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Regency House, 45-51 Chorley New Road, Bolton, BL1 4QR
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Just4contractors.com > New to Contracting > Choosing the right business structure > Umbrella Company
An Umbrella Company - that's an option!
An Umbrella Company arrangement is a real option for many freelance contractors.
The contractor is an employee of the Umbrella Company which could have hundres or even thousands of individuals all of PAYE on its payroll.
Put simply, view an Umbrella Company as outsourcing of your payroll. The umbrella company charges the contractor a fee for the provision of its service.
There are many umbrella companies that you could work through: there are those that provide schemes with built-in insurance cover, while others offer nothing different from standard temporary employment. You should seek advice from a qualified accountant before signing up with an umbrella company. Most new contractors go with the umbrella company for at least the short term, since it is very simple to leave an umbrella company and start up your own company than it is to go from your own company to an umbrella in terms of administration and expense.
When running your own company, you will be liable for ensuring that all of your company administration and legislative paperwork is up to date and you will also incur an accountant’s administration fee for preparing and signing off your accounts each month. You will also be charged a one-off upfront company registration and set-up fee.
Using an umbrella company will naturally incur costs in the provision of employment services. Generally, their costs are around £100 per month; the majority of umbrella companies do not have an up front joining or registration fee.
In addition to the reduced administration costs of using an umbrella company, the benefits for the freelancer include having someone else handling all the company administration, removing the requirement for the freelancer to do so. This could constitute a substantial time saving for the individual as well as removing the need to be aware of the legal requirements and risks involved
with running a limited company. Some schemes also come with built-in insurance cover, for example, for IR35 investigation.
So is an Umbrella Company right for me?
An umbrella company scheme may be suitable for:
1. contractors starting up who expect to work through an agency for the foreseeable future
2. contractors who are “caught” by IR35
3. contractors who do not want the additional administration and finance hassle involved in running their own business and who are happy to hand these functions over to an umbrella company
4. contractors wishing to maximise their take home pay by leveraging Revenue dispensations for genuine, receipted expenses
5. new contractors who think that they may struggle with the responsibilities of running a company
6. short-term contractors who want to avoid the costly process of forming a company and then having to arrange for it to be dissolved
See Also
IR35
Partners - Umbrella Companies
Limited Company
Recommended Links
The contractor is an employee of the Umbrella Company which could have hundres or even thousands of individuals all of PAYE on its payroll.
Put simply, view an Umbrella Company as outsourcing of your payroll. The umbrella company charges the contractor a fee for the provision of its service.
There are many umbrella companies that you could work through: there are those that provide schemes with built-in insurance cover, while others offer nothing different from standard temporary employment. You should seek advice from a qualified accountant before signing up with an umbrella company. Most new contractors go with the umbrella company for at least the short term, since it is very simple to leave an umbrella company and start up your own company than it is to go from your own company to an umbrella in terms of administration and expense.
When running your own company, you will be liable for ensuring that all of your company administration and legislative paperwork is up to date and you will also incur an accountant’s administration fee for preparing and signing off your accounts each month. You will also be charged a one-off upfront company registration and set-up fee.
Using an umbrella company will naturally incur costs in the provision of employment services. Generally, their costs are around £100 per month; the majority of umbrella companies do not have an up front joining or registration fee.
In addition to the reduced administration costs of using an umbrella company, the benefits for the freelancer include having someone else handling all the company administration, removing the requirement for the freelancer to do so. This could constitute a substantial time saving for the individual as well as removing the need to be aware of the legal requirements and risks involved
with running a limited company. Some schemes also come with built-in insurance cover, for example, for IR35 investigation.
So is an Umbrella Company right for me?
An umbrella company scheme may be suitable for:
1. contractors starting up who expect to work through an agency for the foreseeable future
2. contractors who are “caught” by IR35
3. contractors who do not want the additional administration and finance hassle involved in running their own business and who are happy to hand these functions over to an umbrella company
4. contractors wishing to maximise their take home pay by leveraging Revenue dispensations for genuine, receipted expenses
5. new contractors who think that they may struggle with the responsibilities of running a company
6. short-term contractors who want to avoid the costly process of forming a company and then having to arrange for it to be dissolved
See Also
IR35
Partners - Umbrella Companies
Limited Company
Recommended Links