When starting out contracting you have many choices to make that can have an effect on how you work. Choosing between working under an Umbrella company or a Limited company is one of, if not the biggest and most important choice you’ll make. It’s vital that you know the similarities and differences that these two business structures have and their effect on your life.
With an Umbrella company the main difference is the fact that you’re not the director and you don’t have the full responsibilities that come with it. The company that you sign on with will act like your employer, they will pay you when you complete the work with the client as you fill in timesheets. Making it much easier on you and giving you much more personal time, a great option for you if you’ve just made the switch into contracting.
Working as a Limited company, you are the director and you’re in full control of the transactions your company makes. You’re responsible for everything, from complying to contractor specific legislation such as IR35, conducting all tax payments, payroll calculations, returns and all any paperwork that needs to be complete.
Now, not every single contractor working as a Limited company goes it solely alone, the majority get in touch with specialist contractor accountant to help. But the core difference between these two business structures is the amount of control you have.
If you’re at the crossroads when beginning as a contractor, you need to take a hard look at Umbrella and Limited companies and see which fits your specific situation.
Do you want full control, more responsibility and to be your own boss? Then Limited may be for you! Do you want the freedom that contracting brings to your life but don’t mind paying more to a third party to cover the administration? Then Umbrella may be the best choice.
If you’d like to discuss either our Umbrella or Limited options then get in touch with Brookson today for a FREE consultation and we’ll help you pick what’s right for you!