Why should I use an umbrella company

It does not matter what you call yourself, a freelancer, a contractor, or sole trader, but it's essential that your tax matters are taken care of correctly. Book keeping is probably not your thing, so you can have difficulty determining exactly what you have to pay in tax. This actually leaves you with two options, you can act as your very own business and use an accountancy service, or work under an umbrella company. It is much easier to pay one of these companies, rather than try to work out how much you owe the authorities.

You will see that most agencies don't want to become involved in your tax affairs, so will prefer that you act as, or for, a limited company. This does not always mean that you personally should be a limited company, this is when you can satisfy their requirements by dealing with an umbrella company. In case you aren't already linked with an umbrella company, talk to the agency who are attempting to recruit you, as they normally have agreements with the major umbrella companies. Another advantage of working through one which already has a connection with the agency, would be that the payment system flows a whole lot smoother.

If you need to locate an umbrella calculator on your own, it is not that hard. Just check out any online job-site and you'll see adverts all over the place. Each one of them proclaiming that they can offer the highest portion of your hourly or daily rate due to their wonderful accountancy system. In fact the majority of these firms offers are extremely similar. The primary differences among the different companies will be the charges that they take, plus some incredibly modest services they will offer. If you visit their websites there's a pretty good chance of you seeing an umbrella calculator which will let you enter your rate and it will give you a figure of what you can expect to expect as take-home pay.

You must remember that this umbrella calculator is only able to give you an estimated amount, but it is a figure you could compare with what another umbrella company will offer. They usually work on you having a standard tax code, and also the contract being IR 35 compliant, but they also do generally subtract their costs before providing the figures. Unfortunately they can't see how much it can save you through business expenses, as that figure is not available, even though that's most companies selling point.

You may feel that your net income is less using an umbrella company instead of having your very own limited company when you have seen the figures produced by the umbrella calculator. And when you see the service fees you have to pay the umbrella company, you might be astonished, but remember you will pay an accountant much more. So if you would like a simple life as a contractor, don't all of us, and you also want to make sure your taxes are paid accurately, i'm sorry but you will must pay them, then utilising an umbrella company is probably the smartest choice, since they will perform all your paperwork and ensure everything is legal and above board.