Business finance for a first-time director

The company's money isn't yours

The first and most important shift: money in the company account belongs to the company, not to you, even if you own every share. You take it out through salary or dividends, or as a repayment of money you put in — never just because it's there. Treat the company account as personal and you'll create an overdrawn director's loan account and a tax bill. Keep the two worlds separate from day one.

What you're responsible for

As a director you carry legal duties: act in the company's best interests, keep proper records, file accounts and returns on time, and don't trade on if the company can't pay its way. These aren't box-ticking — they protect you as much as creditors. Getting them right keeps your limited liability intact; getting them badly wrong can pierce it.

Profit, cash and tax are three different things

New directors are often surprised that a profitable company can be short of cash, and that tax is owed on profit whether or not the cash is there. Learn the difference early: see profit vs cash flow and budget for corporation tax before you spend. This one insight prevents most first-year cash shocks.

When and how to borrow

Borrowing isn't a sign of failure — used well, it funds growth the business couldn't reach on its own cash. The key is borrowing for a real, repayable purpose and checking the company can afford it. Start with the affordability calculator and read business loans explained. Beware anything that asks you to sign personally.

Keep the borrowing off your back

Many lenders ask first-time directors for a personal guarantee, quietly turning company debt into your own. You don't have to accept that. Credicorp lends to the company, not to you personally, and takes no personal guarantee — so your first venture into borrowing doesn't put your home on the line. See how to avoid personal guarantees.