Working as a contractor is great. You have the freedom to pick your clients, you get to work your own hours and you ultimately determine your income. But, with this freedom comes a lot of responsibility.
One of the difficult aspects of being a contractor is deciding whether you want to work under your own limited company or through an umbrella company. Both options have their pros and cons, but in this article we’re going to focus on the benefits of choosing the umbrella option. Read on for more.
- Your finance obligations are taken care of
One of the difficult aspects of being a contractor is deciding whether you want to work under your own limited company or through an umbrella company.
Your taxes and National Insurance are handled by the umbrella company so you won’t have to worry about them. You need not concern yourself about IR35 legislation either because it doesn’t apply to you.
This is usually a grave concern for new contractors because it’s one of many rules and regulations that can have a far-reaching impact on your earning potential. Thankfully, the umbrella company has trained professionals to ensure that you abide by the law.
Also, one of the main things to check for before you sign up with any umbrella company is that they’re HMRC compliant. This means they’re equipped to handle contractors’ tax obligations so you don’t have to worry about being targeted for tax evasion.
- You enjoy employee benefits
Working under your own limited company can be a cold and unforgiving experience. Yet, working under an umbrella company has the opposite effect. With the latter option, you get paid through PAYE which entitles you to all the employee benefits you can think of. The best part is you don’t have to give up the freedom of being your own boss.
Some of the employee benefits you can look forward to include:
- Redundancy pay
- Holiday pay
- Maternity or paternity leave
- Sick pay
- Annual leave
Needless to say, these benefits are a safety net that enhances the allure of working as a contractor.
- It’s easier to run your company
Umbrella companies make it so much easier to manage your business. In most cases all you have to do is provide them with your timesheet at the end of every week and that’s it!
Since the umbrella company will take care of most of the admin side of things, you can focus on doing the work that you love.
The payslip you receive will reflect your earnings and tax deductions in an easy to understand format. Plus, you’ll notice over time that your deductions are pretty much the same each month. This means if you work consistently you can set a realistic budget and financial goals with the confidence of knowing what you’ll get at the end of the month.
- You can claim business expenses
Since you’re an employee at the umbrella company, you have the right to claim back any expenses incurred while working. This includes money spent on equipment, tools and transport. That way, you get more out of your hard-earned cash than you would if you were a solopreneur.
- It’s a flexible option
Umbrella companies provide an ideal testing ground and growth opportunity for contractors who’re still starting out. You don’t have to deal with mountains of paperwork or worry about coming up with capital.
You can work shorter contracts knowing that there are no financial demands weighing you down. Umbrella companies offer you ultimate freedom and flexibility to do the work you love and try new things until you get your footing.
- Easy sign-up
Signing up with an umbrella company is super simple and easy. They’ll ask you to complete a short registration form where you provide personal data, contact information and assignment details.
If the company is happy with the information you’ve provided they’ll offer you a contract and just like that, you’re in!
- You’ll enjoy insured assignments
Another perk of signing up with a prestigious umbrella company like Bradford Jacobs Professional Employment Organization is that you’ll be get insurance cover for every assignment you get. The insurance includes:
- Professional indemnity cover
- Public liability cover
- Employer’s liability cover
This is offered at no extra cost to you.