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...]
It may seem like a huge risk but freelancing as a contractor can be very rewarding. The key to success (aside being capable and having a client) is robust, compliant accounting and payroll management.
It's simple, when you get home from work you want to forget your day and enjoy your life. The trick to this is getting your accounts in order from the offset.
What are the accounting and payroll options for contractors and freelancers? There are 2 clear tried and test models, the Umbrella Company and the limited company. You can compare the relative merits of Umbrella and Limited options here
In this article we provide a snapshot of solutions. The aim of this article is to provide new contractors with an introduction to their accounting and payroll options and provide the foundation of knowledge for informed decision.
Umbrella Companies are effectively your ready to go limited company. It's the easy option for contractors and Umbrella Companies take care of all your insurances, payroll, tax, PAYE etc. Umbrella companies also alleviate you of responsibility, you are not a director and not responsible for specific tax and legislative requirements. Umbrella Companies = flexibility and easy contracting.
How does the umbrella company solution work then? Its pretty simple:
Seems long winded but that process can complete in under an hour. So, you provide a timesheet and get paid, simple but it gets better... You can also submit expenses associated with your contract, these in turn can be deducted as part of legitimate business expenses so your take home increases. Let's say you drive to work ad spend £300.00 in fuel per month, dependent on salary and tax structure you could claim all of this back. That's £300.00 in your pocket instead of the tax man's pocket.
The most important factor with an umbrella company is that there is typically a 'no work, no fee' policy. This means that if you take a break between contracts you wont have to pay a penny. You can also accumulate holiday pay, access pensions and other pay/finance benefits. See our top 10 umbrella companies to access the best, compliant umbrella company deals.
When reviewing your options is essential that you fully understand the advantages and disadvantages of using an umbrella company.
It's very simple - complete a timesheet, upload expenses, get paid.
You will pay less to maintain your contracting status. One weekly/monthly fee will cover all insurances, all accounting, all communication with HMRC and more.
You wont be directly responsible for reporting and communicating with HMRC.
You wont have to make policy decisions, produce minutes and other administrative responsibility.
As you read through the articles and knowledge base on umbrella compare, you will gain a better understand of umbrella companies and how they work. You will also gain accounting knowledge and understand the litigation, accounting and payroll requirements of running your own limited company.
Throughout your education, you will always have the same factors to consider. These considerations will form the true measure of which option is right for you and your contract.
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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.