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...]
An umbrella company does all paperwork for contractors. An umbrella company is your limited company. An umbrella company will invoice your recruitment agency collect your money, work out your taxes, and deal with HMRC.
Some because they may have lost their full time job and have no choice, and others who make the conscious decision to change the way they work - and the rewards they get!
Whilst contracting has many attractions you should consider all the angles first. For example, do you want to go through all the hassle, cost and pain of setting up and managing your own limited company?
Or would you prefer to make use of one of the umbrella companies out there who will take on all the administration and paperwork for you?
An umbrella company will do lots of the horrible things for you. Apart from acting as your limited company they will;
If you're not experienced in the ways of accountancy, contracts, company law, payroll, and general administration these issues can be quite frightening at best, and an ongoing nightmare at worst.
The last thing you want is to get the fundamentals wrong. Inexperience and lack of knowledge is not a defense any Court will accept should HMRC find you have not completed all the necessary forms on time and correctly.
So what does an umbrella company do for a contractor? Well, actually quite a lot.
In return for a modest processing fee (usually paid weekly or monthly to coincide with your timesheets) a good umbrella company will take care of all your day to day paperwork. Things like:
Do you really want to do these things yourself? Particularly at the end of your working day? There are some contractors who do, but the vast majority of freelancers are more than happy to pass this burden onto an umbrella company.
It means they can get on with their contract while knowing all the boring, but essential, bits are being done by someone else.
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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.