Home » Pros and Cons » 14 Pros and Cons of Being a Company Director UK

14 Pros and Cons of Being a Company Director UK

There was a time not so long ago that being a company director in the UK brought a certain level of prestige to your CV. It was an indication that you had reached a specific level of success in your career, and that you were ready to take on the challenges that were coming in this next stage of life.

After the investigations into misconduct that occurred in 2018 within the financial services sector, including banking and superannuation, the idea of being a company director was no longer favorable in some situations. It caused some professionals to wonder if pursuing this type of opportunity was a good decision with all of the risks that were present at the time.

If you are thinking about accepting a role as a company director, then it is imperative to perform your due diligence on the company before you agree to anything. It is your reputation that will be on the line should something happen in the future, even if all of your decisions and actions are above board.

Then there are these specific pros and cons of being a company director in the UK to review.

List of the Pros of Being a Company Director in the UK

1. There is an opportunity to limit your liability in the financial sector.

If you are a sole trader in the UK, then you do not have the advantage of limited liability in the transactions you initiate or supervise. Becoming a company director, especially in a limited company, will make the organization become liable for its own debts. The owners are only liable up to the nominal value of their shares, and then any personal guarantees that they may have made. That means your personal assets are not available for seizure to pay for any business debts or settle any legal claims that are brought against the company.

2. It still provides you with an upgrade to your professional image.

There is a certain amount of status that comes with the position of a company director in the UK, even though there are some negative stereotypes forming after the 2018 crisis. You must adhere to strict reporting and filing requirements to maintain your position, especially if you are running your own company. You must also disclose detailed information on the public record about the organization, it’s financial picture, and the other company directors that might be working with you. All business activities are closely monitored by the HMRC (Her Majesty’s Revenue and Customs) and in-house safeguards.

3. There may be some tax advantages to consider.

Limited company is in the United Kingdom are subject to a 20% tax on annual profits of up to £300,000. As a company director or shareholder, you can save some money on your personal responsibilities in this area by paying yourself a small salary for the year and receiving regular dividends. You also have the option to keep surplus income in the company to remove it in a future tax year if that would improve your financial situation.

If you were to create a business in the UK as a sole proprietor in the financial sector, then you would be subject to higher personal tax contributions. There would also not be the option to keep money in the business without paying taxes on it in the current year.

4. Your work as a company director can continue to exist.

Unlike other business structures where the owner and the company are treated as the same entity, being a company director in a UK limited company allows your work to exist beyond the life of the original owner – including yourself. This advantage occurs because the company becomes a legal “person” in its own way. If shareholders want to sell or they pass away, the existence of the company remains unaffected.

5. You will usually see an increase in your income as a company director.

The opportunity to make more money is one of the biggest advantages of pursuing a position as a company director. When you start working harder and have more responsibilities, whether it is in your own company or a different organization, then you can experience a sizable bump in what you take home each month.

When you have an opportunity to earn more, then you can pursue some significant life changes that can get you closer to your overall goals. That can mean owning a home, moving to a new city, getting married, or starting a family. You can also enjoy a higher standard of living, which means better clothes, fresher foods, and an automobile that you trust to start in the morning before going to the office.

6. Your job satisfaction may increase in your role as a company director.

Although there are some people who are entirely motivated by money, most people stay in their job because they love what they do. When you are happy about going to work each day, then you will be more productive. That result creates a higher level of accomplishment, which then helps you to love what you do even more. In your role as a company director, you can sometimes influence these outcomes for the people around you as well. The chance to work toward a common goal creates close relationships that can extend beyond the workplace in some situations.

7. You may have an opportunity to continue with your education.

When you become a company director, then there may be more opportunities to pursue the education that you want. You might also be able to take advantage of continuing education opportunities so that you can advance your career even further in the future. Some organizations may even help to provide financing for this need, allowing you to establish a strong foundation for your career without digging deeply into your bank account.

List of the Cons of Being a Company Director in the UK

1. You are going to be doing more work as a company director.

Although there is an excellent opportunity for you to earn a higher salary if you decide to take the position of company director, this job will not be a walk in the park. You are going to end up having more work than most of the other people in the organization. There will be times when you will be expected to do the jobs of someone at an entry-level position in addition to what you do during the day.

