What's the difference between a Director and Shareholder in a Business?

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A lot of people think that being a Director is all about having wads of cash and driving fast cars. The reality is that there are many risks of being a Director of a company.

There are many differences between being a Director and being a shareholder of a company. The Directors are responsible for the day to day running of the company, and get to make Strategic Decisions on where the business heads.

That’s about where the positive news ends. In some situations, Directors can be personally responsible for the debts of the company, which could be devastating for the family if the assets are not structured correctly. They are also not entitled to any profits of the business. Shareholders have it a bit easier though, as generally they are not responsible for the debts of the company, and they can potentially kick out the Directors if they wanted to. They are also entitled to the profits of the business if they decide to pay a Dividend.

As a quick summary, being a Director isn’t always as great as it sounds. If you ensure your business is profitable, and you limit your risks, you should be OK though. Let me ask you something… Is your business structure set up correctly? If you’re not sure, then reach out to me and let’s make a time for a chat. And if you found this video helpful, I would love it if you gave it a like and a share. Thanks for watching.