Considering an umbrella company: Focus on paid work, not paper work
Many professionals who choose to make the move into contracting often do so in order to develop their careers. As a contractor you are hired through the quality of your of your work and developing the diversity of your skills. Being able to deliver work to the best of your ability is essential and it will often lead you towards your next contract.
Now that you work for yourself you will have to make time allowances for things like administration and calculating your tax contributions. This can be a lengthy process that can sometimes take the focus away from your work.
A great way to manage this area of your business is to work through an umbrella company. Taking on the role of an employer, UK umbrella companies look after your finances while also dealing with troublesome paper work. Partnering with an umbrella company leaves you free to concentrate on the expansion of your contracting network instead of worrying about the little details of business.
Now that you are working through an umbrella company you will see an immediate reduction in the amount of paperwork you have to fill out. In fact the only thing you now have to do is ensure your timesheet is delivered to your umbrella every week. Once they have received this they will take care of the rest! Your umbrella company will use your timesheet to invoice your client. The client will then pay your umbrella who will pass the money on to you.
You won’t have to worry about certain administrative details such as chasing late invoices or filing tax returns. These areas of your business do not directly generate any income so it can be useful to outsource them to a company of dedicated experts.
Tax and National Insurance
Calculating your tax and National Insurance contributions can be a lengthy process. It is also worth remembering that any mistakes on your end could lead to penalties from the HMRC. By partnering an umbrella company, they will take care of this for you. They will calculate and deduct your contributions and also provide you with a break down. In this way you can avoid having to hire a personal accountant and also you complete your current contract with complete dedication and focus.
You also won’t have to worry about the tricky IR35 legislation, as you are technically employed by the umbrella company this will not affect you.
As you are now technically an employee of the umbrella company you will also enjoy certain benefits. Holiday pay and entering into a pension scheme become much easier as you do not have to worry about the hassle of setting them up yourself. You may also receive a set expenses policy. This will cover general things such as travel, meals and accommodation if you have to work away. By receiving a set policy there is less administration when it comes to claiming your expenses.
As a freelancer who will probably work on various different sites it is essential that you have a good insurance policy. Taking out an insurance policy can be time consuming and lead to endless forms to fill out, however most umbrella companies will offer you one as part of their package eliminating any hassle you would usually go through to set one up yourself.