It is not unusual for a company director in the UK to experience high levels of daily stress because of the sheer number of responsibilities that are on their plate. You might find yourself working nights, weekends, holidays, and even during a vacation just to make sure you can stay on top of everything.

2. There is a higher level of accountability you will need to manage.

When you are in the role of a company director in the UK, then you will have a higher level of accountability than most other types of workers in your organization. That is especially true if you decide to operate your own limited company. It is easier for people who are lower in the chain of command to hide a poor performance behind their teammates, or even place the blame on those to whom they are supposed to report. As a company director these options are not available for you. If a problem exists, then it stops at your desk.

3. You will have a different set of skills that you’ll need to be using.

You might receive the opportunity to become a company director because you excel in a position that is lower in the chain of command hierarchy. If you find yourself in this situation, then it is essential to remember that being an outstanding employee doesn’t always mean you have skills that can translate into leadership. Being in charge of the performances of other people or the health of your organization means that there is an entirely different set of job expectations and skills that are necessary.

You will need to know how to balance your budget and manage your accounts. It may become necessary to motivate others to continue being productive. Some company directors need to keep the big picture in mind and anticipate company-wide issues to push toward new solutions. Having a steep learning curve is not that unusual.

4. There are times when you might find yourself caught in-between needs.

When you are in the position of a company director, then there are times when you might find yourself caught between the needs of the Organization and what everyone else may require. You might hear complaints about the amount of work that is necessary to complete each day, deal with the lack of staffing, or manage complaints about salaries, benefits, schedules, and everything else that happens during the day. Your work involves cutting costs and increasing efficiencies whenever possible, which can be challenging if there are teams or individuals who are not pulling their weight for any reason.

5. If you have direct reports, then there is hire-and-fire power at your discretion.

When you find yourself in the role of being a company director, then there may be an opportunity for you to manage direct reports. If that is part of your responsibility, then you will have the power to hire people or terminate their position. Although some people enjoy the exercise of going through a disciplinary action for an underperforming employee, it can be challenging to criticize people or let them go when you know that their financial situation may be challenging.

You will want to keep careful documentation over any disputes that arise in the workplace that are associated with your position. Because there is a closer amount of oversight that occurs with company directors today, this work will help to protect you if you need to justify your actions at a later date.

6. You might find yourself on an island by yourself at the workplace.

Once you step away from the entry-level positions in any organization, then there is an increased risk of experiencing potential alienation from your colleagues. The people that used to work next to you may view you differently if you are awarded a company director position. Any time there is a change to the amount of authority that you have, there is a risk that the people who are close to you will now feel like they are far away.

It is essential to remember that you can only control the decisions that you make in life. How other people feel about you is not something that you can influence at the end of the day. There will always be a select few who will condemn your success out of jealousy or spite, but you will also find that there are people who are happy for you and celebrate the fact that you got into the position that you wanted.

7. The actions of others will still dictate your performance.

One of the biggest struggles of being a company director is that you will be judged based on outcomes that are not always under your control. If you have direct reports, then their decisions will become a reflection of who you are. Investments can tank due to economic circumstances outside of your control. There are numerous opportunities available for you to inspire others when you find yourself in this role, but there can also be disgruntled people who try to take you down a notch.

That’s because being a company director in the UK creates a system of competition and rivalry that you don’t always experience before entering this role. There will always be people who think they can do this job better than you can. Rivals are never charitable, and since there is less flexibility in your choices at this stage in your career, it can be a highly stressful situation to manage.

Verdict on the Pros and Cons of Being a Company Director in the UK

There are a lot of issues to consider if you were offered a position as a company director in the UK. You will also want to evaluate your choices carefully if you feel like this role is the next step in your career that you must take. It is the people who blindly accept this role that tend to experience the most regret.

You may experience a newfound sense of job satisfaction after looking at the pros and cons of being a company director in the UK. There might also be longer work hours to manage, and you might find yourself alienated from your other colleagues.

About The Author
Although millions of people visit Brandon's blog each month, his path to success was not easy. Go here to read his incredible story, "From Disabled and $500k in Debt to a Pro Blogger with 5 Million Monthly Visitors." If you want to send Brandon a quick message, then visit his contact page here. Brandon is currently the CEO of Aided.