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info@commonwealthcontractors.comUmbrella Companies make it very easy to work as a Contractor. All you have to do is generate billings and send in regular timesheets and expense claims… the Umbrella Company does the rest!
Monthly Archives: April 2012
With an Umbrella Company the vast majority of your Income will be paid further to the Pay as You Earn (PAYE) system; therefore you will need to pay Income Tax, Employees National Insurance and Employers National Insurance on the sum.
With an Umbrella Company you can normally look to reclaim the cost of certain business related expenses that are incurred further to a contract. Expenses may include; Travel, Subsistence, Hotel / B&B Expenses, Professional training, Postage & Stationary etc. Expenses reduce your taxable income and boost retention!
If you are thinking about using an Umbrella Company you need to weigh up the Pros & Cons versus going into business with you own Contractor Limited Company.
An Umbrella Company is a readymade Invoicing & Payment vehicle for Freelance Contractors. The Umbrella Company acts as the ‘ultimate employer’ whilst the Contractor works on site at a Client, normally via an agency.
If you’re planning to work as a professional Contractor you need to make sure that you’re not using a ‘Managed Service Company’, otherwise you could find that you face a large Income Tax and National Insurance bill down the line.
As a Contractor it can be difficult to get a Loan or Mortgage. Traditionally lenders tend to penalise Contractors when it comes to getting a Mortgage, with permanent employees seen as a much safer bet.
Section 660a is generally considered to be old news right now however it was a hot topic under the old Labour Government who threatening to bring in new ‘Income Shifting’ legislation to make it more difficult for family businesses to split profits between family members in order to gain a tax advantage
If you run a Contractor Limited Company it will normally be your responsibility to deal with Timesheets, Client Invoices and Payments. As part of genuinely ‘running a business’ you should demonstrate that you have full responsibility for these actions together with managing the Limited Company Bank Account.
If you’re going to go into business with your own IT Contractor Limited Company the chances are that you will be contractually required to hold sufficient Professional Insurance with a reputable provider. Please note that if you use an Umbrella Company you will be covered by the Umbrella’s policy.