employment contract with the company or organisation that you are an office holder for.
How Can I Be Paid As A Company Director?
For most small limited companies the directors of the company are likely to be the shareholders as well as the individuals who is conduct majority of the business's activities. Therefore a company director can be compensated in several different ways.
As discussed above, a limited company director (office holder) can become an employee of the company and pay themselves a salary. In order to pay yourself a salary the company would firstly need to register for a payroll services within the company's Government Gateway account. By registering for payroll services the limited company can pay its office holders a salary for successfully complying with their responsibilities and ensuring that the company has continued to meet its filing deadlines throughout the accounting period.
Find out more about Annual Accounts & Tax Filing
Hopefully this article has answered any questions that you may have had about whether you a limited company director is self-employed. If you wish to learn more about whether company directors need to file a Self-Assessment Return or about the inner workings of running a business such as how corporation tax is calculated, please dive into our Knowledge Base which has plenty of articles like this one to help your business thrive.
If you need to file a Corporation Tax Return or Annual Accounts, you can use our filing templates provided directly on our platform with a free account. Get started now or you can visit Easy Digital Filing to find out more.
