If you’re new to contracting, then working under an umbrella company is arguably the best way for you to work. But what exactly does this involve?
An umbrella company will employ you under a contract of employment, so whether you carry out one assignment or 100, you will be employed under the same contract. An umbrella company covers all of the payroll and administration aspects associated with working on temporary assignments, while also providing you with the usual employment benefits.
Umbrella companies are quick to join and can have many advantages. If you work under an umbrella company, such as PayStream's My Max, you become an employee of the umbrella company. This means that you don’t need to worry about paying your own taxes, complying with IR35 or keeping detailed accounts.
Instead, PayStream will invoice the agency or client on your behalf and then handle your pay-as-you-earn income tax and national insurance contribution deductions, just like any other employer would, meaning that the wages you receive at the end of the process are yours to spend.
Umbrella companies are ideal if you're just starting out on temporary assignments and if you're particularly worried about managing your own taxes and staying out of trouble with HMRC. It's also good if you only want to work in this way for a short period of time.
What's more, it takes just ten minutes to join PayStream My Max.
If you'd like to find out more about how an umbrella company could help you, then get in touch with one of the PayStream team today.
Joining PayStream comes with a raft of benefits, but joining up is simple and can take you under ten minutes to complete.
Our experienced advisors are on hand to answer any queries you may have about joining and will work with you to discover what could be the most tax efficient service for you. You're then able to go to our online joining portal, which will seamlessly take you through the process.
All you need to do is log in, add your details, agree to the employment contract and you're there. We help keep the time down by checking your identity online and by sourcing a P45 or P46, we can ensure that you do not pay too much tax at the beginning of your assignment. We'll also deal with your agency and consultant to ensure that funds relating to your assignment are received on time.
That's all there is to it; you're now with PayStream and as a result you can access our reward scheme, create your own suite of handy online tools and much, much more.
Join today at paystream.co.uk or speak to an expert on 0800 197 6516. PayStream – it makes perfect sense.
When you decide to work on a contract basis, you can either work through an umbrella company or become a limited company contractor. But before you decide on which option is best for you, there are a few things you need to consider.
First off, you need to think about how each of the options work – with an umbrella company, it's pretty simple as it becomes your employer. This means that your agency pays the umbrella company, and the umbrella company deducts the necessary PAYE and National Insurance contributions and pays you your salary. There’s very little admin to do.
Even though an umbrella company is the simplest way to work, it isn’t the most tax efficient. By comparison, if you set up as a limited company contractor, as a shareholder and director, you can draw some of your funds as a dividend rather than being paid a full salary, so your overall tax burden is reduced.
Although the limited company route is the most tax-efficient way to work it isn’t the simplest. As the director of your own limited company it is your responsibility to ensure all of your company paperwork and admin is taken care of, but that’s where we can help. Our limited company service, My PSC, is a safe pair of hands that provides help and advice on running your limited company, leaving you to get on with what you do best - contracting.
Making your choice also depends on what kind of contractor you are – if you only plan on doing it for a short spell and don't want to go to the effort of setting up a limited company, an umbrella company could well be the answer for you.
However, if you want to work for numerous clients, be tax efficient and want full control of your finances, a limited company may be best. To work in this way you also need to ensure that your working practices and contracts make you a genuine contractor, as defined by IR35 legislation, rather than a disguised employee. If you’re unsure of your IR35 status PayStream offer an IR35 review service which is free to existing PayStream My PSC customers.
Inevitably your circumstances will change, so you may initially choose to work through an umbrella company but then as your career develops, see more value in setting up a limited company. That's doable, but keep an eye on your IR35 status if you follow that path.
So whether you want to work through an umbrella company or you need help with setting up and running a limited company, contact PayStream – it makes perfect sense.