The main benefit of using the services of an umbrella company is that they can remove the hassles associated with setting up and running your own limited company. The umbrella company will be responsible for invoicing the agency or end client on your behalf and paying you a net salary minus the necessary tax and national insurance contributions. An umbrella company will deal with all the administrative work freeing up your time to concentrate on earning money.
When you decide you want to use the services of an umbrella company there are a number of things you should bear in mind. An umbrella company is governed by the Inland Revenue and this means that the only variance in your earnings should be the fees that are charged by the umbrella company. A reputable umbrella company should not charge you according to what you earn as there is no more work involved for the umbrella company if you earn 50 per day or 500 per day. If the umbrella company quotes its fees as a percentage of your wage you should ensure you do the calculations to ensure you are paying a reasonable amount.
When you use the services of an umbrella company you will be paid through PAYE. This means that all of your tax and national insurance liabilities are taken care of on your behalf and this also means that the headache of IR35 is taken out of your hands and will no longer be an issue. This also means you will not receive any unexpected tax demands or have to worry about saving for your tax bill as this is all done for you.
Your umbrella company will also process all your work related expenses. As an independent freelancer the Inland Revenue allows you to claim certain expenses. These expenses are offset against your gross earnings and therefore reduce your tax and national insurance liability. You must make sure you obtain a receipt for every expense that you claim as if you claim and cannot prove you have incurred the expense this could result in an investigation by the Inland Revenue and could ultimately end up in a fine.
When you are researching potential umbrella companies you should be sure to ask if there are any hidden costs or penalties for leaving the umbrella company. A personal recommendation is always a good indicator but be aware many umbrella companies offer incentives to their current clients to make recommendations. If it seems too good to be true, then it probably is!
Cloud 9 is an extremely reputable umbrella company, and has an experienced team of accountants to ensure all their solutions are compliant with HMRC regulations. They have a cost-effective, competent and personal service to cater for your individual needs. Visit their website to view the full list of services they have to offer.