With more and more assignments being handled by contractors each year, umbrella companies have become an increasingly popular solution in recent times. If you’re a contractor, you may well come across them at one stage or another. Before jumping straight in at the deep end, though, you should first educate yourself about what they are, and how they work.
Only then will you be able to decide whether this type of partnership is in your best interests. Here’s all you need to know.
PAYE umbrellas companies are standard UK limited companies. They essentially serve as an ‘employer’ to contractors by providing the intermediary services between a recruitment agency or end client and the contractor who will be conducting the work.
Essentially, their job is to help contractors reclaim their legitimate business expenses, including travel and subsistence, without breaking SDC (Supervision, Direction and Control) regulations or IR35 legislation.
The umbrella company provides payroll services to its employees, processing timesheet, expenses and invoices.
For contractors considering the concept of joining an umbrella company, it’s important to know exactly what to expect. Here are the eight simple steps that will be completed.
While the exact methods used for processing timesheets and other key documents may vary slightly, the above process will be accurate regardless of the PAYE umbrella company selected.
The growth of umbrella companies over the past 20 years has been quite exceptional, and there are now hundreds of companies offering this type of service up and down the country. Therefore, finding the perfect solution for your needs can feel like an immensely difficult task.
Ultimately, though, it boils down to a being a decision about finance and customer care. Use the weekly/monthly fee as your main barometer while additionally asking for recommendations regarding customer care, and you won’t go far wrong.
Before doing anything else, though, you’ll want to check that the umbrella company partnership is actually needed. If working as a Limited Company is a better solution that won’t break any tax regulations, don’t be afraid to take that route. The best decision is the one that works for you.