Umbrella Companies

[spanners]

Have any goaters had any experience with umbrella companies and are they easy to set up? I’ve looked on the net and there are 100’s to choose from, any advice would be great.
Thanks

 

[SecretSquirrel]

I had this problem a while back. I found this website very useful.

 

[spanners]

Cheers mate, that made me laugh.
As well as any experience of umbrella companies, does anyone have experience of being a LTD Company and which approach is best?

 

[John Lloyd]

When I set up, I bought a company 'off the shelf' arranged by my accountant. Cost £250.00 all relevant paperwork which then allows a business bank account and VAT registration. From resigning to trading for myself took 4 days.

Only downside is, you pick a name from a list then change it later if you wish to

 

[I Look Like Kevin Costner]

Cheers mate, that made me laugh.
As well as any experience of umbrella companies, does anyone have experience of being a LTD Company and which approach is best?

It depends if you intend to be a connie for a long while! Umbrella companies take out all the effort of sorting out running a business (what you will be if you set up a LTD). Effectively they act as your employer, giving you third party insurance cover and tax benifits on business motor mileage, accomodation cost, sundry expenses and subsistance (if you work over 10 hours a day).

However, you pay that back by their margin cut (what is their admisitration costs, usually between 20 and 30 quid a week, if you are using them to get paid), personnal insurance (if you don't opt out) and the worst thing employers national insurance (say bye bye to 40 to 50 quid a week).

I used Danbro. They are online and using their DOTS system, would put in a timesheet at the end of the week. I would be paid the following week (if the agency had paid them!)

Ltd company status is better in the long run if you wish to see more of your connie gold! Some accountancy companies will help you set up your company and act as the adminstrators. However they charge a nice amount too. If you have the bottle and the time to set up a company, find a local accountant. Its not that expensive, however companies house need an annual company report and accounts to keep within the law. If you don't supply them, penalties soon build up.

Hope this helps.

 

[spanners]

Cheers mate, some good info there, I was recommended Brookson, but I will have a look at Danbro. An umbrella company does seem the easier route to take, it's just that there are so many out there, knowing which one to use could be a gamble. Not sure how long I'm going to be a connie for, so not sure if a LTD company is for me. I'm going to Tax Assist in Elgin tomorrow morning and a couple of financial advisor's to see what they say about it.
DT_Xtremez_30:

 

[I Look Like Kevin Costner]

Cheers mate, some good info there, I was recommended Brookson, but I will have a look at Danbro. An umbrella company does seem the easier route to take, it's just that there are so many out there, knowing which one to use could be a gamble. Not sure how long I'm going to be a connie for, so not sure if a LTD company is for me. I'm going to Tax Assist in Elgin tomorrow morning and a couple of financial advisor's to see what they say about it.
DT_Xtremez_30:

Oh, you pay PAYE and employees NI as you would as a normal employee, under the brolly.. As a limited company, you can pay youself a minimal wage avoiding NI and income tax and recieve income as dividends (that I believe have less tax liablity). However, with the big connie profit you make, to get that dividend, you will get coporation tax on that profit and you will also have to sort out other things like liabilty insurance.

Also it is worth remembering thisIf you have done 22.. Your tax allowance is taken from the pension already. Ltd company status will let you see more bucks than an umbrella.. If you don't mind sorting out the reciepts..DT_Xtremez_30:

 

[dkh51250]

Check with an accountant first to find out if you are working in or out of IR35.

Google it, and then try and understand it. This will have a greater bearing on whether or not you opt for an umbrella company or go "Ltd".

If you get it wrong the taxman can chase you for megayears for what he considers you owe him.

 

[spanners]

Short term, I've gone with an umbrella company, but I've now spoken to an accountant, and I'm going to set up a LTD Co next month, as I seem to keep more of my money that way.
There's a lot to get your head around, but I'm getting there.
DT_Xtremez_30:

 

[billyWhizz]

Make sure that you are not susceptible to IR35 as you are in effect a sole trader under LTD guise, the umbrella company avoids this and means you don't pay NI employers and employees contributions. Also when you go LTD remember you need to pay yourself the minimum of around £6.5k to pay your NI otherwise you get no state pension or NHS cover. Further to this ensure you have saved for your TAX bill at the year end as this will 10% of your total income so if you earn £100k then the HM customs will want 10K. Also if you earn over £58k then you will have to be VAT registered as well and you have to charge VAT on your contractor rates and this has to be paid out as well every month or quarter or annually. Keep all your receipts and invoices.

The other thing to bear in mind as soon as you go LTD you are then at the mercy of your customer as to when you get paid this can be 30 days\60 days\90 days or even 120days this happened to me and can get very tight for money. The umbrella company ensures you do get paid every month.

Good luck with your contracting