What is your best Option Umbrella Company or own Limited Company

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The umbrella company service has been used by contractors for more than ten years, and is now an established part of the recruitment process. The advantages of using an umbrella company is that it is a professional back-office facility, specifically created & designed around your needs as a contractor.

They continue to develop in-line with the needs of today's contractor.

Prior to the umbrella company service being an option you would have had to set-up & manage your own one-man limited company. Running your own limited company involves a fair amount of work to keep it going including paperwork, recordkeeping & administration.

There are advantages of running your own limited company, but it's not surprising contractors can become fed-up with doing a full day's contracting work then coming home and having to sit in front of their computers all night filling in spreadsheets & forms.

Running your Own Limited Company may Sound Good

Running your own limited company may sound good, and being a ‘director' carries a certain amount of kudos, however, behind the façade does lie an endless stream of rules, regulations & red tape that has to meet certain minimum standards and be submitted within strict time deadlines.

Being the boss of your own limited company actually involves knowing a fair amount about spreadsheets, invoicing & contracts - as an absolute minimum.

Contrast An Umbrella Company with a Limited Company

The only form you'll have to fill out when using the umbrella company service is your timesheet. See all the advantages of using an umbrella company. Once this part is completed the umbrella company takes over and does everything else - you just sit back and wait for your net pay to arrive in your personal bank account.

If you're new to contracting, only set-up & manage your own one-man limited company if you can tick these:

• Have had training
• Are an accountant
• Like red-tape
• Enjoy administration & paperwork
• Understand complex forms
• Have nothing better to do of an evening or weekend than complete forms
• Believe biros will never replace fountain pens

These days, the umbrella company is the smart option. Not only is it cheaper than running your own limited company, but also carries significantly less administrational overhead. You are also able to maximise your salary in the most compliant method, see our guide to claiming umbrella company expenses.