03 Nov Having a Spouse as a Company Director
Here’s what you need to know about Having a Spouse as a Company Director. We see a lot of family business where both partners are Directors as well. It’s important to understand that being a Director is quite different from being a Shareholder. The Shareholders get a “share” of the rewards. The Directors get the responsibility and the risk – jointly and severely.
A Director is someone elected or appointed to manage a company’s business and affairs. Every registered company must have at least one direct.
Being a Director could be considered prestigious, and the Director(s) make the decisions that control how the company is run. Aside from these possible benefits, it’s difficult to identify any real benefit to being a company director, especially of a typical NZ family business.
The Risks of being a Director?
As a Director, you have responsibilites. Ultimately, the directors are responsible for ensuring the company is well run, financial solvent and compliant with all legislation and standards. The Directors of a comp[any can be personally held to account on any failing on the company.
If you are a Director, it is important that you understand your responsibilites and that you take an active part in the day to day running of the business as you can be personally held to account for the actions of the company. EG, personal guarantees to banks and suppliers, health and safety, and legal proceedings.
Some examples on how a Director can be found personally liable:
Health and Safety at Work – Directors and other officers can be found directly liable if they fail to exercise due diligence.
IRD & Taxes – Directors can be found personally liable for PAYE and GST debt
Personal Guarantees – Directors who have extended Personal Guarantees to banks and other Trade Creditors can be held personally liable for the debts of the company
Retiring a Director
All Directors must be aware of their responsibilities and and willing to act in this capacity. If you would like information on this, please contact us. We will be happy to discuss this with you and provide you with more information.
Retiring a director can be a simple process. If this is something you wish to do, please talk to us and we will be happy to assist you with this.
Our ‘Having a Spouse as a Company Director’ not enough?
The better you understand your business and your financials, the easier it will be to make more money and ultimately achieve your goals. We have developed comprehensive resources to enable business owners to fully understand and interpret their numbers. Need more help? Join our free webinars on financial awareness coaching or talk to us about personalised financial awareness coaching. Contact Samantha for a call, zoom or meet on 06 871 0793.
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