Why Use An Umbrella Company?
If you are a contractor or run a recruitment agency, umbrella companies can offer you a number of advantages. Besides giving you the ability to concentrate on your core task (doing your job), they ensure you remain compliant with HMRC and offer a variety of perks when compared to running a limited company or using direct hiring. Below, we outline some of the major reasons why you might wish to use an umbrella firm:
Contractors
As a contractor, you can operate using two major methods: either set up a limited liability company or use an umbrella company. Although trading as a limited company has its benefits in terms of flexibility, it requires a high level of responsibility and administration.
This is why operating as an umbrella company offers a number of key advantages, especially if you are a less experienced contractor. When you use an umbrella firm, you become an employee of the company and place yourself in a position to take full advantage of the benefits this brings. This includes full IR35 compliance, PAYE, and NICs to ensure you keep on the right side of HMRC.
You have the freedom to work with whoever you see fit. The only difference is you will receive your monthly payslip from the umbrella company. There is far less administration involved than working self-employed or as a Ltd company, and all payroll is handled by the umbrella company.
As an employee, you will also maintain continuity of employment, which can prove highly beneficial if you are applying for a mortgage or finance.
Your employee status also entitles you to the full range of workers’ rights, such as holiday pay, statutory sick pay, maternity and paternity leave, shared parental leave, and company pension.
Agencies
As a recruitment agency, there are various benefits that can be obtained from clients using umbrella companies. Rather than hiring contractors directly, you can benefit from risk-free, streamlined contractor processes and all the efficiency savings this entails.
When your client uses an umbrella firm, all the payroll and employee administration is handled by the umbrella company. Your agency gets paid, but the umbrella company manages all the administration. This makes your job easier and more secure.
In addition, the status of employment is clear. This means that your agency can ensure tax is being paid correctly, limiting the responsibility you have to fulfil at HMRC.
The Benefits of App Paye
A service such as App Paye comes highly recommended if you want to take advantage of an umbrella company. As a contractor or agency looking for a smart, efficient solution, App Paye lets you access relevant details 24/7 via a revolutionary app. This enables you to handle timesheets and payments simply and effectively while on the go.
Suitable for both contractors and agencies, App Paye provides instant payment solutions, a variety of benefits and reward packages, and up to 20m insurance cover to protect you while at work.
When using an umbrella company service, such as provided by App Paye, a dedicated account manager is available to answer any client related queries. As a contractor, you can log-on day or night to manage your account and request payments.
As an agency, you gain a centralised system that makes your job more efficient, enabling you to maintain excellent client relationships. Additional services include HR support, service visits to your office, and cost efficiency.