Your job title. It’s simply a label that doesn’t carry much weight, right? Well not exactly. The choice of job title carries legal implications, responsibilities and accountability, so it is a very important thing to get right.
In deciding what title is appropriate you have to look at the legal structure and the responsibilities associated with the role.
The title of director should only be used when dealing with a company. If you own a business as sole trader then you should call yourself the owner.
People may be tempted into giving themselves titles which overrate their position, but this is a big mistake. With a title comes legal responsibilities which gives rise to accountability and if a business becomes insolvent, whether as a company or managed own business, then depending on your title you may become personally liable.
When you use the title of managing director then remember you are the captain and have overall responsibility for the company; if you are a financial director you are responsible for the finance. When you have a title you should be clear what responsibilities go with that title and should not act beyond those duties.
When managing people it is always important they understand your role and your authority. Certain types of authority come with a title. People need to know who they are accountable to and why. Having a title helps.
Only use the title of partner if you are in a partnership.
Having the correct title is also important when it comes to dealing with third parties. Lenders will want to be clear who they are dealing with and the authority that they hold. With a title comes authority to bind a business.
Do not allow people to act in a way which exceeds their authority as this could give rise to a personal liability. This can often be the case when dealing with shadow directors.
Limited companies and partnerships
Remember, if you are operating a limited company, then your job titles will need to be much more specific, as all limited companies must have a director. A limited company is a separate legal identity, owned by its shareholders and run by the director or directors, so in most cases the owner/manager would adopt that job title. If you are setting up a partnership, the title of partner or ‘associate partner might be most appropriate.
Always remember, with a job title comes responsibilities and liabilities. The title is important and is also a sign of achievement to be proud of.
This article was originally written by Nick Johnson, managing partner of Glaisyers Solicitors LLP in March 2018.
