| Many people are finding work as freelance contractors these days, and while it's great that they are earning, there are some pitfalls they need to avoid. Not all freelance contractors want to go to go through the time and expense of setting up a company to look after their payroll needs. If you are in that category an umbrella company can see that you are kept on the right side of HM Revenue and Customs, and you can concentrate on generating earnings and keeping clients.
To an inexperienced freelance contractor, dealing with payroll matters can be daunting and challenging, to say the least. Not only does it take time away from what you should be focusing your attention on, which is doing the work you are being paid to do, but it can be confusing to work out how much you need to pay in taxes. If you don't have a good PAYE (Pay As You Earn) system in place, you can all too easily get behind, and no one would recommend that.
So just what can a freelance contractor do to make their life easier? You can get help from an umbrella company that can take over this portion of the business for you. When you work with an umbrella company there are a number of benefits.
Compared with the time and expense it would take you to set up your own limited company, engaging an umbrella company is quick and easy. All you have to do is make contact and the staff will look after getting your account set up, quickly and efficiently, and before you know it your contractors payroll is ready to go. Some companies can get you up and running within 24 hours.
Another advantage of signing on with an umbrella company is that you get the same types of benefits as does an employee. The value of having full statutory benefits cannot be overestimated. You may like the freedom that being a freelance contractor brings, but being entitled to maternity, paternity, and sick pay is important too.
When you get paid, your income is processed straight away. The administration fees you pay for the service are tax deductible as a business expense. Ask whether the umbrella company you are considering will assign you a dedicated personal assistant to look after your file.
It's important to get all the facts before making a final decision about whether it makes sense to use an umbrella company for your contractors' payroll needs. Make sure that you understand the company's billing procedures before you sign on. When you are between contracts, do you still get billed or are the fees based on the number of days that you use the service?
Once you have done your due diligence, you will be in a position to make the right choice about whether working with an umbrella company is the best choice for your situation.
ABOUT THE AUTHOR :-
Karen Michaels is a freelance writer and retired accountant who enjoys writing about all kinds of tax-related issues, including contractors payroll . During her career, she has written about several topics, including the subject of choosing an umbrella company . |