Umbrella Companies

For first time contractors one of the first choices you have to make is how you want to operate as a “self employed” individual, in this respect there can be a whole new lingo to learn. Contractors who specialise in any number of areas now have to add another string to their bow and learn the basics of how to run a business. Just to complicate things even further there are also the legalities regarding the various structures that exist to ensure contractors as self employed individuals can retain as much of their earnings as possible.

Outside of contracting people who want to go self employed seem very limited in what they can do. They either go through the complexities of setting up and managing their own business (which offers limited liability advantages) or they exist under the status of being self employed. Either way the core of this is the person running their own business, invoicing, accounts, all of the admin work. Working for yourself in your own time this is all part of the game and is to be expected. For contractors though things are a little different, a contractor is working for one client at a time (for the most part) and it is very much a case where time is money. It’s no wonder then that contractors look for something a little more hands off when it comes to the admin side of things.

There are plenty of solutions out there that promise great returns for the contractor but for some, like I said above, it’s not so much about getting most out of their contract, it’s just about lessening the administration burden and for these the Umbrella Company is the perfect payroll solution. In an Umbrella Company setup the contractor acts as an employee of the umbrella company who in turn handle all the administration work. Payroll is processed as if you are an employee and all PAYE deductions should be accounted for by the Umbrella Company. It’s understandable that the convenience comes at a cost and with umbrella companies that costs is usually represented as a fixed amount, not based on your contract value. There is no more work involved to an umbrella company if you are earning £2000 a week or £20,000 a week. A good ball park figure is somewhere between £15 and £25 per week. Add on to this your standard PAYE deductions and you can see that this may not be the most efficient way of working (lets not mention holiday pay, pensions etc either) so it really comes down to the contractor to negotiate the best possible rate for themselves in order to make contracting under an umbrella company pay.

Some Well Known Umbrella Companies

A huge number of companies offer umbrella company services, there are some of the more well known ones:-

ContractorUmbrella
Parasol
1st Contact Umbrella
RACS Group
Smartwork Umbrella
OrangeGenie
Danbro

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