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Advantages and Disadvantages to Using Contractor Umbrella Company Business Articles | October 12 Mesut Ozil Arsenal Jersey , 2012
Describing a contractor umbrella company in simple terms would be outsourcing your payroll. To avoid the costs and hassles involved with setting up your own limited company you can instead work through an umbrella company.

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By choosing to work through a contractor umbrella company Alexandre Lacazette Arsenal Jersey , the contractor would not have to be a director and therefore would not have to take on the responsibilities that are associated with running a limited company. The umbrella company will take care of all taxation and accountancy matters and will also deal with the administration tasks that arise. The umbrella company will forward the contractors completed timesheet to the agent and once the agent has made payment to the umbrella company the contractor will then in turn be paid.


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The British government introduced the legislation of IR35 in 1999 and the use of contractor umbrella companies has become more popular. These days there is only really one viable choice for an umbrella company and this is the PAYE umbrella. A PAYE umbrella will treat all income as a salary and this means that you will pay employers NI, employees NI and PAYE on all of your income. Whether you choose and umbrella payment structure of a limited company this will not influence the IR35 status of any contract.


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By using a PAYE umbrella all your income will be treated as if you are caught by IR35 and this is regardless of the IR35 status of any contract. If you are a long term contractor it is wise to try and avoid the legislation and you can find out how much IR35 will affect you by using an IR35 calculator.


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There are of course advantages and disadvantages to using a contractor umbrella company. The advantages are that you avoid the time and stress of running a limited company and once you are set up all you need to do is complete your timesheets and send them to your umbrella company. You will also have no need to be involved with VAT returns Dani Ceballos Arsenal Jersey , company accounts, payroll matters and taxation. The main advantage for a short term contractor is that they do not have to go through the costly process of forming a company and then having to arrange for it to be resolved.


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