Monday, March 21, 2011

How an Umbrella Company Benefits You

Contractors whose contracts were caught by the IR35 law affected the growing demand for new umbrella companies. The umbrella companies proved to be to most sensible way to go for short-term IT contracts.

It is wise to get recommendations from your IT contractor peers or recruitment companies in choosing an umbrella company because of the big number of umbrella companies offering similar services for almost the same price. An efficient service is a more important aspect to look out for in any umbrella firm rather than the fees you pay for.

By understanding the advantages of setting up an umbrella company, you may be able to decide on which business model is best for you.

You may finally settle in considering a contracting career mainly for the ndependence. It gives you an opportunity to maximize your skills, to independently set your own working hours at your own pace. It gives you a free hand to balance family life and work and so on. Do you like the challenge of managing your own finances? If you are more attracted by the opportunity to sample a wide variety of working environments then a contractor umbrella company will work well for you.
An umbrella company has the following advantages:
a) saves you headaches from major challenges facing first time contractors such as operating procedures, payroll, managing your taxes, finance and more if you deem it as unwelcome distraction from your work
b) no overhead costs for setting up a limited company
c) no fees for shutting down a limited company if you are in it for a trial period only
d) one advantage of incorporating a company through an umbrella company is that it becomes more tax efficient. Contractors of limited companies get small salaries and get high dividends as remainder of their income
e) limited personal liability of the director in case something goes wrong with the business.

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