Quick Guide to Umbrella Companies

Lifestyle

Freelancers, temporary workers & 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 has to be considered, between:

1. Setting up & managing your own limited company
2. Using the services of an umbrella company

Hassle or Ease?

Some contractors are happy to take responsibility for raising invoices, completing the correct HMRC tax forms and keeping detailed records of their business activity.

• However, many contractors prefer the less stressful option of using the services of an umbrella company, which does all the paperwork for them, takes care of the red-tape and handles all the hassle.

Take Home

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.

It is possible for contractors using an umbrella company to off-set some of their tax liabilities by claiming for legitimate business expenses.

The better umbrella companies, have a team of expert tax advisors on hand to ensure their contractors know exactly what expenses can be claimed and so take home the maximum net pay legally allowed by HMRC.

Contractors can sleep easy knowing they are protected from any future HMRC investigation.

Ready Made Ready-To-Go

The other key benefit 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.

More Time Less Worry

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
7. Handling legal contracts
8. General paperwork and filing
9. Staying up to date with ever changing legislation

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.

Save Time

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.

By registering with an umbrella company, a contractor becomes an employee of the umbrella company, while retaining the desired flexibility to find and choose their own work, clients, rates, terms and conditions.

Flexi-Time Saver

Umbrella companies help contractors to save time on administration, time which could be better spent by most contractors. Umbrella companies are a far simpler way for contractors to trade whilst reducing their tax burden to the lowest possible level.

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.

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