What Is An Umbrella Company
Starting a new business and becoming self-employed is a tricky thing and when there is a recession on – such as now! – it is a very risky prospect with many businesses failing before they have had the chance to even get off the ground. However, there are ways of doing things that can help individuals to get started, and one of these is to use an umbrella company. This is a company that a freelancer can register with and work with in a similar way to being an employee, while still being independent. It is a way of dipping a toe into the world of self-employment, without needing to take the complete plunge of starting a company with all the attendant administrative work that is involved.
An umbrella company will take away many of the difficulties that are part and parcel of establishing a limited company. The umbrella company will be responsible for dealing with the client and will then pay the freelancer, minus any tax or National Insurance contributions – removing the need for be carrying out any administrative work. The paperwork is one thing that will put many people off going it alone, but with this way of handling administration there is more time available for those who want to concentrate fully on the real work. Income is via PAYE so that there is no need to submit a self-assessment form to the Inland Revenue at the end of the tax year. In addition, the umbrella company will help with the processing of expenses.
Which Business Sectors Would Benefit From An Umbrella Company?
This is the ideal opportunity for those who have skills that can earn them money on a freelance basis to become self-employed, without the trouble of dealing with all the paperwork. This could apply to those in the medical sector, security, hospitality and professional workers. It gives people the opportunity to see what it is like to work for themselves without the need for endless regulations and restrictions and peace of mind that money is guaranteed.
There are a number of benefits to using an umbrella company to start a business in this way. Most companies will appoint each freelance their own accounts manager and payments are usually cleared very quickly. Workers can also benefit from guaranteed monthly payments and information can be submitted to the umbrella company via timesheets and expenses forms online. There is assistance available to talk freelancers through each step and any questions are generally answered very quickly.
The Self Employed Would Benefit From The Services of An Umbrella Company
Invoices are submitted to the clients as soon as the information on the work is received from the freelancer – something that is a time consuming task when working alone. Many self employed who do not use an umbrella company will find that they find it difficult to find the time for invoicing and chasing outstanding payments, and there is never any guarantee of payment, which can leave them out of pocket and struggling to keep a business afloat.
Freelancers who work for an umbrella company will also be able to access a variety of benefits, depending upon the company. There are pension schemes, life insurance, income protection and even mortgages. And when the time comes to make the transition to a limited company, they can even help to do that.
If you have had any experience of using an umbrella company then let us know your thoughts of how it is working for your business.