If you are new to the world of contracting, there are lots of different options to consider. Arguably the most critical decision is whether to set up your own limited company or work through an umbrella company. With the legislation changes to off-payroll working in the private sector just around the corner, we thought we’d highlight ten umbrella company benefits, to show that using an umbrella for your payroll has some advantages.
1. Umbrella companies can be used for any role
Whether you are a seasoned contractor or you are just dipping your toes into the world of contract work, you can use an umbrella company for any assignment, in any industry. And, even better, you can take on multiple jobs alongside each other through the same umbrella company and not be negatively taxed.
2. Simple registration
Unlike setting up a limited company, registering with an umbrella company is exceptionally straightforward, and can be done over the phone or online in under ten minutes. This gives you the flexibility to take on a last-minute assignment and be set-up and ready to get paid on time.
3. Hassle-free payroll
One of the key umbrella company benefits is that there is very little ongoing administration. The umbrella company will take on most of the administrative tasks such as chasing invoices and processing payroll; all you need to do is send them your timesheets.
4. No unexpected tax bills
All compliant umbrella companies will make the necessary tax and National Insurance deductions and pay them to HMRC on your behalf – you will never have to worry about receiving an unexpected tax bill! We say this a lot on our website, but it’s vital – only use a compliant umbrella company for your payroll. Whatever you do, never be tempted to use a tax avoidance scheme because the repercussions could be catastrophic! We recommend you only consider using FCSA accredited umbrella companies.
5. Insurance is included as part of the service
Most compliant umbrella companies offer Professional Indemnity insurance, as well as Employers Liability insurance and Public Indemnity insurance – for free! The level of cover that is provided will vary between umbrella companies but should offer more than enough cover for assignments.
6. Continuity of employment
When you register with an umbrella company, you will sign an overarching contract of employment. This means that you become a permanent employee of the umbrella company and will benefit from the continuity of employment between different contracts. This is beneficial for tax purposes – as HMRC will tax you as one employee, rather than a different employee for each assignment.
7. Statutory benefits
When you register with an umbrella company, you will get statutory benefits similar to permanent employees, including Maternity/Paternity Pay and Sick Pay.
8. You don’t have to worry about IR35
With the changes to off-payroll in the private sector coming into play next year, arguably one of the most important umbrella company benefits is that you do not have to worry about IR35 when you register with an umbrella. Providing the company is operating ethically, they will process your tax and National Insurance and pay it to HMRC on your behalf – before paying you directly into your bank account.
9. You only pay for the weeks you work
Unlike a limited company where you would pay your accountant regardless of whether you are working or not; when you use an umbrella company, you only pay for the weeks you work. Most umbrella companies will also not charge you to join or leave their service, so you can use them as required.
10. Additional extras
Many umbrella companies will offer additional bonuses, such as a complimentary employee rewards scheme or a referral rewards scheme. These are a great way to get discounts at your favourite shops or restaurants or benefit from a reduced margin.
Are you looking for an umbrella company? Look no further than our top 10!
If you are looking for an umbrella company, why not take a look at our top 10 umbrella companies for some fantastic discounts from FCSA accredited providers. This is an excellent opportunity to talk to some of the industry’s leading providers to help you decide which one is best for your circumstances. Some of our top 10 umbrellas offer umbrella company benefits that are second to none. Go and check them out and see for yourself!