Employment Status

Are you a contractor? If you work for someone else, it is important to know whether you are working for that person in an employed capacity or in a self-employed capacity as an independent contractor.

Your employment status will determine the charge to tax on income from your employment or self-employment. It will also determine the class of NICs, which are to be paid.

Umbrella Companies employ you for tax purposes and complete central returns for all their contractors. It's less hassle and more flexible for you but take home pay is typically less than that the limited company option.

The best option for you depends on your plans, 'one off' contract or 'contractor for life'? [Read More...]

You are here: | |

Is an Umbrella Company my Best Choice Umbrella Company Benefits for Contractors

Is an Umbrella Company my best choice?

Being new to contracting you may be a bit dazzled by everything that's going on. But landing the contract is just the start. Now comes the paperwork.

If you haven't already been told you'll soon find out that however good you are at "widget development ++", engineering or teaching you won't be welcome on your client's site without setting yourself up as a limited company first.

Time Consuming and Complicated

You'll have to be competent with spreadsheets, good at form-filling (there's a load of that) and able to understand what the guy at HMRC is talking about - because if you don't all your money will be spent on fines.

Who on earth wants to spend all day at work then come home and sit in front of your PC slaving away at statutory administration? No, you probably want a life.

Well, don't worry, you have an alternative choice which is painless, effective and very reasonable in cost. It's called an umbrella company.

Order, Eat and Leave

Using the services of an umbrella company is like eating out at a restaurant instead of cooking yourself. No slaving over bubbling pots and pans, timing all the food to be ready at the same time then having to do the washing up - in between which, you're keeping your fellow diners supplied with drinks and condiments.

  • No, you walk into the restaurant, order, eat and leave!

Pass it Over

Registering with an umbrella company means you pass all your administration to someone else. Set up your own limited company and you'll have to:

  1. Register your company at Companies House
  2. Complete Annual Returns each year to update Companies House, this requires an annual fee.
  3. Tell HMRC if the Company has any profits or taxable income in a Company year.
  4. Complete an annual corporation tax return and pay the taxes within a set time.
  5. Memorandum of Association
  6. Articles of Association
  7. Form 10 - Provides Directors' and Company Secretary's Names and Addresses, together with the Registered Company Address.
  8. Form 12 - States that the Company complies with the terms of the Companies Act

On The Other Hand

Registering with an umbrella company takes just minutes, is cheaper and all the work is done for you. Registering with an umbrella company can be done either on the phone or online.

Umbrella companies are designed to make the life of a contractor as simple and stress free as possible. This is done by having a team of dedicated and trained staff all geared up to handle every aspect of a contractor's administration for them.

Umbrella companies are the future of contracting: fast, simple and extremely efficient.

[52368 Page Views]

HMRC Compliance

It's the basics... Compliance with Tax, VAT, PAYE and fiscal arrangements is mandatory for contractors regardless of whether you use an umbrella company or your own limited company.

Incredible then that there are still rogue umbrella companies and limited company accountants who expose their contractors to fraud. Umbrella Compare provides THE solution, we thoroughly vet all umbrella companies and limited company accountants that we list [Read more...].

Umbrella Compare provides a holistic overview of contracting with the aim of helping new and old contractors find the right payroll solutions. Contracting should be about focusing on the contract, not payroll, accounting, HMRC and bureaucracy.