What is an umbrella company and how can it help a contractor?

Friday, 26 August 2011 01:35

What is an umbrella company and what services can it provide?

If you are a freelancer who wants help with your accounting, an umbrella company could be just what you need. But what exactly is this?

Luckily, it's quite simple – a contractor umbrella company takes care of all aspects of payroll and administration associated with being a contractor whilst providing the benefits of being a temporary worker.

Working as a contractor means that you are entitled to claim back allowable business expenses which is offset against your income thus maximising your take home pay.

When you are working as a contractor, you know how valuable it is to make every minute count, by operating as your employer umbrella firms are able to deal with all this hassle on your behalf.

By choosing an umbrella service, all you have to do is ensure that the umbrella company is armed with the necessary paperwork it needs – including your timesheets and expense claims. It will then be able to work out how much tax, PAYE and National Insurance (NI) you need to pay.

However, this is not the end of the advantages contractors can expect when they opt to work through such a service.

In essence, umbrellas have the ability to act as your employer and fight in your corner for you where necessary.

This means that as well as taking care of your tax obligations, it will also chase up late payments to ensure that you get the money you are entitled to.

Because of this, you have the peace of mind to simply get on with your job or enjoy your leisure time.

An umbrella company will be able to invoice your clients for you to request the money you have been promised for a particular job. From here it will work out what tax and NI you need to cover, before settling this and paying the remaining balance directly into your account.

Additional benefits offered by good umbrella companies include insurance such as employers liability, public liability and professional indemnity policies – just one more thing you don't have to sort out.

So, if you want to get on with the job you know you are good at rather than worry about all the additional hassle that comes with it, start looking for the umbrella company that is right for you today.

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