Umbrella companies are often talked about as a good solution for contractors. But if you are new to self-employment, or have been a sole trader for a while, you might not know exactly what this working option is, or what they can do for you.
Umbrella companies and the way they work are easy to understand. For a lot of people, they can be a great way to gain the perks of self-employment without some of the disadvantages, like excessive admin or a complicated tax return.
If you want to know more about how Brookson One can help you get setup and working through an umbrella company, you can find out more about our services here , or read on to learn more about umbrella working.
All an umbrella company does is act as an intermediary between you and your clients, in order to simplify your admin work. You will be paid as if you were a permanent employee, meaning your tax and National Insurance Contributions (NICs) are deducted for you, so you don't have to worry about filling out a return.
If you sign up with an umbrella company, instead of raising an invoice to your client, you will fill out a timesheet. This gets submitted to the umbrella firm, which then handles all your invoicing. The client pays the umbrella company, which deducts tax and NICs from your earnings before paying you.
Most people would agree that the main advantage of working through an umbrella company is that you don't have to worry about admin or tax returns. This frees up a lot of time, and removes a great deal of stress from your life. You'll also get access to in-work benefits such as sick leave.
Of course, less admin and in-work benefits all this comes at a price. You will have to pay a weekly fee to be part of the umbrella firm, and you'll be paying more tax than if you worked through your own limited company. However, some of these costs will be offset by the fact that you will have more free time that you can spend gaining and completing paid work.
Unlike some self-employment options, setting up your work via an umbrella company is quick and easy. All you have to do is sign a contract, and the umbrella firm will take care of the rest. After that, it will likely be your responsibility to find work and complete it; the umbrella company is only there to manage your payroll.
Even if you have competing organisations involved, things are still simple. For example, if you get a lot of work through a recruitment agency, you will still be able to sign up with an umbrella company. There will be extra steps involved with paying you, but they will be the organisations' responsibility, not yours.
As specialist contractor accountants, we can help you get setup and working through an umbrella solution, which is the perfect way if you want a hassle free way to get paid.
With over 20 years' experience helping self-employed professionals make the most of their finances, we can help you increase the amount you earn as well as freeing up valuable time for you to focus on paid work. We can help make sure you're paying yourself in the most tax-efficient way, increasing the amount of your income that you can take home.
If you'd like to learn more about how we can help you, book a free consultation to chat to one of our highly trained advisors.
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