Umbrella Companies

 What is it and how it operates?

An umbrella company is basically an agent between you and your clients.It acts as your employer to collect payment from your clients and than pay you a salary after deducting their commission tax and National Insurance. If you want to operate through an umbrella company as a contractor you Will have to submit a timesheet and details of all work-related expenses to it.

 Advantages of umbrella company

1- it easy and simple use. The umbrella company takes responsibility for all the paperwork, tax and accounting matters.

2- once you receive your salary there will be no further deductions.

3- it provides a platform for people who want to try out contracting but are not ready to take responsibility for running a limited company.

The disadvantages of umbrella company

1- less control compared to running your own limited company.

2- reduced take home money as paying commission on top of tax and NI.

3- fewer tax planning options.