Which type of business structure should you use? A basic overview of how limited and umbrella companies work, and some of the pros and cons of using each structure.
Business Structures - Umbrella Companies
Virtually all IT contractors work via limited or umbrella companies. In this section, we explore how PAYE umbrella schemes work.
- Find out what a PAYE umbrella company does.
- Why you should be cautious when reading umbrella company reviews.
- How much do the leading umbrella companies charge?
- Which structure is best for you? Limited or Umbrella?
5 essential tips to help you find the best umbrella
- Don't focus purely on the weekly cost. Good customer service and communication skills are just as important. Ask other contractors for recommendations if you're looking for a new provider.
- Only sign-up to a UK-based PAYE umbrella. Never use offshore payment tax avoidance schemes.
- The only difference between take home pay quotes between umbrella companies should be the margin (fee) they charge.
- If you're caught by the Off-Payroll (IR35) rules, consider a flexible umbrella/limited model of working, so you can switch between the two with ease. Most leading accountants/umbrellas offer this service.
- Find a trusted umbrella in our umbrella directory.
If you’re working through an umbrella company, you may have noticed deductions on your payslip for the Apprenticeship Levy. Here we explain what this charge is, and how it is calculated.
The number one question many umbrella companies are asked by their employees is: “why am I paying employers’ national insurance contributions?” – here we provide the answer and explain what other costs are payable by umbrella contractors.
Contractors receiving their first umbrella company payslip can sometimes find it challenging to understand exactly how their pay has been calculated and what deductions have been made. However, the actual payslip is fairly straightforward to understand once you know what to look for.
If you have decided to go down the umbrella company route, there are dozens of providers out there. Here we look at some important things to consider when you are choosing a prospective provider.