The company's money is not your money: a director's rules

The deal behind incorporation is symmetric. The company's debts are not yours — and the company's money is not yours either. It belongs to a separate legal person, and you, as director, are its fiduciary. Most founder trouble with ACRA, IRAS and later investors traces back to blurring that line early.

The duties, briefly

Directors must act honestly and use reasonable diligence in the company's interest — the statutory expression is s157 of the Companies Act 1967, alongside general fiduciary duties. Breach is personal: fines, disqualification and civil liability do not hide behind the corporate veil. The practical translations for an owner-director:

• Don't withdraw company money for personal use. An ATM habit against the company account is, at best, an undocumented loan; at worst, misappropriation.
• Don't take casual loans from the company. The Act restricts loans to directors (s162) with limited exceptions — and an accumulating "director's loan account" is one of the most common findings in small-company due diligence.
• Don't use company resources personally — the company card for family holidays, staff time for private errands. Small amounts, same principle.

The one habit that prevents most of it

Open a business bank account before the first dollar moves, and route everything through it — all business income in, all business expenses out. Use a business debit or credit card for company spending instead of your personal card (and still keep the invoices). Never let personal transactions touch the account.

This single habit does a remarkable amount of work:

• your bookkeeping becomes clean by construction — every line in the account is business;
• your tax computation stops accumulating awkward "private expense" add-backs;
• banks, auditors and investors see governance instead of a shoebox;
• and you never face the question a mixed account always eventually invites: whose money was this?

Paying yourself properly

There are three clean routes, each with a record: salary or director's fees for real work (deductible to the company, taxable to you, CPF where applicable); dividends declared from available profits (tax-free to shareholders under the one-tier system); and reimbursements of documented business expenses. Choosing the mix is legitimate planning — compensate yourself fairly, decide deliberately how you take returns, and paper each payment as what it is.

The standard is not perfection; it is that every movement of company money has a reason the company would recognise, and a document behind it. Directors who keep that standard find every later step — audits, fundraising, filings, exit — cheaper and calmer.