- Posted January 13, 2014 by
London, United Kingdom
Benefits of Umbrella Company
Although majority of workers want a limited company to take care of their business processes, there are times which umbrella agencies can be a better option. By understanding all the advantages that you can enjoy in a umbrella company and match them with your expectations and goals in your contracting profession, then you will be able to come up with the best business model for you.
The first and most important step is having clear reasons why a contracting profession is the best for you; for independence, opportunity to set and balance your life and work, a chance to maximize the profits of your experience and skills and so on. After analyzing all these together with other benefits which come along with it such as receiving payments since you work in your own home and other tax benefits, you will be able to rethink and opt for an umbrella company.
Instead of working as limited company where you will have a lot of work load, an umbrella company will handle the tax issue, payroll and other business processes on your behalf. Working under an umbrella company saves you from setting up only to close down a limited company after few months. It will clear the problems such as increased levels of taxation which are associated with falling in IR35 rules.
After joining the umbrella company like a contractor, you directly become a flexible worker of that particular agency, holding on the autonomy of a contractor. It will enable you enjoy all the advantages of working like a limited company without any fear of falling under IR35.
Such agencies can also work as contractor’s administration and accountants as well as pursue payments, ensuring that your national insurance and taxes as paid as per scheduled. These services remove some of worst time consuming jobs working as limited company or a contractor giving you enough time to concentrate on your job.
For you to become a member of an umbrella company, you must pay some regular fee during the time of work. This varies from one company to the other. However, you need to analyze all the benefits and disadvantages of an umbrella company with that of a limited agency in order to come up with the best decision. Your nature of employment as well as personal circumstances must also be considered.
The main advantage of umbrella companies is that they provide you with an alternative path into contracting those who do not want to set up their personal limited company due to their own reasons. However, you must be sure of all the available business models and understand clearly what you really want to achieve in the contracting career. This will put you in the perfect position which will enable you have a rewarding and independent career.
Finally, the decision to work under an umbrella company isn’t binding. In case you feel the need to change the business model, you can switch into a limited company.