Grant Nisbet, Director of Jonathan Lee Contracts Limited shares his top 5 advantages of contracting through an umbrella company below.
If you’re considering working as a contractor, you’ll need to decide on a way to manage your finances and responsibilities. One popular option is to work through an umbrella company. Here are five reasons why you should consider contracting through an umbrella company.
1. Simplicity and ease of use
Working through an umbrella company means that you don’t have to worry about the administrative work that comes with running your own business. The umbrella company will handle your payroll, taxes, invoicing, and other administrative tasks, leaving you free to focus on your work. This can be particularly beneficial if you’re new to contracting or don’t have a lot of experience with the business side of things.
2. Employment rights and benefits
When you work through an umbrella company, you’re considered an employee of the company, which means that you’re entitled to certain employment rights and benefits. For example, you’ll have access to sick pay, maternity/paternity pay and holiday pay, which can be valuable if you need to take time off work. Additionally, umbrella companies often provide access to training and development opportunities, which can help you improve your skills and advance your career.
3. Reduced tax liability and compliance risk
Umbrella companies are responsible for deducting the correct amount of tax and National Insurance from your earnings, which can help you avoid unexpected tax bills and compliance issues. Additionally, because you’re an employee of the company and paying tax accordingly, you don’t have to worry about the threat of IR35 legislation (IR35 guide available here), which can be complex and time-consuming to navigate.
4. Flexibility and freedom
Working through an umbrella company can provide you with the flexibility and freedom to work on multiple projects for different clients without having to worry about the administrative and financial aspects of running your own business. This can be particularly beneficial if you’re looking to gain experience in different areas or if you prefer to work on a project-by-project basis.
5. Professional support and advice
Umbrella companies often provide support and advice to their contractors, which can be valuable if you’re new to contracting or if you’re working in a new industry. This can include advice on contracts, invoicing, and tax planning, as well as access to legal and financial professionals who can help you navigate complex issues.
Whether you’re just starting out with contracting or considering switching to an umbrella company, it’s important to carefully consider your options and weigh up the benefits of contracting through an umbrella company before making a decision.
Jonathan Lee can help determine if using an umbrella company is right for you. Click the link to discover more about our payroll and support services or get in touch with me on 01384 446115 / firstname.lastname@example.org