How Do Umbrella Companies Benefit Contractors

Your Lifestyle

Contractors, freelancers & temporary workers love the lifestyle & sense of freedom that comes with being 'self-employed'. Choosing how to trade as a contractor is an important part of freelancing, and the choice between setting up your own limited company or using the services of an umbrella company has to be considered.

• Whilst some contractors are happy to take responsibility for raising invoices, completing the correct HMRC tax forms and keeping detailed records of their business activity, many other contractors prefer the less stressful option of using the services of an umbrella company.

Unlike permanent employees, as a contractor you'll face various tax implications which can affect exactly how much your take home pay will be each month. You're looking for a way of reducing your tax bill, where possible, and the professional advice of your umbrella company is set up for exactly this.

Key Benefits of Working Through an Umbrella Company

One of the other key benefits provided by an umbrella company is that they provide you with a ready-made limited company through which you can operate multiple contracts.

• The umbrella company does all the administration & paperwork and only charges when you're working, so in between contracts there are no worrisome bills.

The benefit from using an umbrella company is that it saves you time & worry on all the complex administration usually associated with running a limited company, including:

1. Processing timesheets
2. Understanding business expenses
3. Raising invoices in the correct manner
4. Credit control
5. Calculating tax and National Insurance
6. Collecting payments from the recruitment agency or end client

All legitimate umbrella companies provide additional benefits such as holiday and sick pay.

Umbrella companies can also give the contractor access to other benefits not otherwise readily available to them, such as pension schemes, private health-care, life and critical illness insurance and childcare vouchers.

Inclusive

Umbrella companies provide Public Liability insurance cover within the fixed price.

• Most also include Professional Indemnity Insurance, which helps to cover the contractor in the event of any legal cases being brought against them in respect to the services provided to their clients.

An umbrella company is designed for today's modern contractor who has better things to do after a hard day's work than sit in front of a computer struggling with spreadsheets, forms & figures.