Advantages of Using an Umbrella Company
If you are a contractor, there are two options for you to take. You either put up your own limited company or put yourself under an umbrella company to handle your business affairs. Somehow, using an umbrella company in specific circumstances is a more practical option for a new contractor. What a contractor needs to do is to understand what the advantages in using an umbrella company are, and matching them with their contracting career goals and expectations. Eventually, you will know what the most suitable business model for you is.
That said, the next thing you need to make clear with yourself is why you are going into a contracting career. You need to ask yourself questions like: Is it for independence? Is it so that you can set your own balance in life? Is it to be able to maximize the return on your skills and talents? Do you want to manage your own finances? Do you want to direct your own company? Are you simply trying to sample a new working environment? Answering these questions truthfully will help you to begin considering what there is for you if you choose to go with a PAYE umbrella company. What are its benefits?
The primary reason why contractors opt for an umbrella company is to save them from having to manage their own taxes, NI, payroll and other paperwork. For a first time contractor, doing these dirty jobs can be very challenging, even if you hire the services of a good accountant. With an umbrella company taking charge of all these, you are free from the overhead of setting up a limited company. This is very ideal especially if you are only doing contractor work on a trial basis before deciding on a long term career. This is also true if you plan to do contractor work only for a limited period of time. Check out http://modernsociety.wikia.com/wiki/Umbrella_company to find out more about umbrella companies.
With an umbrella company, you outsource your administrative duties and you are free to deal with your day-to-day work and be good at it. You need not worry about tasks that are hard to budget for, like late invoices and the like, with an umbrella PAYE company.
Another advantage of choosing to operate with an umbrella company is that it is not binding. You can end the contract and not continue. If you opt to set up your own limited company after, it is quite easy to do so.
If you are one who is not ready to set up your own limited company, the best option is to go with the umbrella company model. Just do the job well and the rest is handled by them.
