Do Umbrella Companies Benefit Contractors

Lifestyle

Freelance temporary contractors love the lifestyle and 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.

Stress-Lite

Many contractors prefer the less stressful option of using the services of an umbrella company.

Unlike permanent employees, contractors face various tax implications which can affect exactly how much they take home in their pay packet each month. Most contractors look for a way of reducing their tax bill, where possible, and rely on the professional advice of their umbrella company.

Key Benefits

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

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

Time Saver

The benefit from using an umbrella company is that the contractor saves time and 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 readily available to them, such as pension schemes, private healthcare, life and critical illness insurance and childcare vouchers.

Inclusive

Umbrella companies provide Employer's Liability and Public Liability insurance cover within the fixed price, and 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 that they provide 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 and struggle with spreadsheets, forms and figures.