It can be a tough decision to make, and one which will impact
strongly on the next period of one's life. The choice between umbrella
companies and limited companies for contractors should be approached
with an open mind, and a keen eye for detail. To make the process that
little bit simpler, let's take a look at some of the aspects of each
option available to contractors.
Umbrella Company
An umbrella company performs a specific service for contractors. Essentially, they act as an employer to contractors who are engaged in a contracted assignment. The umbrella company processes a PAYE payroll for contractors, and offsets business expenses (travel expenses, accommodation expenses etc) against the contractor's tax.
Employment through an umbrella company is subject to the same employment rights as any other permanent, direct employment relationship. Entitlement to sickness pay, maternity and paternity leave, and minimum wage all full under the auspices of the benefits of working through an umbrella company.
Other advantages of undertaking employment through the umbrella company includes:
- A reduction in the amount of paperwork involved in running one's own limited company
- No need to worry about taxation or expenses; this is covered by the umbrella company
- The opportunity to invest in pension schemes, training courses etc
- Elimination of any IR35 legislative concerns
Limited Company
A limited company is an entity completely separate from those who own it and run it. At the most basic level, it is a legally recognized entity in itself. As such, the element of limited liability is the main attraction of this option. Operating in this way reduces the risk faced by shareholders or directors.
Opting for the creation of a limited company, while it does involve more legwork on the contractor's part, will be the most suitable option for many people for the reasons mentioned above. From basic elements like the legitimate registration of the company name, to the more in-depth aspects such as the completion of VAT and tax returns, and expense reconciliation's, the workload involved is considerably higher when operating as a limited company.
If you are a contractor in need of some advice on the options available, hopefully the information provided here will go some way to assisting your decision. Whether you opt for employment through an umbrella company or the creation of a limited company, be sure to research both options thoroughly.
It is important to make the decision based on your requirements; always think about the service you are providing, and how that service will be best served and applied. Do you have the time to be your own accountant, or is the sense of credibility associated with the limited company the most important aspect?
Umbrella Company
An umbrella company performs a specific service for contractors. Essentially, they act as an employer to contractors who are engaged in a contracted assignment. The umbrella company processes a PAYE payroll for contractors, and offsets business expenses (travel expenses, accommodation expenses etc) against the contractor's tax.
Employment through an umbrella company is subject to the same employment rights as any other permanent, direct employment relationship. Entitlement to sickness pay, maternity and paternity leave, and minimum wage all full under the auspices of the benefits of working through an umbrella company.
Other advantages of undertaking employment through the umbrella company includes:
- A reduction in the amount of paperwork involved in running one's own limited company
- No need to worry about taxation or expenses; this is covered by the umbrella company
- The opportunity to invest in pension schemes, training courses etc
- Elimination of any IR35 legislative concerns
Limited Company
A limited company is an entity completely separate from those who own it and run it. At the most basic level, it is a legally recognized entity in itself. As such, the element of limited liability is the main attraction of this option. Operating in this way reduces the risk faced by shareholders or directors.
Opting for the creation of a limited company, while it does involve more legwork on the contractor's part, will be the most suitable option for many people for the reasons mentioned above. From basic elements like the legitimate registration of the company name, to the more in-depth aspects such as the completion of VAT and tax returns, and expense reconciliation's, the workload involved is considerably higher when operating as a limited company.
If you are a contractor in need of some advice on the options available, hopefully the information provided here will go some way to assisting your decision. Whether you opt for employment through an umbrella company or the creation of a limited company, be sure to research both options thoroughly.
It is important to make the decision based on your requirements; always think about the service you are providing, and how that service will be best served and applied. Do you have the time to be your own accountant, or is the sense of credibility associated with the limited company the most important aspect?
Harvey McEwan writes to offer information and advice on a variety
of areas, from technology to holiday destinations. Read through
Harvey's other articles here to find out more.
Posts
1 comments:
Mind-boggling job mates, I take pleasure in longing your articles.international umbrella company
Post a Comment